United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 10-QSB
|X| Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended September 30, 2005
|_| Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period from ____ to ___
Commission File No.: 000-50005
----------------
TECHEDGE, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 04-37033348
(State of Incorporation) (IRS Employer Identification No.)
33 Wood Avenue South, 7F
Iselin, New Jersey 08830
(Address of Principal Executive Offices) (Zip Code)
Issuer's telephone number, including area code: (732) 632-9896
----------------
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes |X| No |_|
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: As of November 11, 2005, there
were 82,455,000 shares of Common Stock outstanding.
TABLE OF CONTENTS
PART I- FINANCIAL INFORMATION.................................................1
Item 1. Financial Statements...............................................1
Item 2. Management's Discussion and Analysis or Plan of Operation..........7
Item 3. Controls and Procedures............................................9
PART II- OTHER INFORMATION...................................................10
Item 1. Legal Proceedings.................................................10
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.......10
Item 3. Defaults Upon Senior Securities...................................11
Item 4. Submission of Matters to a Vote of Security Holders...............11
Item 5. Other Information.................................................11
Item 6. Exhibits..........................................................11
-2-
PART I- FINANCIAL INFORMATION
Item 1. Financial Statements
Techedge, Inc. and Subsidiary
(A Development Stage Company)
Consolidated Balance Sheet
September 30, 2005
(UNAUDITED)
ASSETS
Current Assets:
Cash and cash equivalents $ 24,394
Accounts receivable, net of bad debt reserve of $14,326 49,808
Due from related party 414,531
Prepaid consulting 33,950
Prepaid expenses and other current assets 5,722
-----------
Total Current Assets 528,405
Property and equipment, net of accumulated depreciation 131,649
Investment in unconsolidated subsidiary 324,167
Other assets 30,237
-----------
Total Assets 1,014,458
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses 992,444
Due to officers 978,792
-----------
Total Current Liabilities 1,971,236
-----------
Commitments and contingencies --
Stockholders Equity:
Common Stock, stated value $.0001, 100,000,000
shares authorized; 82,455,000 shares issued and outstanding 8,220
Additional paid-in capital 6,523,863
Deficit accumulated during development stage (7,485,335)
Accumulated other comprehensive income (3,526)
-----------
Total stockholders' equity (deficit) (956,778)
-----------
Total Liabilities and Stockholders' Equity $ 1,014,458
===========
See notes to the unaudited consolidated financial statements
Techedge, Inc. and Subsidiary
(A Development Stage Company)
Consolidated Statements of Operations
For the Three Months Ended September 30, 2005 and 2004
and for the Period from
September 13, 2000 (date of inception) through September 30, 2005
(UNAUDITED)
Three Months Ended For the Period From
September 30, September 13, 2000
----------------------------------- (Date of Inception)
2005 2004 to September 30, 2005
------------ ------------ ---------------------
Revenues $ 59,307 $ 94,843 $ 1,344,360
Cost of Sales 33,476 38,154 689,621
------------ ------------ ------------
Gross Profit 25,831 56,689 654,739
------------ ------------ ------------
Costs and expenses:
Research and development 161,214 109,111 2,166,370
General and administrative (including
stock-based compensation of
$133,000, $0, and $294,911, respectively) 637,296 174,629 5,611,887
Depreciation and amortization 20,373 5,350 337,157
------------ ------------ ------------
Total costs and expenses 818,883 289,090 8,115,414
------------ ------------ ------------
Loss from operations (793,052) (232,401) (7,460,675)
------------ ------------ ------------
Other income (expense):
Loss from unconsolidated subsidiary -- -- (60,134)
Gain on foreign currency -- -- 1,254
Interest income 102 454 34,220
------------ ------------ ------------
Total other income (expense) 102 454 (24,660)
------------ ------------ ------------
Net Loss $ (792,950) $ (231,947) $ (7,485,335)
------------ ------------ ------------
Unrealized loss on foreign
currency translation, net of tax -- -- (3,526)
------------ ------------ ------------
Comprehensive Loss $ (792,950) $ (231,947) $ (7,488,861)
============ ============ ============
Loss Per Common Share, basic and diluted $ (0.01) $ (0.00)
============ ============
Weighted Average Common Shares
Outstanding, basic and diluted $ 82,411,044 $ 80,000,000
============ ============
See notes to the unaudited consolidated financial statements
2
Techedge, Inc. and Subsidiary
(A Development Stage Company)
Consolidated Statements of Operations
For the Nine Months Ended September 30, 2005 and 2004
and for the Period from
September 13, 2000 (date of inception) through September 30, 2005
(UNAUDITED)
Nine Months Ended For the Period From
September 30, September 13, 2000
----------------------------------- (Date of Inception)
2005 2004 to September 30, 2005
------------ ------------ ---------------------
Revenues $ 186,921 $ 252,872 $ 1,344,360
Cost of Sales 101,697 115,552 689,621
------------ ------------ ------------
Gross Profit 85,224 137,320 654,739
------------ ------------ ------------
Costs and expenses:
Research and development 503,034 296,425 2,166,370
General and administrative (including
stock-based compensation of
$281,300, $0, and $294,911, respectively) 1,607,821 734,780 5,611,887
Depreciation and Amortization 54,386 53,359 337,157
------------ ------------ ------------
Total costs and expenses 2,165,241 1,084,564 8,115,414
------------ ------------ ------------
Loss from operations (2,080,017) (947,244) (7,460,675)
------------ ------------ ------------
Other income (expense):
Loss from unconsolidated subsidiary -- -- (60,134)
Gain (Loss) on foreign currency 594 (2,031) 1,254
Interest income 341 3,135 34,220
------------ ------------ ------------
Total other income (expense) 935 1,104 (24,660)
------------ ------------ ------------
Net Loss $ (2,079,082) $ (946,140) $ (7,485,335)
------------ ------------ ------------
Unrealized gain on foreign
currency translation, net of tax -- 3,526 (3,526)
------------ ------------ ------------
Comprehensive Loss $ (2,079,082) $ (942,614) $ (7,488,861)
============ ============ ============
Loss Per Common Share, basic and diluted $ (0.03) $ (0.01)
============ ============
Weighted Average Common Shares
Outstanding, basic and diluted $ 81,215,952 $ 72,183,471
============ ============
See notes to the consolidated financial statements
3
Techedge, Inc. and Subsidiary
(A Development Stage Company)
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2005 and 2004 and for the Period from
September 13, 2000 (date of inception) through September 30, 2005
(UNAUDITED)
Nine Months Ended For the Period From
September 30, September 13, 2000
--------------------------------- (Date of Inception)
2005 2004 to September 30, 2005
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(2,079,082) $ (946,140) $(7,485,335)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 60,570 76,227 411,943
Loss on unconsolidated subsidiary -- -- 60,134
Provision for doubtful accounts -- -- 14,326
Loss on foreign currency exchange -- 3,526 (3,526)
Stock-based compensation 281,300 -- 294,911
Changes in operating assets and liabilities:
Accounts receivable (14,869) (22,005) (64,134)
Due from related parties (366,127) (9,411) (584,385)
Prepaid expenses and other current assets 180,236 (110,189) 156,669
Other assets -- (9,654) (27,127)
Accounts payable and accrued expenses 315,575 106,176 629,665
Other liabilities (260,000) -- --
----------- ----------- -----------
Net cash (used in) operating activities (1,882,397) (911,470) (6,596,859)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in unconsolidated subsidiary -- (60,614) (408,270)
Purchase of property and equipment -- (38,406) (205,202)
----------- ----------- -----------
Net cash (used in) investing activities -- (99,020) (613,472)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from private placement of common stock 1,355,000 504,000 1,863,800
Repurchase of treasury stock -- -- (432)
Net proceeds from private placement of preferred stock -- -- 4,000,000
Net proceeds from (repayments of) officers' advances 496,915 -- 1,371,357
----------- ----------- -----------
Net cash provided by financing activities 1,851,915 504,000 7,234,725
----------- ----------- -----------
Net increase (decrease) in cash (30,482) (506,490) 24,394
Cash and Cash Equivalents, beginning of period 54,876 710,694 --
----------- ----------- -----------
Cash and Cash Equivalents, end of period $ 24,394 $ 204,204 $ 24,394
=========== =========== ===========
Supplemental Disclosures of Cash Flow Information:
Interest paid $ -- $ -- $ --
=========== =========== ===========
Income taxes paid $ 556 $ 500 $ 2,729
=========== =========== ===========
See notes to the consolidated financial statements
4
Techedge, Inc. and Subsidiary
(A Development Stage Company)
Notes to Consolidated Financial Statements
(UNAUDITED)
1. BASIS OF PRESENTATION
These financial statements should be read in conjunction with a reading of the
Company's Annual Report on Form 10-KSB for the fiscal year ended December 31,
2004.
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles applicable to
interim financial information and with the requirements of Form 10-QSB and Item
310 of Regulation S-B of the Securities and Exchange Commission. Accordingly,
they do not include all of the information and footnotes required by accounting
principles generally accepted in the United States of America for complete
financial statements. Interim results are not necessarily indicative of results
for a full year. In the opinion of management, all adjustments considered
necessary for a fair presentation of the financial position and the results of
operations and cash flows for the interim periods have been included.
2. LOSSES DURING THE DEVELOPMENT STAGE AND MANAGEMENT'S PLANS
Through September 30, 2005 the Company had incurred development stage losses
totaling $7,485,335, and net cash used in operating activities of $6,596,859. At
September 30, 2005 the Company had $24,394 of cash and cash equivalents and
$49,808 of net trade receivables to fund short-term working capital
requirements.
The Company's ability to continue as a going concern and its future success is
dependent upon its ability to raise capital in the near term to: (1) satisfy its
current obligations, (2) continue its research and development efforts, and (3)
successfully develop, deploy and market its products on a wide scale.
3. PREPAID CONSULTING
The Company issued 200,000 warrants to purchase shares of common stock to a
consultant for services in addition to cash payments. Warrants to purchase a
total of 150,000 shares issued were for services that extend into the future and
are amortized monthly over the period of the agreement, one year. Warrants to
purchase a total of 50,000 shares issued were for services performed during the
three months ended September 30, 2005 and were expensed. Since there was no
readily determinable value for the consulting services provided or to be
provided, the fair value of options granted during the three months ended
September 30, 2005 was estimated as of the date of grant using the Black-Scholes
stock option pricing model, based on the following weighted average assumptions:
annual expected return of 0%; annual volatility of 73%; and based upon a
risk-free interest rate of 3.84% and expected option life of 2 years. The
Company accounted for the prepaid value of consulting services in accordance
with EITF 00-18, Accounting Recognition for Certain Transactions Involving
Equity Instruments Granted to Other Than Employees. See note 4 for further
details on this transaction.
4. STOCKHOLDERS' EQUITY
In July 2005, the Company completed a private placement of 1,000,000 of common
stock at a purchase price of $0.50 per share, or gross proceeds of $500,000 and,
for no additional consideration, a cashless 5-year warrant to purchase an
additional 400,000 shares at an exercise price of $0.75 per share. A value of
$168,000 of the proceeds has been allocated to the warrant.
5
Techedge, Inc. and Subsidiary
(A Development Stage Company)
Notes to Consolidated Financial Statements
(UNAUDITED)
In July 2005, the Company entered into a service agreement pursuant to which the
Company agreed to issue warrants to purchase up to an aggregate of 200,000
shares (the Warrant Shares) of the Companys common stock in exchange for
investor relations services. Techedge has the right to terminate the service
agreement at any time on or after October 5, 2005, upon 30 days prior written
notice. The Warrant Shares shall vest in accordance with the following schedule
and are purchasable at the following exercise prices:
o 50,000 Warrant Shares are immediately vested and may be purchased at
an exercise price of $0.90 per share;
o 50,000 Warrant Shares will vest on the 91st day following the date
of the service agreement and may be purchased at an exercise price
of $1.10 per share;
o 50,000 Warrant Shares will vest on the 181st day following the date
of the service agreement and may be purchased at an exercise price
of $1.30 per share;
o 50,000 Warrant Shares will vest on the 271st day following the date
of the service agreement and may be purchased at an exercise price
of $1.50 per share.
The warrants shall terminate on the 24-month anniversary of the effective date
of a registration statement filed by the Company to register the resale of the
Warrant Shares; provided, however, in the event that Techedge elects to
terminate the service agreement early as described above, the Warrants will
terminate as to any Warrant Shares that are not then vested.
4. RELATED PARTY TRANSACTIONS
The Company records material related party transactions. The Company incurs
costs for certain administrative expenses from a company owned 100% by the
Company's CEO. Those charges are included in general and administrative
expenses. The Company also provides services to a related party and those
amounts are included in revenue.
The Company also purchases equipment used in the Research and Development from a
company owned 100% by the Company's CEO.
The Company also engages in advances to and advances from related parties. The
advances have no stated terms of repayment and carry no interest.
Following is a summary of transactions and balances with affiliated entities and
related parties for three months and nine months ended September 30, 2005 and
2004:
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
2005 2004 2005 2004
-------- -------- -------- --------
General and administrative expenses to related party $ 10,890 $ 3,750 $ 32,670 $ 11,120
Due from related party $414,531 $ 50,993 $414,531 $ 50,993
Amounts due to officers consist of advances from the Company's CEO to fund the
Company's operations. It also includes compensation deferred by the Company's
CEO, CFO, CTO and COO. No written repayment agreements exist with either
officer. Amounts are unsecured, non-interest bearing and due upon demand.
6
Item 2. Management's Discussion and Analysis or Plan of Operation
NOTE REGARDING FORWARD-LOOKING STATEMENTS
You should read the following discussion together with the more detailed
business information and consolidated financial statements and related notes
that appear elsewhere in this report and in the documents that we incorporate by
reference into this report. This report may contain certain "forward-looking"
information within the meaning of the Private Securities Litigation Reform Act
of 1995. In some cases, you can identify forward-looking statements by our use
of words such as "may," "will," "should," "could," "expect," "plan," "intend,"
"anticipate," "believe," "estimate," "predict," "potential" or "continue" or the
negative or other variations of these words, or other comparable words or
phrases. This information involves risks and uncertainties. Our actual results
may differ materially from the results discussed in the forward-looking
statements. Factors that might cause such a difference include, but are not
limited to, those discussed in Part I, Item 1 of our annual report on Form
10-KSB under the caption "Business--Risk Factors," which annual report was filed
on March 31, 2005.
Unless the context requires otherwise, references to "we," "us," "our,"
"Techedge" and the "Company" refer to Techedge, Inc. and its consolidated
subsidiaries.
CRITICAL ACCOUNTING POLICIES
See "Summary of Significant Accounting Policies" in the Notes to Consolidated
Financial Statements December 31, 2004 in our annual report on Form 10-KSB filed
on March 31, 2005 for our critical accounting policies. These policies include
revenue recognition, determining our allowance for doubtful accounts receivable,
accounting for cost of revenue, valuation of long-lived assets and research and
development costs. No significant changes in our critical accounting policies
have occurred since December 31, 2004.
BUSINESS OVERVIEW
Techedge is a mobile voice over Internet protocol, or VoIP, solution provider.
Techedge has developed network services for carriers combining matured wireless
products with advanced VoIP technology. Techedge is primarily focused on
providing low cost mobile VoIP products and services and carving a niche in
providing enabling technology to communications service providers targeting
underserved markets in the United States. We have just started to initiate sales
from our principal product, IP-PCS systems and solutions. We have substantially
completed development of our initial product offering and are engaged in efforts
to initiate commercialization of this product. We are headquartered in New
Jersey, with research and development and support centers in both the U.S. &
China.
The following discussion should be read in conjunction with our condensed
consolidated financial statements and the notes thereto:
RESULTS OF OPERATIONS
Revenues
Current revenues are from limited sales of VoIP and value added communications
services to business and residential customers. Such revenues are not
significant as we continue to focus on the commercialization of our initial
IP-PCS product and development of additional IP- PCS systems and solutions.
Revenue decreased to $59,307 in the 3rd quarter of 2005 from $94,843 in the 3rd
quarter of 2004. The decrease in VoIP service revenues is due to reduced
marketing and sales activities, and significant rate cuts in response to
continued price reductions among competitors.
7
No customer represented more than 10% of our total revenues for the 3rd quarter
of 2005 or 2004.
Comprehensive Loss
Comprehensive loss increased to $(792,950) in the 3rd quarter of 2005 from
$(231,947) in the 3rd quarter of 2004. The increase in loss is due to decreased
revenues, and an increase in legal, accounting, finance, and research and
development expenses.
Cost of Revenues and Gross Margin
The cost of service revenues consists of costs primarily associated with network
operations and related personnel, telephony origination and termination services
provided by third-party carriers, and indirect costs associated with purchasing,
scheduling and quality assurance.
The cost of revenues was $33,476 in the 3rd quarter of 2005, compared to $38,154
in the 3rd quarter of 2004.
Gross margins decreased to $25,831 in the 3rd quarter of 2005 from $56,689 in
the 3rd quarter of 2004, primarily due to significant revenue decrease and a
continued increase in variable cost including termination cost.
Research and Development Expenses
Research and development ("R&D") expenses consist primarily of personnel for
system design, implementation, and testing, and equipment costs associated with
IP-PCS systems and solutions development. R&D expenses increased to $161,214 in
the 3rd quarter of 2005 from $109,111 in the 3rd quarter of 2004. R&D costs,
including software development costs, are expensed as incurred.
General and Administrative Expenses
General and administrative ("G&A") expenses consist primarily of personnel and
related overhead costs for sales, marketing, finance, legal, human resources and
general management. Such costs also include sales commissions, trade show,
advertising and other marketing and promotional expenses.
G&A expenses increased to $637,296 in the 3rd quarter of 2005 from $174,629 in
the 3rd quarter of 2004. We continue to experience a significant increase in
legal, accounting, finance, and SEC filing fees associated being a publicly
traded firm. We anticipate that total G&A expenses will stabilize or decrease as
we increase marketing expenses to commercialize our IP-PCS systems and solutions
while taking comprehensive cost reduction measures across the Company.
Other Income (Expense)
Other income was $102 in the 3rd quarter of 2005 compared to $454 in the 3rd
quarter of 2004.
Income Taxes
No tax provision has been recorded for 2005 or 2004, as a result of the
cumulative operating losses we have generated.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents; working capital deficit. As of September 30, 2005, we
had cash and cash equivalents of $24,394 and a working capital deficit of
$(1,442,831), as compared to $54,876 and $(1,094,470), respectively, at December
31, 2004. The increase in our working capital deficit reflects a decrease in
current assets and an increase in current liabilities. Our current liabilities
of $1,971,236 include $978,792 in non-secured loans from and deferred
compensation due to the officers of the Company which are payable on demand.
8
Net cash provided by operating activities. Net cash used in operating activities
was $1,882,397 in the 9 months ended September 30, 2005, as compared to $911,470
in the 9 months ended September 30, 2004.
Net cash used in investing activities. Net cash used in investing activities was
$0 in the 9 months ended September 30, 2005, as compared to $99,020 in the 9
months ended September 30, 2004.
Net cash provided by financing activities. Net cash provided by financing
activities was $1,851,915, including $1,355,000 through issuance of common
stock, and $496,915 from officers' advances in the 9 months ended September 30,
2005, as compared to $504,000 net cash provided by financing activities in the 9
months ended September 30, 2004.
Capital Stock Transactions. In July 2005, the Company completed a private
placement of 1,000,000 of common stock at a purchase price of $0.50 per share,
or gross proceeds of $500,000, and, for no additional consideration, a cashless
5-year warrant to purchase an additional 400,000 shares at an exercise price of
$0.75 per share. A value of $168,000 of the proceeds has been allocated to the
warrant.
Currency exchange fluctuations. For the purpose of funding operations of our
Chinese subsidiary, we have implemented simple currency hedging against
fluctuations in the Chinese Renminbi to United States dollar exchange rate.
Need for current financing. Our ability to continue as a going concern is
dependent upon our ability to raise capital in the near term to: (1) satisfy our
current obligations, and (2) continue our mobile VoIP system and solution
development and commercialization efforts. Furthermore, our future success will
depend on our ability to successfully market and sell our IP-PCS products and
solutions. We do not have sufficient capital to fund our operations at the
current level unless we receive additional capital either through external
independent or related party funding, revenues from sales, further expense
reductions or some combination thereof.
SUBSEQUENT EVENTS
None.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements.
Item 3. Controls and Procedures
The Company, under the supervision and with the participation of its
management, including the Chief Executive Officer and the Chief Financial
Officer, evaluated the effectiveness of the design and operation of the
Company's "disclosure controls and procedures" (as defined in Rule 13a-15(e)
under the Securities Exchange Act of 1934 (the Exchange Act)) as of the end of
the period covered by this report. Based on that evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that the Company's disclosure
controls and procedures are effective, in making known to them on a timely
basis, material information relating to the Company and the Company's
consolidated subsidiaries required to be disclosed in the Company's reports
filed or submitted under the Exchange Act. There has been no change in the
Company's internal control over financial reporting during the three months
ended September 30, 2005 that has materially affected, or is reasonably likely
to materially affect, the Company's internal control over financial reporting.
9
PART II-Part II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, the Company may be subject to legal proceedings, which
could have a material adverse effect on its business. At September 30, 2005 and
through the date of this filing, the Company was not a party to any litigation
matter.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) Entry into a Material Definitive Agreement. On July 6, 2005, Techedge,
Inc., entered into a service agreement with Elite Financial Communications
Group, LLC pursuant to which Elite will provide investor relations services to
Techedge. The service agreement expires on July 6, 2006. However, Techedge has
the right to terminate the service agreement at any time on or after October 5,
2005, upon 30 days prior written notice. As compensation, Techedge has agreed to
pay Elite $7,500 per month in advance through the term of the service agreement
and agreed to issue to Elite warrants (the "Warrants") to purchase up to 200,000
shares (the "Warrant Shares") of Techedge's common stock, par value $.0001 per
share. The Warrant Shares shall vest in accordance with the following schedule
and are purchasable at the following exercise prices:
o 50,000 Warrant Shares are immediately vested and may be purchased at
an exercise price of $0.90 per share;
o 50,000 Warrant Shares will vest on the 91st day following the date
of the service agreement and may be purchased at an exercise price
of $1.10 per share;
o 50,000 Warrant Shares will vest on the 181st day following the date
of the service agreement and may be purchased at an exercise price
of $1.30 per share;
o 50,000 Warrant Shares will vest on the 271st day following the date
of the service agreement and may be purchased at an exercise price
of $1.50 per share.
Under the service agreement, Techedge is required to register the Warrant Shares
for resale by Elite on the first applicable registration statement that Techedge
files with the United States Securities and Exchange Commission pursuant to the
Securities Act of 1933 after January 2, 2006. The Warrants shall terminate on
the 24-month anniversary of the effective date of such registration statement;
provided, however, in the event that Techedge elects to terminate the service
agreement early as described above, the Warrants will terminate as to any
Warrant Shares that are not then vested. The issuance of the Warrants may
trigger an anti-dilution adjustment under one or more of Techedge's existing
outstanding warrants.
(b) Unregistered Sales of Equity Securities. On July 6, 2005, Techedge become
obligated to issue the Warrants to Elite. The Warrants were issued in a private
placement of securities exempt from registration under the Securities Act of
1933, as amended, pursuant to Section 4(2) of the Securities Act.
Techedge's reliance upon the exemption from registration afforded by
Section 4(2) of the Securities Act is premised on the following:
o Elite has executed an investor representation letter in which it
acknowledged, among other things, that (i) the Warrants and the
Warrant Shares, would not, upon consummation of the sale or exercise
of the Warrants, as applicable, be registered under the Securities
Act and could not be transferred in the absence of registration
under the Securities Act or an effective exemption from the
registration requirements of the Securities Act, (ii) the
certificates representing the Warrant and the Warrant Shares would
bear a legend referring to such transfer restrictions and (iii) that
Elite was purchasing the securities for its own account, not as a
nominee or agent, and not with a view towards the resale,
distribution or dissemination of the shares and that it had no
present arrangement to sell the securities.
10
o Elite had an opportunity to ask questions of, and receive answers
from Techedge, concerning Techedge and the terms and conditions of
the securities purchase.
o Elite is an "accredited investor," as such term is defined pursuant
to Rule 501(a) promulgated under the Securities Act.
o All of Techedge's communications with Elite regarding the private
placement were effected without any general solicitation or public
advertising.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits
The following exhibits are being filed herewith pursuant to Item 601 of
Regulations S-B:
31.1 Rule 13a-14(a)/15d-14(a) Certification, executed by Peter Wang,
Chairman of the Board of Directors and Chief Executive Officer of
Techedge
31.2 Rule 13a-14(a)/15d-14(a) Certification, executed by Ya Li, Chief
Financial Officer of Techedge
32.1 Certifications required by Rule 13a-14(b) or Rule 15d-14(b) and
Section 1350 of Chapter 63 of Title 18 of the United States Code (18
U.S.C. 1350), executed by Peter Wang, Chairman of the Board of
Directors and Chief Executive Officer of Techedge
32.2 Certifications required by Rule 13a-14(b) or Rule 15d-14(b) and
Section 1350 of Chapter 63 of Title 18 of the United States Code (18
U.S.C. 1350), executed by Ya Li, Chief Financial Officer of Techedge
99.1 Service Agreement, dated as of July 6, 2005, between the Registrant
and Elite Financial Communications Group, LLC (incorporated by
reference to Exhibit 99.1 to Techedge's Q2 2005 report on Form
10-QSB filed on August 15, 2005)
99.2 Form of Warrant to be issued to Elite Financial Communications
Group, LLC (incorporated by reference to Exhibit 99.1 to Techedge's
Q2 2005 report on Form 10-QSB filed on August 15, 2005)
11
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TECHEDGE, INC.
Date: November 11, 2005 By:
-----------------------------
Peter Wang
Chief Executive Officer
(Principal Executive Officer)
EXHIBIT INDEX
Exhibit No. Description of Exhibit
31.1 Rule 13a-14(a)/15d-14(a) Certification, executed by Peter
Wang, Chairman of the Board of Directors and Chief Executive
Officer of Techedge
31.2 Rule 13a-14(a)/15d-14(a) Certification, executed by Ya Li,
Chief Financial Officer of Techedge
32.1 Certifications required by Rule 13a-14(b) or Rule 15d-14(b)
and Section 1350 of Chapter 63 of Title 18 of the United
States Code (18 U.S.C. 1350), executed by Peter Wang, Chairman
of the Board of Directors and Chief Executive Officer of
Techedge
32.2 Certifications required by Rule 13a-14(b) or Rule 15d-14(b)
and Section 1350 of Chapter 63 of Title 18 of the United
States Code (18 U.S.C. 1350), executed by Ya Li, Chief
Financial Officer of Techedge
99.1 Service Agreement, dated as of July 6, 2005, between the
Registrant and Elite Financial Communications Group, LLC
(incorporated by reference to Exhibit 99.1 to Techedge's Q2
2005 report on Form 10-QSB filed on August 15, 2005)
99.2 Form of Warrant to be issued to Elite Financial Communications
Group, LLC (incorporated by reference to Exhibit 99.1 to
Techedge's Q2 2005 report on Form 10-QSB filed on August 15,
2005)