SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 18, 2000
XCEL MANAGEMENT, INC.
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(Exact name of Registrant as specified in its Charter)
UTAH 0-22814 87-0363613
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(State or other Jurisdiction of (Commission (I.R.S. Employer
Incorporation or Organization) File No.) Identification No.)
1101 Broadway Plaza
Tacoma, Washington 98401
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number including Area Code: (253) 383-1085
781 East 2300 South, Bountiful, Utah 84010
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Former name, former address and former fiscal year,
if changed since last report.
Item 1. Changes in Control of Registrant.
On February 18, 2000, Xcel Management, Inc. (the "Company" or the
"Registrant") completed an Asset Purchase Agreement (the "Agreement") with
Insynq, Inc. ("Insynq"), a privately-held Washington corporation, under the
terms of which the Registrant acquired substantially all of the assets of
Insynq, and assumed substantially all of the obligations of Insynq, in
exchange for the issuance of a total of 7,604,050 shares of restricted common
stock of the Company which were distributed to the shareholders of Insynq in a
liquidating dissolution of Insynq. The terms of the Asset Purchase Agreement
were negotiated between the Registrant and its representatives, and Insynq and
its representatives, and were not based on an appraisal or any other formal
method of valuation of the respective companies or businesses.
As a result of the completion of this transaction, the Registrant now
has a total of approximately 9,404,050 shares issued and outstanding, of which
7,604,050 shares, or 81% of the issued and outstanding common stock, are held
by the former Insynq shareholders. In connection with the consummation of the
Agreement, Dallin Bagley and Steve Rippon, officers and directors of the
Registrant, resigned as officers and directors, and were replaced as
directors, seriatum, by John Gorst and Carroll Benton, who were officers,
directors and the principal shareholders of Insynq. In addition, the board of
directors was expanded to three individuals, and Mr. David Selmon was elected
as an additional director of the Registrant. On February 19, 2000, John
Gorst was elected by the new board of directors as the Chairman of the Board
and Chief Executive Officer of the Company, and M. Carroll Benton was elected
as the Secretary/Treasurer of the Company.
In connection with the completion of the transaction, Mr. Gorst and Ms.
Benton were issued a total of 3,609,418 and 1,946,956 shares, respectively, of
the Company's restricted common stock, as a pro rata distribution of their
ownership interest in Insynq. As a result, Mr. Gorst now holds approximately
38%, and Ms. Benton now holds approximately 21%, of the issued and outstanding
common stock of the Company following the transaction. Mr. Gorst and Ms.
Benton together hold an aggregate of 5,556,374 shares, or approximately 59% of
the issued and outstanding common stock of the Company. Therefore, as a
result of the completion of the Agreement, Mr. Gorst and Ms. Benton may be
deemed to be in control of the Registrant. Mr. Selmon is not a shareholder of
the Company.
For details regarding the terms of the Agreement and the assets and
business acquired, see "Item 2. Acquisition or Disposition of Assets," below.
Item 2. Acquisition or Disposition of Assets.
General
On January 26, 2000, the Registrant entered into an Asset Purchase
Agreement with Insynq, a Washington corporation. The terms of the Agreement
were substantially completed on February 18, 2000. Under the terms of the
Agreement, the Registrant acquired substantially all of the assets of Insynq,
and assumed substantially all of the obligations of Insynq, in exchange
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for the issuance by the Company of a total of 7,604,050 shares of restricted
common stock of the Company, to the Insynq shareholders pro rata in a
liquidating distribution. As a result of the transaction, the Company now has
a total of approximately 9,404,050 shares issued and outstanding, of which
7,604,050 shares, or approximately 81% are now held by the former Insynq
shareholders. In connection with the Agreement, Insynq obtained approval of
the sale of its assets by its shareholders at a duly called and convened
shareholders' meeting.
As a result of the Agreement, the Registrant has acquired essentially all
of the assets, tangible and intangible, of Insynq. These assets include
computer hardware and software, related equipment, furniture and fixtures,
proprietary technology developed by Insynq, described below, all contractual
rights including capitalized lease equipment and other leasehold rights,
tradenames and trademarks and all client lists and marketing data and
materials, cash and cash equivalents, accounts receivable, inventory, work in
progress and related assets. As of October 31, 1999, Insynq reported in an
audited balance sheet as of that date, total assets of $1,068,829. As
indicated below, the asset considered most valuable by Insynq and the
Registrant in completing the Agreement, is Insynq's proprietary data utility
services system that was designed to offer enhanced technological computer
processing and communication capabilities.
In connection with the Agreement, the Registrant has assumed essentially
all of the obligations and liabilities of Insynq, including capital lease
obligations on equipment (approximately $587,517 as of October 31, 1999),
accounts payable, accrued payroll and other business taxes, notes payable, and
other liabilities. As of October 31, 1999, total liabilities were
$787,806.67. In addition to such liabilities, the Registrant has agreed to
assume all other contractual obligations of Insynq. In that regard, it is
anticipated that the Registrant will enter into employment contracts with
James R. Leigh III, Carey M. Holladay and Donald L. Manzano, key employees, on
substantially the same terms as the employment contracts between each of said
individuals and Insynq. In addition, the Company has agreed to assume all
equipment leases, leasehold obligations covering office space utilized by
Insynq, all consulting contracts, and all other contract obligations.
Finally, at the time of completion of the Insynq asset acquisition, Insynq had
outstanding to various shareholders, a number of warrants and options,
entitling the holders to purchase shares up to a total of 6,220,300 shares of
restricted common stock of Insynq. The Registrant has agreed to convert the
outstanding Insynq warrants and options, to substantially equivalent warrants
and options to purchase restricted shares of common stock of the Registrant,
subject to appropriate compliance with state and federal securities laws.
Following such conversion, it is anticipated the Registrant will have
outstanding warrants and options to purchase a total of approximately
3,110,150 shares of common stock, at exercise prices of between $1.00 and
$15.00 per share.
New Business of Registrant
As a result of the acquisition by the Company of the assets of Insynq,
the Company will continue the business of Insynq. The Company has been
assigned the tradename "InsynQ," which it intends to use as a tradename and
d/b/a in its business. The Registrant is currently considering whether it
will undertake efforts to call a meeting of the Registrant's shareholders to
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amend the Company's articles of incorporation to make a formal corporate name
change to "Insynq, Inc.,"or such similar name as determined by the board of
directors.
Insynq is a provider of computer hardware, software, computer/internet
related telephonic requirements and services, access to web services of all
kinds, access to internet marketing assistance and related equipment and
services. It offers these services as an integrated whole; in other words,
Insynq is an on-line provider of hardware and software, together with related
support services, on a rental, fee or sales basis, with its best margins
arising from fee services. Insynq was incorporated in August, 1998, and,
therefore, it is in the development stage with a limited history of
operations. During the ten (10) months ended October 31, 1999, Insynq had
total revenue of $91,075, with operating losses for such ten month period of
$128,220.
Insynq targets small businesses and high-end home offices for the sale
of hardware and software and access to related services. It provides these
not in a retail setting, but by attempting to convince customers and
subscribers to adopt a cost effective on-line solution to building and to
maintain an information technology system through the adoption of a
"server-based" computing as an alternative to both local area networks
(LAN's), and traditional client/server implementations. Insynq will
concentrate on the small business and high-end home office user ("SOHO"), and
markets itself as an "internet utility company" that can provide
cost-effectively all of the computer software, hardware, telecommunication and
internet needs for the SOHO markets.
The Company's offices and headquarters, consisting of approximately 1,800
square feet, are located at 705 South 9th, Suite 305, Tacoma, Washington
98405. In approximately the end of March, 2000, the Company will be moving to
new space, consisting of approximately 18,000 square feet, located at 1101
Broadway Plaza, Tacoma, Washington 98401. The Company has assumed Insynq's
leasehold obligations at these locations. The Company has also assumed
Insynq's leasehold obligation covering office space located at 3017 Douglas
Boulevard, Suite 300, Roseville, California, consisting of approximately 2,000
square feet.
The Company has approximately 30 employees, formerly Insynq employees,
consisting of the Company's management, clerical, approximately 10 to12
technical people, and an additional 10 marketing and sales personnel.
Management
As a result of the consummation of the Asset Purchase Agreement, the
Registrant has new management consisting of John P. Gorst, Chief Executive
Officer, Chairman and a director; M. Carroll Benton, Secretary/ Treasurer and
a director; and David D. Selmon, a director. A brief biographical description
of each of these individuals is set forth below.
John P. Gorst was the co-founder of Insynq and has directed all
development and business efforts for Insynq. Mr. Gorst has over eleven (11)
years experience in founding entrepreneurial technology ventures, specifically
in the development of software and data
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services for business. His prior experience includes serving as Vice
President and General Manager of Interactive Information Systems Corp., a
business based in the Pacific Northwest Region, and a training/IS consulting
business in conjunction with Nynex Business Centers of New York. Mr. Gorst's
primary responsibilities will be as Chairman of the Board and Chief Executive
Officer. In such capacities, Mr. Gorst will be responsible for directing
company strategy, and positioning the Registrant in the marketing by forging
strategic business alliances. It is also anticipated that Mr. Gorst will
also serve as the Company's spokesperson at tradeshows, press conferences and
industry meetings. Mr. Gorst earned a bachelors degree in business
administration from Harrington University, and expects to complete his masters
in business administration degree in the first quarter of 2000.
M. Carroll Benton has been with Insynq since its inception in 1997, and
is a co-founder of Insynq. She has directed and managed the fiscal
responsibilities of Insynq. Ms. Benton's early career spanned both the public
and private sectors working largely with the banking system and higher
education institutions, assisting in the development and deployment of
computer systems. Ms. Benton has managed a 13 state insurance brokerage firm
and has been a consultant to the small to medium business markets via
accounting system design, support and business practice analysis. She has
taught undergraduate accounting courses at several Puget Sound colleges and
universities. With an in-depth understanding of Insynq's accounting
infrastructure and vendor leases, Ms. Benton directs Insynq's current
financial practices. Formerly with Benton & Benton, a certified public
accounting firm, for a period of over twenty (20) years, Ms. Benton has over
twenty five (25) years of financial expertise to the business.
David D. Selmon, age 43, has been employed as an accountant and tax
professional since approximately 1979. Mr. Selmon is a certified tax
professional. He graduated from the University of Houston, magna cum laude,
in 1983, with a bachelor's degree in accounting and business administration.
Item 6. Resignations of Registrant's Directors.
In connection with the consummation of the Asset Purchase Agreement, on
February 18, 2000, described under Item 1 and Item 2 above, Steve Rippon and
Dallin Bagley have resigned as officers and directors of the Corporation.
Item 7. Financial Statements and Exhibits.
a) Financial Statements of Business Acquired.
Pursuant to subparagraphs (a)(4) and (b)(4) of Item 7 of Form 8-K, the
financial statements of Insynq and the pro forma financial information
required under Item 7, shall be provided by amendment to this Form 8-K no
later than sixty (60) after the date of filing of this initial Form 8-K.
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b) Exhibits
The following exhibits are filed as part of this report:
Exhibit No. SEC Ref. No. Description/Title of Document
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1 EX - 2 Asset Purchase Agreement
2 EX- 17 Director Resignations
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has caused this report to be
signed on its behalf by the undersigned, hereunto duly authorized.
REGISTRANT:
XCEL MANAGEMENT, INC.
Date: March 3, 2000 By: /s/ John Gorst
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John Gorst, President