A UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14C
INFORMATION STATEMENT PURSUANT TO SECTION 14(c)
OF THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for use of the
Commission only (as permitted by
Rule 14c-5(d)(2))
[X] Definitive Information Statement -
INSYNQ, INC.
-----------------------------------------------
(Name of Registrant as Specified in its Charter)
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
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fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party: Insynq, Inc.
(4) Date Filed: August 13, 2004
INSYNQ, INC.
1127 Broadway Plaza, #202
Tacoma, Washington 98402
Telephone: (253-284-2000)
Facsimile: (253-722-5605)
INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY STATEMENT AND
YOU ARE REQUESTED NOT TO SEND A PROXY
This Information Statement is being mailed or furnished to the stockholders of
Insynq, Inc., a Nevada corporation (the "Company"), in connection with the
previous approval at a meeting held on July 16, 2004, of the Company's Board of
Directors of the corporate actions referred to below and the subsequent adoption
of such corporate actions by written consent on August 2, 2004 of a majority of
the shares entitled to vote of the aggregate shares of common stock par value
$0.001 per share (the "Common Stock") of the Company and series A preferred
stock, par value $.001 per share (the "Series A Preferred Stock") of the
Company. Accordingly, all necessary corporate approvals in connection with
matters referred to herein have been obtained and this Information Statement is
furnished solely for the purpose of informing the stockholders of the Company,
in the manner required under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), of these corporate actions before they take effect.
This Information Statement is first being mailed or furnished to the
stockholders of record of the Company on or about August 18, 2004 and the
transactions described herein shall be effective on September 7, 2004.
ACTIONS BY BOARD OF
DIRECTORS AND
CONSENTING STOCKHOLDERS
The following corporate actions were authorized and adopted by unanimous written
consent of the Board of Directors of the Company on July 16, 2004, and
subsequently we received the written consent in lieu of a meeting of
stockholders, from the holders entitled to vote a majority of the Common Stock
and Series A Preferred Stock on August 2, 2004:
1. To amend our Articles of Incorporation to increase the number of authorized
shares of our Common Stock to 2,000,000,000 par value $0.001 per share;
The reasons for, and general effect of, the amendments to our Articles of
Incorporation is described in "ACTION 1 - AMENDMENTS INCREASING THE NUMBER OF
AUHTORIZED SHARES OF OUR COMMON STOCK."
The Board of Directors of the Company knows of no other matters other than those
described in the Information Statement, which have been recently approved or
considered by the holders of the Company's Common Stock and Series A Preferred
Stock.
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GENERAL
This Information Statement is first being mailed or furnished to stockholders of
record on or about August 18, 2004, and the Amendment described herein will be
effective on September 7, 2004. The Company will pay all costs associated with
the distribution of this Information Statement, including the costs of printing
and mailing.
CONSENT OF STOCKHOLERS OBTAINED - NEVADA LAW
Nevada Revised Statutes ("NRS") 78.390 provides that every amendment to our
Articles of Incorporation shall first be adopted by the resolution of the Board
of Directors and then be subject to the approval of stockholders entitled to
vote on any such amendment. Under NRS 78.390 and our bylaws, an affirmative vote
by stockholders holding shares entitling them to exercise at least a majority of
the voting power is sufficient to amend our Articles of Incorporation. NRS
78.320 provides that, unless otherwise provided in the Articles of Incorporation
or the bylaws, any action required or permitted to be taken at a meeting of the
stockholders may be taken without a meeting if, before or after the action, a
written consent thereto is signed by stockholders holding at least a majority of
the votes entitled to vote at a stockholders' meeting. In order to eliminate the
costs and management time involved in holding a special meeting and in order to
effect the Amendments as early as possible, to accomplish the purposes as
hereafter described, the Board of Directors approved the Amendments and the
written consent of the holders of shares having sufficient votes to constitute a
majority of the votes required to approve the Amendments was executed. NRS
78.320 provides that in no instance where action is authorized by written
consent of stockholders, is a meeting of stockholders to be called or notice
given.
VOTING SECURITIES AND
PRINCIPAL HOLDERS THEREOF
As of August 2, 2004, there were 8,907,700 outstanding shares of Common Stock
and 165,000 outstanding shares of Non-participating Series A Preferred Stock
("Preferred Stock".) The Preferred Stock is not entitled to dividends and not
entitled to any distributions in the event of a liquidation of the Company. Each
share of Common Stock is entitled to one vote, and each share of Preferred Stock
is entitled to 1,000 votes. On July 16, 2004, the Board of Directors authorized
the issuance of an aggregate of 165,000 shares of Preferred Stock, to the
executive officers of the Company, two of whom are directors of the Company.
Each executive officer was issued 55,000 shares of Preferred Stock, representing
in the aggregate, a majority of the votes required to consent to the filing of
the amendments described herein.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of August 2, 2004, certain information as to
the stock ownership of each person know by the Company to kown beneficially 5%
or more of the Company's outstanding Common Stock, each director of the Company
who owns shares of Common Stock and Preferred Stock, and by all officers and
directors as a group. This table includes the shares of Preferred Stock, which
have the right in the aggregate to cast 95.73% of the total votes which may be
cast by the holders of all the outstanding (i) shares of Common Stock and (ii)
Series A Preferred Stock.
- ----------------------------------- ---------------------- ---------------------- -----------------------
Name and Address of Beneficial Number of Shares of Number of Shares of Aggregate Percentage
Owner Common Stock Owned Series A Preferred of Voting Rights
(1)(2) Stock Owned (1)(3)
- ----------------------------------- ---------------------- ---------------------- -----------------------
John P. Gorst 98,626 55,000 31.7%
1127 Broadway Plaza #202
Tacoma, WA 98402
- ----------------------------------- ---------------------- ---------------------- -----------------------
M. Carroll Benton 78,724 55,000 31.7%
1127 Broadway Plaza #202
Tacoma, WA 98402
- ----------------------------------- ---------------------- ---------------------- -----------------------
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Joanie C. Mann 10,898 55,000 31.7%
1127 Broadway Plaza #202
Tacoma, WA 98402
- ----------------------------------- ---------------------- ---------------------- -----------------------
Plaza Corp 1,300,000 -0- 14.6%
10 Wanless Avenue, Ste 201
Toronto, ON, Canada M4N1V6
- ----------------------------------- ---------------------- ---------------------- -----------------------
Director and Officers as a Group 188,019 165,000 94.98%
- ----------------------------------- ---------------------- ---------------------- -----------------------
(1) Except as otherwise indicated, all shares are beneficially owned and the
persons named hold sole voting and investment power. (2) Each share of Common
Stock is entitled to one vote per share. (3) Each share of Preferred Stock is
entitled to 1,000 votes at any meeting of stockholders.
NOTICE TO STOCKHOLDERS OF ACTIONS
APPROVED BY CONSENTING STOCKHOLDERS
The following actions have been approved by the written consent of the holders
together entitled to vote a majority of the aggregate votes at any stockholders
meeting of the Company:
ACTION 1
AMENDMENT INCREASING
THE NUMBER OF AUTHORIZED SHARES
OF OUR COMMON STOCK
Purpose of the Increase in Authorized Common Stock
The Company currently has outstanding $1,992,131 principal amount of two year
Secured Convertible Debentures (the "Convertible Debentures"), which are
convertible into shares of Common Stock. The Company sold total of $2,050,000 of
Convertible Debentures over three separate private financing transactions to
several investor groups. Terms of each of the Convertible Debentures are
essentially equivalent: the Convertible Debentures are convertible into shares
of Common Stock (the "Conversion Shares") at the lesser of (i) $0.30 per share
and (ii) the average of the lowest three intraday trading prices in the
twenty-day trading period immediately preceding a Notice to Convert, discounted
by sixty percent (60%.) Pursuant to the terms of the Convertible Debentures,
upon receipt by the Company of a Notice to Convert, the Company have reserved
and must deliver the Conversion Shares to the holders of the Notes within two
(2) trading days. Under the terms of the Convertible Debentures, if the Company
fails to have reserved, sufficient authorized Conversion Shares available to
deliver, (the Company is required at all times to have authorized and reserved
two (2) times the number of shares that is actually issuable upon full
conversion of the Convertible Debentures) because it lacks sufficient
authorization to issue Conversion Shares, the Company must pay to the holder who
requested conversion of the Convertible Debentures, damages in the amount of
$2,000 per trading day for each trading day until the Conversion Shares are
delivered. In addition, the Company must pay to that holder continuing damages
in the form of "Conversion Default Payments" in accordance with a formula, up to
the date (the "Authorization Date") that the Company authorizes a sufficient
number of shares of Common Stock to effect conversion of the full outstanding
principal balance of the Convertible Debentures.
On June 25, 2004, the Company issued a total of $900,000 of Secured Convertible
Notes Payable (the "Notes") to four investor groups (the "Purchasers".) The
Purchasers are also holders of Convertible Debentures previously issued by the
Company. The Notes are convertible into shares of Common Stock (the " Note
Conversion Shares") at the lesser of (i) $0.01 and (ii) the average of the
lowest three intraday trading prices in the twenty-day trading period
immediately preceding a Notice to Convert, discounted by forty-five percent
(45%). Pursuant to the terms of the Notes, upon receipt
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by the Company of a Notice to Convert, the Company must have reserved and must
deliver the Note Conversion Shares to the holders of the Notes within two (2)
trading days. Under the terms of the Notes, if the Company fails to have
sufficient authorized Note Conversion Shares available to deliver, (the Company
is required at all times to have authorized and reserved two (2) times the
number of shares that is actually issuable upon full conversion of the Notes)
because it lacks sufficient authorization to issue Note Conversion Shares, the
Company must pay to the holder who requested conversion of the Note, damages in
the amount of $2,000 per trading day for each trading day until the Note
Conversion Shares are delivered. In addition, the Company must pay to that
holder continuing damages in the form of "Note Conversion Default Payments" in
accordance with a formula, up to the date that the Company authorizes a
sufficient number of shares of Common Stock to effect conversion of the full
outstanding principal balance of the Notes.
In addition, the company granted a total of 2,700,000 warrants to purchase
common stock at an exercise price of $0.001. Each warrant holder's period to
exercise the warrants is until June 25, 2009
On July 16, 2004, the Company was authorized by its Articles of Incorporation to
issue 500,000,000 common shares and had issued and outstanding 445,384,987
common shares. Also, on July 16, 2004, the Company's Common Stock was quoted on
the OTC Bulletin board at $0.0017 per share. Accordingly, and based upon the
terms of the Convertible Debentures, the Notes, and the Warrants, the Company
was required to have authorized a minimum of 7,800,142,513 shares of Common
Stock reserved for issuance. Therefore, the Company did not have sufficient
authorized Common Stock to comply with the requirements of the Convertible
Debentures and the Notes.
The directors of the Company determined that an amendment (the "Amendment") to
the Articles of Incorporation of the Company was necessary to increase the
authorized Common Stock. However, the filing of an Amendment would require
approval of the stockholders. Based upon an inspection of the stockholders'
list, it was determined by the Company that it take between 90 and 120 days to
achieve a quorum of stockholder to vote at a stockholders meeting. The Board of
Directors determined that it was in the best interest of the company to minimize
the amount of penalties accruing on the convertible debentures and the notes by
issuing the preferred stock and seeking the consent of the preferred
stockholders to the filing of the amendment.
To comply with the terms of the Convertible Debentures and the Notes, the Board
of Directors, pursuant to Nevada Revised Statutes ("NRS") 78.207, declared a
"reverse split" of one for fifty effective August 2, 2004 and, accordingly, the
authorized Common Stock was reduced to 10,000,000 and the issued and outstanding
Common Stock of 445,384,987 were reduced to approximately 8,907,700 shares of
Common Stock. This did not eliminate the Company's lack of sufficient authorized
Common Stock. In addition, the Board of Directors approved the issuance of a
total of 165,000 Non-Participating Series A Preferred Stock, each share having
1,000 votes on all matters upon which stockholders are entitled to vote. The
Board of Directors believes that the issuance of the Preferred Stock was
necessary in order that the Company obtain the requisite number of votes to
amend the Articles of Incorporation to increase the authorized Common Stock of
the Company.
The Company's Board of Directors has determined that it is in our best interests
to increase the number of authorized shares of our Common Stock. The Board of
Directors believes that the Amendment is necessary and in addition will provide
us with greater flexibility, by increasing our authorized capital to allow us to
issue additional shares of our common stock. Consequently, the Board of
Directors has recommended that we increase the number of authorized shares of
our Common Stock to 2,000,000,000 shares. On August 2, 2004, the holders of the
issued and outstanding Preferred Stock executed their consent to the Amendment
to increase the authorized Common Stock.
The Company's potential issuance of the shares of Common Stock upon conversion
of the Debentures and Notes and any other common Stock issuance will have the
effect of diluting equity ownership position of the then current holders of
Common Stock. The issuance of the Preferred Stock did not effect the equity
ownership position of the holders of Common Stock.
Effect of the Increase
The increase in authorized Common Stock will not have any immediate effect on
the rights of existing stockholders. However, the Board of Directors will have
the authority to issue authorized Common Stock without requiring future
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stockholder approval of such issuances, except as may be required by the
Articles of Incorporation or applicable law. To the extent that additional
authorized shares are issued in the future, they may decrease the existing
stockholders' percentage equity ownership and, depending on the price at which
they are issued, and could be dilutive to the existing stockholders.
The increase in the authorized number of shares of common stock and the
subsequent issuance of such shares could have the effect of delaying or
preventing a change in control of the Company without further action by our
stockholders. Shares of authorized and unissued Common Stock could, within the
limits imposed by applicable law, be issued in one or more transactions which
would make a change in control of the Company more difficult, and there less
likely. Any such issuance of additional stock could have the effect of diluting
the earnings per share and book value per share of outstanding shares of Common
Stock and such additional shares could be used to dilute the stock ownership or
voting rights of a person seeking to obtain control of the Company.
The Board of Directors is not currently aware of any attempt to take over or
acquire the Company. While it may be deemed to have potential anti-takeover
effects, the Share Increase amendment is not prompted by any specific effort or
takeover threat currently perceived by management.
Vote Required
Pursuant to NRS 78.385 and NRS 78.390, the affirmative vote of the holders of a
majority of our outstanding voting stock is sufficient to amend our Articles of
Incorporation to increase the number of authorized shares of our Common Stock to
2,000,000,000 shares, which vote was obtained by majority written consent. As a
result, the Share Increase Amendment was approved and no further votes will be
needed.
Effective Date
Under applicable federal securities laws, the Amendment cannot be effective
until at least 20 calendar days after this Information Statement is sent or
given to our stockholders. The Amendment will become effective upon filing with
the Secretary of State of Nevada. It is anticipated that the foregoing will take
place 20 calendar days after this Information Statement is mailed to our
stockholders.
Dissenters' Rights of Appraisal
The Nevada Revised Statutes do not provide for appraisal rights in connection
with the increase of authorized shares of our capital stock.
ADDITIONAL INFORMATION
We are subject to the information requirements of the Securities Exchange Act of
1934, as amended, and in accordance therewith file reports, proxy statements and
other information including annual and quarterly reports on Form 10-KSB and Form
10-QSB with the Securities and Exchange Commission. Reports and other
information filed by us can be inspected and copied at the public reference
facilities maintained at the Securities and Exchange Commission at Room 1024,
450 Fifth Street, N.W., Washington, DC 20549. Copies of such material can be
obtained upon written request addressed to the Securities and Exchange
Commission, Public Reference Section, 450 Fifth Street, N.W., Washington, DC
20549, at prescribed rates. The Securities and Exchange Commission also
maintains a web site on the internet (http://www.sec.gov) where reports, proxy
and information statements and other information regarding issuers that file
electronically with the Securities and Exchange Commission through the
Electronic Data Gathering, Analysis and Retrieval System may be obtained free of
charge.
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By order of the Board of Directors
/s/ John P. Gorst
John P. Gorst
President
Dated: Tacoma, Washington
August 13, 2004
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