SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC  20549
                                 UNITED STATES

                                 FORM 10-KSB/A

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     FOR THE FISCAL YEAR ENDED MAY 31, 2001

OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     FOR THE TRANSITION PERIOD FROM _________________ TO __________________

                             --------------------

                       COMMISSION FILE NUMBER:  0-22814

                                 INSYNQ, INC.
                (Name of Small Business Issuer in Its Charter)

               DELAWARE                               74-2964608
    (State or other jurisdiction of        (IRS Employer Identification No.)
     incorporation or organization)

     1101 BROADWAY PLAZA, TACOMA, WASHINGTON                         98402
     (Address of principal executive offices)                      (Zip Code)

                                (253) 284-2000
             (Registrant's telephone number, including area code)

     Securities registered pursuant to Section 12(b) of the Exchange Act:
                                     None

     Securities registered pursuant to Section 12(g) of the Exchange Act:

                    COMMON STOCK, PAR VALUE $.001 PER SHARE
                               (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB        [ ].

The Registrant's revenue for its most recent fiscal year:  $493,008

The aggregate market value of the Registrant's common stock, $.001 par value,
held by non-affiliates as of July 25, 2001, based on the average bid and asked
price of the common stock as reported on July 25, 2001 on the OTC Bulletin
Board, was: $2,004,933.

As of September 4, 2001, there were 37,364,932 shares of the Registrant's
common stock.

DOCUMENTS INCORPORATED BY REFERENCE: Selected portions of the Registrant's
definitive Proxy Statement for the 2001 Annual Meeting of Stockholders are
incorporated by reference into Part III hereof.

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                                 INSYNQ, INC.

                                 FORM 10-KSB/A
<TABLE>
                               TABLE OF CONTENTS

<S>                                                                    <C>
PART I    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3
     ITEM 1.   DESCRIPTION OF BUSINESS  . . . . . . . . . . . . . . . .   3
     ITEM 2.   DESCRIPTION OF PROPERTY  . . . . . . . . . . . . . . . .  25
     ITEM 3.   LEGAL PROCEEDINGS  . . . . . . . . . . . . . . . . . . .  25
     ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS  . .  27

PART II   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27
     ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS  27
     ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
               FINANCIAL CONDITION AND RESULTS OF OPERATIONS  . . . . .  34
     ITEM 7.   FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . .  38
     ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
               ON ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . . .  38

PART III  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  38
     ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
               CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF
               THE EXCHANGE ACT . . . . . . . . . . . . . . . . . . . .  38
     ITEM 10.  EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . .  38
     ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
               AND MANAGEMENT . . . . . . . . . . . . . . . . . . . . .  39
     ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . .  39
     ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . .  39
</TABLE>
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                                    PART I


ITEM 1.        DESCRIPTION OF BUSINESS

     Except for historical information, the following description of our
business contains forward-looking statements based on current expectations that
involve risks and uncertainties. Our actual results could differ materially
from those set forth in these forward-looking statements as a result of a
number of factors, including those set forth in this prospectus under the
heading "Risk Factors."

     General

          We are an application service provider, or ASP and we have been
delivering outsourced software application hosting and managed information
technology services through our IQ Data Utility Service and IQ Delivery System
since 1997.  We host software applications on our servers located at the data
center, rent computing services to our customers for a monthly fee, and perform
remote management and maintenance of our customers' servers from our network
operations center. Our customers connect to our facilities over the Internet,
through a dedicated telecommunications line or by wireless connection. Our goal
is to provide our services with the speed, simplicity and reliability of a
utility service. Like a utility company, we allow business customers to "turn
on", or access, their software applications and data instantly through any web
enabled computer, regardless of operating system. Our current 765 users can
freely access their software and data in real time from any computer, anywhere
in the world.

     We provide our customers with the tools necessary to implement business
workflow and process ideas quickly and cost effectively.  We make it possible
for many businesses to take advantage of technology solutions that have
typically been reserved for larger business enterprises. These solutions enable
our customers to benefit from reliable, high-quality technology operations,
which can grow to accommodate increasing business needs, and can be delivered
without undertaking the difficulty and expense associated with building the
required expertise in-house.

     We provide our services through our IQ Data Utility Service and IQ
Delivery System, which allows us to consistently deploy our customers
operations across multiple locations and to maintain those services through
our centralized operations center.  Among other things, our services enable
our customers to:

     *    Quickly expand their Internet presence as business opportunities
          arise in new geographies; and

     *    Efficiently incorporate new technologies into their existing business
          operations as these technologies evolve.

     The application service provider model of distributing computer processing
services over the Internet has proven itself to deliver a lower total cost
of ownership as compared to building and maintaining physically separated
information technology systems. This due in part to the increasing complexities
of successfully deploying and maintaining the various components of software
solutions, as well as the hardware and connectivity required for a successful
Internet business operation.  In addition, the in-house expertise required to
meet these challenges is significant and typically requires a host of technical
specialists.

     We target small and medium enterprises and the high-end segment of the
small office and home office market for the sale of hardware and hosted
software and access to Internet-related services.  The products and services
are provided by developing a customer subscriber base that adopts a cost-
effective, on-line solution to building and maintaining an information
technology system through the adoption of "Web-based" computing as an
alternative to both local area networks and traditional network
implementations.  Generally, we market ourselves as an Internet utility company
that can cost-effectively provide all of the computer software, hardware,
connectivity and Internet-access needs for its customers.

     History

     One of our predecessor companies, Xcel Management, Inc., formerly known
as "Palace Casinos, Inc.," was inactive from the end of 1995 until the
consummation of an asset purchase transaction with another of our predecessor
companies, Insynq, Inc., a Washington corporation. During the two-year period
prior to the transaction with Insynq-WA, Xcel and its then management worked
to complete a plan of reorganization confirmed in the United States Bankruptcy
Court under Chapter 11 of the federal bankruptcy laws, and undertook necessary
steps to position Xcel to seek a new business enterprise in which it could
become involved, either through a merger or reorganization, or an acquisition
transaction. These efforts resulted in the transaction with Insynq-WA,
completed in February 2000.

     Xcel was originally incorporated in the state of Utah on May 22, 1980,
under the name Ward's Gas & Oil, to engage in the oil and gas business. This
business was terminated after a few years of operations. From November 1992
until approximately the end of 1995, Xcel (then called Palace Casinos, Inc.),
was engaged, through its then wholly-owned subsidiary, Maritime Group, Ltd., in
the development of a dockside gaming facility in Biloxi, Mississippi. In April
1994, the subsidiary completed the development of the Biloxi gaming facility,
Palace Casino, and commenced operations. On December 1, 1994, Xcel and its
subsidiary separately filed voluntary petitions for relief under Chapter 11
of the federal bankruptcy laws. Although the original bankruptcy petition was
filed in the United States Bankruptcy Court for the District of Utah, Central
Division, the supervision of Xcel's Chapter 11 proceedings was transferred to
the United States Bankruptcy Court for the Southern District of Mississippi. On
September 22, 1995, Xcel, having been operating as a debtor-in-possession in
connection with the bankruptcy proceeding, entered into an asset purchase
agreement under the terms of which it agreed, subject to the approval of the
bankruptcy court, to sell substantially all of its subsidiary's operating
assets. This transaction was approved by the bankruptcy court and completed
in the end of 1995, with all of the net proceeds of the transaction being
distributed to creditors. Following the completion of the sale of the
subsidiary's assets, Xcel had essentially no assets and liabilities and its
business operations essentially ceased, except for efforts to complete a plan
of reorganization, described below.

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     In February 1999, Steve Rippon and Edward D. Bagley, Xcel's management
at the time, submitted to the bankruptcy court, as plan proponents, a plan of
reorganization, which was confirmed by the bankruptcy court on June 16, 1999.
Under the terms of the plan: (a) all of Xcel's priority creditors were paid a
total of $5,000; (b) unsecured creditors, holding between $300,000 and $500,000
in claims, were issued pro rata a total of 90,000 shares of post- bankruptcy
common stock in full satisfaction of such obligations; and (c) all of the
equity holders of Xcel common stock were issued, pro rata, a total of
approximately 90,000 shares of common stock in lieu of a total of 8,794,329
shares of preferred and common stock issued and outstanding, with the result
that .0102 shares of common stock were issued for each previously outstanding
share of common stock. Under the terms of the plan, all of Xcel's outstanding
warrants and options expired. In connection with the plan, Messrs. Rippon and
Bagley, creditors of the estate and the plan proponents, were elected as Xcel's
officers and directors, and were issued a total of 1,620,000 shares of common
stock (810,000 shares each) in consideration of their contributions of services
and approximately $20,000 in cash provided to pay for legal services and costs
incurred in the plan confirmation process and related activities.

     Following the confirmation of the plan in June 1999, Xcel completed the
plan in accordance with its terms. Immediately following the confirmation of
the plan, Xcel had a total of approximately 1,800,000 shares of common stock,
par value $0.001 per share, issued and outstanding. On December 3, 1999, the
bankruptcy court, after reviewing the efforts by the plan proponents, issued
an order closing the bankruptcy estate.

     Subsequent to the completion of the plan, Xcel undertook efforts to
complete updated financial statements, to prepare and file updated periodic
reports with the Securities and Exchange Commission, and to undertake actions
to enable Xcel to seek a business opportunity for acquisition or involvement by
Xcel.  These efforts resulted in the asset purchase transaction with Insynq-WA.

     On January 26, 2000, Xcel entered into an asset purchase agreement with
Insynq-WA.  Since September 1998, Insynq WA was engaged in providing hardware,
software, computer Internet and related connectivity services and products
to the small to medium enterprise and the high end small office home office
markets. On or about that same time, Insynq-WA engaged in a 1.41056 to 1 stock
split. The terms of the asset purchase agreement were substantially completed
on February 18, 2000.  Under the terms of the asset purchase agreement, Xcel
acquired substantially all of the assets of Insynq-WA and assumed substantially
all of the obligations of Insynq-WA, in exchange for the issuance by Xcel of a
total of 7,604,050 shares of restricted common stock of Xcel to the Insynq-WA
shareholders pro rata in a liquidating distribution. As a result of the
transaction, Xcel had a total of approximately 9,404,050 shares issued and
outstanding, of which the former Insynq-WA shareholders held 7,604,050 shares,
or approximately 80.9%.  In connection with the asset purchase agreement,
Insynq-WA obtained approval of the sale of its assets by its shareholders at
a duly called and convened shareholders' meeting.

     As a result of the asset purchase agreement, Xcel acquired essentially
all of the assets, tangible and intangible, of Insynq-WA and became engaged in
Insynq-WA's business. These assets included computer hardware and software and
related equipment, furniture and fixtures, proprietary technology developed by
Insynq-WA, all contractual rights including capitalized lease equipment and
other leasehold rights, trade names and trademarks, all client lists and
marketing data and materials, cash and cash equivalents, accounts receivable,
inventory, work-in-progress and related assets. Xcel also assumed essentially
all of the obligations and liabilities of Insynq-WA, including capital lease
obligations on equipment, accounts payable, accrued payroll and other business
taxes, notes payable, and other liabilities. In addition to such liabilities,
Xcel agreed to assume all other contractual obligations of Insynq-WA. In that
regard, Xcel entered into employment contracts with certain individuals who
were executives or key employees of Insynq-WA on substantially the same terms
as the terms of employment between Insynq-WA and such individuals.

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     Prior to September 1998, the business which ultimately became Insynq-WA's
business was under development as a potential product/services line of
Interactive Information Systems Corporation, a company wholly owned by
M. Carroll Benton, our secretary, treasurer and chief administrative officer.
In September 1998, Interactive transferred to Charles Benton, husband of Ms.
Benton and then a creditor of Interactive, in satisfaction of a debt obligation
owed by Interactive to Charles Benton, all of Interactive's right, title and
interest in and to (1) certain equipment and other tangible personal property,
and (2) the intellectual properties, computer software, trademarks, copyrights,
ideas, work-in-progress, and other tangible and intangible property comprising
the system known as the "Insynq Project" which later developed into our IQ
Delivery System. Mr. Benton then contributed all of the Insynq Project
intellectual property assets to Insynq-WA in exchange for the initial shares of
common stock issued by Insynq-WA at the time of its formation. Mr. Benton also
sold the equipment and other tangible property to the newly formed Insynq-WA in
exchange for a note. Mr. Benton then sold all of his shares of Insynq-WA common
stock to M. Carroll Benton and John P. Gorst, our chief executive officer,
chairman of the board and president. Insynq-WA continued the development of the
Insynq Project business until February 18, 2000, when Xcel acquired all of that
business under the terms of the asset purchase agreement.

     Under the asset purchase agreement, Xcel also agreed to assume all
equipment leases, leaseholder obligations covering office space utilized by
Insynq-WA, all consulting contracts, and all other contract obligations.
Finally, at the time of completion of the Insynq-WA asset acquisition, Insynq-
WA had outstanding to various shareholders a number of warrants and options
which entitled the holders to purchase shares of restricted common stock of
Insynq-WA, which warrants and options were converted into like warrants and
options to purchase shares of Xcel's common stock.

     On August 3, 2000, at a special meeting of shareholders, Xcel completed
a re-incorporation merger with its wholly owned subsidiary, Insynq, Inc.,
a Delaware corporation, pursuant to a plan of merger dated June 30, 2000.
Pursuant to the plan of merger, each shareholder of Xcel received two (2)
shares of Insynq common stock for each one (1) share of Xcel stock held on
the date of the merger.

                              Industry Background

The Internet

     The Internet is fundamentally changing the way businesses interact with
their customers, partners and other businesses and has become an important
medium for both commerce and communications. Improvements in the quality and
reliability of global telecommunications networks and common Internet protocols
permit large volumes of data to be delivered to end users over a variety of
Internet-enabled devices.  Businesses are now able to access and distribute
a wide array of software services over the Internet, allowing them to, among
other things, implement supply chain management solutions and enable other
operating functions on-line, market and sell products and services to customers
and offer web-based customer self-service programs.  As a result, businesses
are substantially increasing their investments in Internet sites, services,
software, network infrastructure, information technology personnel and hardware
to utilize the reach and efficiency of the Internet.

     Even as companies have increased their investments in Internet
infrastructure, the complexity of successfully deploying and maintaining
Internet business operations continues to increase. In particular, the software
infrastructure required to deploy and maintain Internet business operations
has become increasingly complex.  For example, businesses deploying Internet
business operations can choose from multiple software applications with varying
levels of functionality and complexity, all of which must integrate to become
a seamless information system.  In addition, with increasing globalization,
businesses often must maintain their operations in multiple locations and
design their infrastructure to accommodate local standards, while remaining
synchronized with operations in other geographies.

     The in-house expertise required to meet these challenges is significant
and typically requires a host of technical specialists, including network
administrators, systems administrators, database administrators, security
experts, monitoring and management experts, project managers, software
operations specialists, troubleshooting specialists and performance engineers.
It is often difficult, time consuming and costly to hire and retain these
experts.  Even if businesses can effectively hire and retain these experts,
deploying this talent to maintain a business' Internet infrastructure is
inefficient as it diverts these resources from enhancing a business' core
competencies.

     To effectively manage the increasing complexity of Internet business
operations, we believe that companies require a new set of infrastructure
services to run Internet business operations on an automated and global basis.
A reliable, secure, expandable and cost-effective software infrastructure
network would permit businesses to focus on their core competencies and provide
greater functionality and flexibility than they could otherwise attain on
their own.  Businesses could also access a global and robust technology
infrastructure without incurring the time or financial costs associated with
building equivalent functionality on their own. In addition, businesses would
be able to access the operational capacity they require to efficiently run
their Internet-based software applications, and to efficiently increase or
reduce that capacity as business needs dictate.  The solution would also
consistently deploy and maintain businesses' operations across multiple
locations via centralized network operations centers.

     We believe that we provide all of these services in an affordable and easy
to deliver package and that corporate information technology departments have a
resource that they can depend on to deliver advanced technology solutions.

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The Industry

     An application service provider can be defined as an entity that supplies
another company with leased applications, information technology infrastructure
and support services.  Instead of buying hardware and business software from
vendors and using its own information technology staff to implement and
maintain the system, a customer contracts with an application service provider
for software applications and services that may include system administration,
upgrades and day-to-day operations such as backup, recovery and security.

     This arrangement enables customers to focus on getting value from leased
applications, free of the need to administer, maintain and upgrade them.
Renting rather than buying may provide a financial advantage, since such
services are treated as operating expenses, rather than capital investments.

     Organizations reap several significant benefits from using application
service providers.  These include a solution to the scarcity of information
technology staff, rapid software application deployment, and a lower total cost
of ownership.  By avoiding the time and cost of developing internal systems,
customers also save money that would otherwise be spent on maintenance, updates
and training, raising their overall productivity.  Finally, application service
provider customers are protected from technological obsolescence and benefit
from the latest applications and services.

     As reported in Computerworld, ASP Winners and Losers, August 20, 2001,
"The total market for application services last year came to just $770.5
million worldwide, according to IDC.  But the total market is expected to
more than do this year and jump to $15 billion by 2005, the market research
firm says."

     We believe that the value of our service is further enhanced by delivering
a customer-premise equipment solution, our IQ Delivery System, that can provide
both a less expensive computing model, as well as provide the customer with a
fully managed and secure outsourcing option.

                                The Technology

     We believe that the following key features of our technology allow us to
provide dependable and affordable services to our clients:

     Our IQ Data Utility Service and our IQ Delivery System were originally
developed by Interactive, a computer integration company located in Tacoma,
Washington.  The early stages of the IQ Data Utility Services and the IQ
Delivery System were purchased by Insynq- WA in September 1998 and were
subsequently assumed by Xcel as part of the Insynq-WA asset purchase agreement
in February 2000.  The complete IQ Data Utility Service includes managed
network and application services, and can span from a customer's keyboard to
the data center.  We provide certain equipment, which is kept on our customer's
premises, including a simplified, diskless workstation, or Thin Client, and
multi-function router or utility server, our IQ Delivery System, which we
manage and maintain.  The final piece of the system is the data center, which
is located in Tacoma, Washington.  This facility, with redundant power,
bandwidth, and cooling, houses our server equipment and routers.

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     In the process of developing the IQ Delivery System, we believe we
acquired valuable technological expertise.  We have created new methodologies
and produced hardware and software that we believe is essential to the
configuration and effective management of Internet-based networks and outside
deployment of shared software applications. Some of our key employees are
certified as Microsoft Systems Engineers, Microsoft Certified Professionals,
Certified Netware Administrators, Certified Citrix Administrators, Certified
Netware Engineers and Certified Cisco Architects.

     To support Microsoft Corporation's Windows-based applications, the IQ Data
Utility Service uses proprietary Citrix Systems, Inc. independent computer
architecture software to increase end-user performance and reduce a customer's
total cost of owning and maintaining computer hardware and software.  Our
technology utilizes our IQ Delivery System, a simple device at the client site,
that allows us to manage all hosted application processing functions.  The
centrally managed servers also house customers' data, provide storage and
backup, file and directory security, and anti-virus protection.

     The IQ Data Utility Service receives and transmits information in the form
of images rather than data, requiring less bandwidth than traditional network
configurations.  Customers may connect to the IQ Data Utility Service via a
variety of carriers and connectivity technologies, including public access over
the Internet with encryption, through private connections, or other available
access methods. Properly provisioned connections, whether public or private,
generally provide a quality end-user experience.

     The first type of customer configuration, Internet browser-based Thin
Client devices, also called Internet Appliances, allow a user to interact with
the images transmitted over the Internet using only a monitor, keyboard, and a
mouse.  The Internet Appliance actually does very little since its functions
are limited to sending user instructions to centrally managed servers.  Using
the IQ Data Utility Services, an Internet Appliance communicates the user's
data-entry and retrieval commands to servers located at the data center, where
all computing functions are performed. Internet Appliances do not have disk
or tape drives which generally increases customer productivity by restricting
users' ability to install extraneous software applications, such as computer
games, or tamper with a computer's operating system.  This access device
imposes a singleness of purpose upon the operation, and improves manageability,
simplicity, and reliability.

     The traditional computer workstation, utilizing a central processing unit
and disk resources, constitutes the second type of customer configuration.
These customers may need to use fully-equipped workstations for certain
individuals that utilize non-Windows software applications or very specialized,
complex applications such as computer aided design used, for example, in
engineering.  This is not our recommended option because it does not free
the customer from the technical problems and service costs associated with
maintaining this type of configuration.  Customers may choose to use existing
workstations to connect to the IQ Data Utility Services, however, because this
machine uses an operating system that Insynq does not manage, the workstation
may be more susceptible to various failures.

     Once connected to the IQ Delivery System, users can acquire any of the
following computer services:

VIRTUAL OFFICE - We can establish a virtual office for a customer, allowing
professionals, employers, employees, clients, and customers to utilize a
wide variety of software applications and/or interact directly in a network
environment.  This office is always open, irrespective of the time of day or
the user's location.

OFFICE SOFTWARE SUITE - Customers may select from one of three (3) Office
Software Suites as part of the virtual desktop subscription.  Customers may
also select from a wide variety of other fully supported Windows-based software
applications. We serve some vertical markets and in many cases incorporate
specialized software for these customers.  We regularly test new applications
and make them available to our customers. If a customer wishes to use Windows-
based software that is not already offered for use with our service, we may
test, and subsequently configure, load, and maintain compatible applications
for an additional monthly fee.

INTERNET CONNECTION - We may provide customers with connectivity to the
Internet through their Virtual Office as part of our service.  Our customers
must provide their own local Internet connection in order access their service
with us.  Customers may also provide private connections to our data center.

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WEB SITE HOSTING - For an additional fee, we may put the customer's Internet
Web site on one of our servers and host the site for them.  Further, we can
assist our customer in performing Web site changes and updates.

DATA BACK-UP AND STORAGE - The IQ Data Utility Service provides daily automatic
backup of customer data on high-speed tape and logs the activity.  Upon
request, a customer can receive their backup data and related backup logs.
On average we provide one (1) gigabyte of data storage with each business
subscription.  For larger customers, we tailor storage requirements to the
customers' needs and price it accordingly.

SECURITY - Our IQ Data Utility Service generally raise the level of a
customer's computer security in several ways.  First, our servers are located
in secured rooms, with keycard access.  Second, customers utilizing thin client
technology additionally prevent unauthorized disk installation and installation
of extraneous software, both of which can introduce computer corruptions and
viruses.  Third, access to customer data is restricted through the use of
secured application servers located at the data center, which is protected by
firewall filters and Internet protocol based networking rules.  Last, customer
data is rarely transmitted; transmissions between the customer's site and
the servers located in the data center generally occur in the form of
indecipherable, encrypted images.

REDUNDANCY - Our IQ Delivery System secures customer data on redundant
disk arrays with ready spare disk drives.  We make a best effort to assure
application redundancy, so that if one server fails, we can reroute customers
to similar servers, thereby minimizing customer downtime.

                         Our Strategic Plan

Market Drivers

     Primary research conducted by Gartner Dataquest uncovered that the
information technology requirements of midsize enterprises were almost
identical to those of Fortune 1000 enterprises. Despite their large numbers and
information technology requirements, small to medium sized enterprises have
limited budgets, which rarely makes them the direct target of sophisticated
professional service providers who are considered our competitors. As a
result, this sector of the economy remains open to the services of emerging
professional services providers like us.

Key Differentiators

     We are different from other service providers due to our focus on the
information technology needs of both the small to medium sized enterprise and
the small office home office customers for low cost services. These businesses
require the same level of reliable information technology services as Fortune
1000 businesses do but generally don't have the financial resources to make the
required investment for Internet business operations. We enable these customers
to rent just what they need when they need it.

Challenges

     Our greatest challenge is to educate our target markets regarding the
cost savings and productivity enhancements gained through using Internet
based computing services as an alternative to traditionally deployed computer
networks.

Strategy

     We will continue to position our products and services as a cost effective
way to utilize the latest computer network technologies without making
a significant investment in computer equipment, software or private
telecommunications network infrastructure.

     We market and sell our services primarily through the sales organizations
of independent software vendors, telecommunications and Internet service
providers, managed service providers and technology consultants.

     We intend to continue to invest in the development and integration of
additional services that address the evolving needs of our customers. Our goal
is to integrate additional product enhancements that extend the capabilities of
our services across a large universe of existing and potential customers. We
believe that by continuing to broaden our service offerings, we will be viewed
by our customers as the single and best source for all of their information
technology service requirements.  There can be no assurance, however, that we
will be successful in accomplishing our goal.

     In addition to expanding the scope of our services, we are also developing
services geared to the needs of particular segments of our customer base. We
will continue to review the applicability of our service offerings to our
target customers and create additional category- specific offerings based on
the size and profitability of the market segment.

     While we believe that it is paramount that we remain focused on our plan,
we must have the ability inherent in any company to adapt to changing market
conditions.

     In addition to internally generated growth, we intend to expand our
business through strategic acquisitions in the United States and possibly
abroad. We believe our acquisitions will allow us to accelerate our penetration
of key geographical markets, broaden our offerings of products and services,
expand our technical staff, as well as our market entry points. To attain
this goal, we are aggressively pursuing opportunities to merge and/or
acquire compatible companies with which to utilize management, financial
and operational resources.

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Sales and Marketing

     We focus our sales and marketing efforts on the small to medium size
enterprise and the small office home office market.  Although specific
definition for these market segments vary somewhat, we view the high-end small
office home office market to represent small offices with up to 10 employees,
and the small to medium size enterprise market to represent companies that
employs approximately 11 to 500 people.  We will occasionally pursue larger
opportunities.  We sell to these segments through the sales organizations of
the software publishers, information technology consultants, telecommunication
carriers and Internet service providers.

     We have developed a packaged service offering targeting these small
businesses that delivers a combination of software and marketing services
designed for these market segments.

Competition

     The market for Internet based data processing and information technology
services is rapidly evolving and intensely competitive. In addition to
internally built and supported operations, our primary current and prospective
competitors include:

     *    providers ofcomputer equipment;

     *    co-location, web site hosting and related services;

     *    technology vendors that have recently announced their intentions to
          offer some of the services that we offer currently to a portion of
          our targeted customer base;and

     *    providers of Internet based systems integration or professional
          services.

     Many of our competitors have been in business longer than us, have
significantly greater financial, technical, and other resources, or greater
name recognition. Our competitors may be able to respond more quickly to new or
emerging technologies and changes in customer requirements. Competition could
negatively impact our ability to sell additional services on terms favorable
to us. Competitive pressures could cause us to lose market share or to reduce
the price of our services, either of which could harm our business, financial
condition and operating results.

     We believe that the principal competitive factors in our market include:

     *    quality and reliability of services offered;

     *    scope of supported applications and technology platforms;

     *    ability to expand the operational environments supported;

     *    extent to which the services offered provide a complete solution to a
          potential customer's operations requirements;

     *    engineering and technical expertise and development ofautomation
          software;

     *    rapid deployment of services; quality of customer service and
          support; and price.

                                    -  9 -
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Government Regulation

     There are currently few laws or regulations directly governing access to,
or commerce upon, the Internet. Due to the increasing popularity and use of the
Internet, it is possible that a number of laws and regulations may be adopted
with respect to the Internet, covering issues such as user privacy, pricing and
characteristics and quality of products and services.

     Such legislation could dampen the growth in the use of the Internet
generally and decrease the acceptance of the Internet as a communications and
commercial medium, and could, thereby, have a material adverse effect on our
business, results of operations and financial condition.  Other nations,
including Germany, have taken actions to restrict the free flow of material
deemed to be objectionable on the Internet.  In addition, several connectivity
carriers are seeking to have connectivity over the Internet regulated by the
Federal Communications Commission in the same manner as other connectivity
services.  For example, America's Carriers Connectivity Association has
filed a petition with the Commission for this purpose.  In addition, because
the growing popularity and use of the Internet has burdened the existing
connectivity infrastructure and many areas with high Internet use have begun
to experience interruptions in phone service, local telephone carriers, such
as Pacific Bell, have petitioned the Commission to regulate Internet service
providers and online service providers, in a manner similar to long distance
telephone carriers and to impose access fees on these service providers.
If either of these petitions is granted, or the relief sought therein is
otherwise granted, the costs of communicating on the Internet could increase
substantially, potentially slowing the growth in use of the Internet, which
could in turn decrease the demand for our products.

                                    - 10 -
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<PAGE>

     Also it is possible that laws will be adopted or current laws interpreted
in a manner to impose liability on online service providers, such as us, for
linking to third party content providers and other Internet sites that include
materials that infringe copyrights or other rights of others.  Such laws and
regulations if enacted could have an adverse effect on our business, operating
results and financial condition.  Moreover, the applicability to the Internet
upon the existing laws governing issues such as property ownership, copyright
defamation, obscenity and personal privacy is uncertain, and we may be subject
to claims that our services violate such laws.  Any such new legislation or
regulation or the application of existing laws and regulations to the Internet
could have a material adverse effect on our business, operating results and
financial condition.

     In addition, as our products and services are available over the Internet
in multiple states and foreign countries, such jurisdictions may claim that we
are required to qualify to do business as a foreign corporation in each such
state or foreign country.  We are qualified to do business only in the states
of Washington and California, and our failure to qualify as a foreign
corporation in a jurisdiction where we are required to do so could subject
us to taxes and penalties and could result in the our inability to enforce
contracts in such jurisdictions. Any such new legislation or regulation, the
application of laws and regulations from jurisdictions whose laws do not
currently apply to our business, or the application of existing laws and
regulations to the Internet and other online services may severely restrict the
sale of new contracts and materially effect our ability to maintain our current
customers.

     At present, we do not collect sales or other similar taxes in respect
of sales and shipments of our products through Internet purchases.  However,
various states have sought to impose state sales tax collection obligations on
out-of- state direct marketing companies similar to us.  A successful assertion
by one or more of these states that it should have collected or be collecting
sales tax on the sale of our products could result in additional costs and
corresponding price increases to its customers.  The U.S. Congress has passed
legislation limiting for three years the ability of states to impose taxes on
Internet-based transactions.  Failure to renew this legislation could result in
the broad imposition of state taxes on e-commerce.

                                    - 11 -
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<PAGE>

Intellectual Property and Proprietary Rights

     We regard our service marks, trademarks, domain names, and similar
intellectual property as critical to our success.  We have applied for
federal trademark or service mark registration of a number of names and
terms, including "Insynq," "Your Internet Utility Company," "Interlynq," and
"Idesq." Our domain names include, INSYNQ.com, ON-Q.net, SIMPLENETWORKS.net,
APPLICATIONVAULT.com, MESSAGEIQ.com, OURACCOUNTING.com, OURBOOKEEPER.com, and
RAPIDNETWORKS.com, all of which are now owned by us. We have also applied
for a patent covering our multi-platform network application management and
connectivity system: our InterLynQ and IdesQ components of our customer premise
equipment solution.

     We rely on trademark, unfair competition and copyright law, trade secret
protection and contracts such as confidentiality and license agreements with
our employees, customers, partners, and others to protect our proprietary
rights. Despite precautions, it may be possible for competitors to obtain
and/or use the proprietary information without authorization, or to develop
technologies similar to ours and independently create a similarly functioning
infrastructure. Furthermore, the protection of proprietary rights in Internet-
related industries is uncertain and still evolving. The laws of some foreign
countries do not protect proprietary rights to the same extent, as do the laws
of the United States. Protection for proprietary rights in the United States or
abroad may not be adequate.

                                    - 12 -
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<PAGE>

     We intend to continue to license certain technology from third parties
such as Citrix, Microsoft, and others, for our technologies that support
business systems. The market is evolving and we may need to license additional
technologies to remain competitive. We may not be able to license these
technologies on commercially reasonable terms or at all. In addition, we may
fail to successfully integrate licensed technology into our operations.

     Although we have not yet experienced infringement or misappropriation of
our intellectual property or similar proprietary rights, it may be anticipated
that infringements and misappropriations will occur as our business grows and
there is more brand loyalty attaching to our trade names and domain names. We
intend to police against infringement or misappropriation. However, we cannot
guarantee that we will be able to enforce our rights and enjoin the alleged
infringers from their use of confusingly similar trademarks, service marks,
telephone numbers, and domain names.

     In addition, third parties may assert infringement claims against us.  We
cannot be certain that our technologies or trademarks do not infringe valid
patents, trademarks, copyrights, or other proprietary rights held by third
parties. We may be subject to legal proceedings and claims from time to time
relating to the intellectual property of others in the ordinary course of our
business. Intellectual property litigation is expensive and time-consuming and
could divert management resources away from running the business.

Recent Restructuring

     Until recently, we operated several satellite sales offices in central and
southern California and in Washington State, selling our hosted and managed
network services to the small to medium enterprises. In September 2000, we
completed our test marketing allowing us to focus on building our product
offerings while creating relationships with outside sales organizations, which
we believe has proved to be a more beneficial method of increasing awareness
and generating market share of our products and services.

     We have implemented cost restructuring strategies of our operations, both
in sales and marketing and in our executive management team, and implemented
certain cost-cutting measures. We believe this restructuring and the cost-
cutting measures, which resulted in a workforce reduction of approximately 31
people - mostly in sales-related positions - in addition to changes to our
executive management team, will allow us to (1) reduce operating costs, (2)
provide operational efficiencies, and (3) focus on the development of strategic
business plans in preparation for future growth initiatives.

     As part of our corporate cost restructuring, we consolidated our sales
activities into our corporate headquarters office in Tacoma. We are planning
a redeployment of a national direct sales force in the future to augment our
relationship with out-side sales organizations; however, there can be no
assurance that the redeployment will occur.

     In addition to the restructuring, retroactive to September 1, we reduced
salaries and benefits for certain members of executive management and certain
other employees.  In addition, as of June 30, 2001, we have negotiated with
many of our vendors to reduce the amounts owed or to extend more favorable
payment terms.

     We believe that the combination of the restructuring, the salary
reductions and negotiated trade payables will reduce our corporate overhead.

Customer Services

     Our Customer Support Service is comprised of Customer Service
Representatives, Customer Support Representatives and is further supplemented
by Senior Technical Support Representatives consisting of Microsoft, Citrix,
Novell and Cisco Certified Engineers and Insynq Server Technicians.  Customer
Support is available via toll-free telephone lines to offer support for any
aspect of the IQ Delivery System and the IQ Utility Service.

Employees

     We currently have approximately 22 employees: (a) nine management and
clerical, (b) approximately six technical people, (c) two full-time and two
part-time Customer Support personnel, and (d) an additional three marketing
and sales personnel.

Management

     Our board of directors consists of John P. Gorst, M. Carroll Benton and
David D. Selmon, each of whom took this position upon or shortly after the
consummation of the asset purchase on February 18, 2000, and continued in these
positions after the re-incorporation merger effected on August 3, 2000. Our
executive officers include:  John P. Gorst, chief executive officer, president
and chairman of the board, M. Carroll Benton, chief administrative officer,
secretary and treasurer, and Joanie C. Mann, vice president of strategic
alliances. In September 2000, DJ Johnson resigned his position as our chief
financial officer, and we appointed Stephen C. Smith as our interim chief
financial officer while we conduct a nationwide search for a full-time chief
financial officer. In January 2001, William G. Hargin, executive vice president
of marketing, resigned.  In April, James R. Leigh, III, president and chief
technology officer resigned from executive management to become our general
manager of technical operations; while in May 2001, James A. Zachman resigned
as senior vice president to take on a consultative role with us.

Need For Additional Capital

     In order to execute our long-term and short-term strategic plans and to
continue our operations, we need to continue to raise funds through public
or private debt or equity financings. Consistent with this approach, we have
entered into various non-exclusive financial advisory agreements, including,
but not limited to, an agreement with MG Securities Group, Inc., a member of
the National Association of Securities Dealers, Inc., dated May 17, 2001, to
act as placement agent for an offering of our three year convertible secured
debentures, $10,000.00 value per certificate. The offering will be for a
minimum of two million dollars ($2,000,000) and a maximum of three million
dollars ($3,000,000) of gross proceeds. The term of the agreement is for a
period of 120 days in connection with the offering, which will be a non public
offering pursuant to Regulation D under the Securities Act.  MG Securities has
agreed that it will exercise its best efforts to find suitable purchasers of
the debentures, all purchasers of which will be "accredited investors" within
the meaning of Regulation D.  The offering is to be made to residents primarily
in the states of California, Texas and New York, and pursuant to exemptions
from registration provided by such states' securities laws. In consideration
for the services rendered by MG Securities, we agreed to pay MG Securities an
aggregate of 13% of all the securities sold and to reimburse MG Securities for
its reasonable out of pocket expense and costs.  In addition, we have agreed
to issue to MG Securities up to one million (1,000,000) warrants to purchase
shares of our common stock at a price of $0.25 per share.  The warrants will
be earned pro-rata based upon the number of debentures sold in the offering.

                                    - 13 -
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<PAGE>

     In addition, we entered into a business advisory and consulting services
agreement with Tarshish Capital Markets, Ltd., an Israel corporation, to
provide expertise in completing mergers and acquisitions, raising funds and
rendering strategic business advice, including leverage based buyouts. Pursuant
to the terms of the Tarshish agreement, the we have agreed to pay to Tarshish
a 13% success fee of all cash so invested through Tarshish's efforts and an
equity success fee in the form of warrants to purchase our common stock equal
to 10% of the funds raised.  The exercise price for the warrants will be 110%
of the equity as valued by the transaction

     There can be no assurance that we will be able to raise additional capital
through any such financial advisory arrangements, including, but not limited
to, MG Securities.

Additional Factors That May Affect Future Results

     An investment in our stock involves a high degree of risk. The following
information discusses the material risk factors which are unique to our company
and that make an investment in our common stock risky or speculative. If any of
the risks discussed below actually occur, our business, financial condition,
operating results or cash flows could be materially adversely affected, which
could cause the trading price of our common stock to decline.

Risks particular to Insynq, Inc.

     WE HAVE HISTORICALLY OPERATED AT A LOSS, HAVE EXPERIENCED NEGATIVE
OPERATING CASH FLOWS, AND ANTICIPATE THAT LOSES WILL CONTINUE.

     We have experienced net losses and negative cash flows since we
began implementing our current business plan. We expect that the ongoing
implementation of our current business plan will increase our net losses and
our negative cash flows for the foreseeable future as we continue to incur
significant operating expenses and make capital investments in our business.
We may never generate sufficient revenues to achieve profitability, and if we
are unable to make a profit, we may not be able to continue to operate our
business. Even if we do become profitable, we may not be able to sustain or
increase profitability on a quarterly or annual basis.

     WE HAVE RECEIVED A GOING CONCERN OPINION FROM OUR AUDITORS INDICATING
THERE IS DOUBT AS TO WHETHER WE CAN REMAIN IN BUSINESS.

     In its audit report dated July 31, 2001, our auditors indicated that there
was substantial doubt as to our ability to continue as a going concern and that
our ability to continue as a going concern was dependant upon our obtaining
additional financing for our operations or reaching profitability.  There can
be no assurance that we will be able to do either of these.

     OUR LIMITED OPERATING HISTORY MAKES EVALUATING OUR BUSINESS DIFFICULT.

     Insynq-WA commenced operations in September 1998. Accordingly, we have
only a very limited operating history upon which you can evaluate our business
and prospects. We face the risks, expenses and difficulties frequently
encountered by early-stage companies in new and rapidly evolving markets,
including on-line companies which host hardware and software applications for
other companies. Our past financial results may not be representative of our
future financial results.

     WE ARE DELINQUENT IN THE PAYMENT OF BUSINESS AND PAYROLL TAXES.  IF WE ARE
UNABLE TO NEGOTIATE WORKOUT ARRANGEMENTS OR TO MAKE TIMELY PAYMENTS, WE COULD
EXPERIENCE A SEVERE NEGATIVE IMPACT ON OUR BUSINESS OR OUR RESOURCES.

     We are delinquent in the payment of approximately $493,000 of business and
payroll taxes, plus $103,000 of related assessed penalties and interest.  We
have initiated contact with the respective taxing authorities to work out an
arrangement for payment plans in settlement of these tax obligations although
definitive workout agreements have not been finalized.  However, if we are
unable to negotiate terms or if we are unable to execute such negotiated terms,
we could experience a severe negative impact on our business resources.  For
example, the taxing authorities could obtain a lien against some or all of our
assets.  Should this occur, we likely would be forced to cease our operations.

     Additionally, two liens have been filed by two different States for past
due taxes, plus accrued penalties and interest.  One lien, for approximately
$28,000, is to the State of Utah for prior year's income taxes assessed to the
predecessor company of Insynq, Inc.  This amount is in dispute and amended
returns to correct this deficiency have been filed.  The second lien, for
approximately $5,500, is to the State of Washington and has been subsequently
paid in full.

     WE ARE IN DEFAULT ON AN EQUIPMENT LEASE OBLIGATION AND IF WE ARE UNABLE TO
SUCCESSFULLY RESTRUCTURE THIS LEASE OBLIGATION WE MAY NOT BE ABLE TO DELIVER TO
OUR CUSTOMERS THEIR CONTRACTED SERVICES.

     As of September 4, 2001, we are in default on an equipment lease
obligation. We are attempting to renegotiate with  the lessor and have
initiated contact with them.  When they are prepared to enter discussions we
will attempt to negotiate for a lesser amount owed and we believe that given
the current market conditions, we should be successful in such negotiations.
However, there is no assurance that we will be successful in such attempts.
If we are unable to successfully restructure this lease obligation, we may be
required to seek other equipment or methods of delivering our services.  There
is no assurance that we would be able to locate other equipment or methods on
acceptable terms, or at all.   In addition, because we are in default we may be
obligated to pay penalties.  As such, the lessor could repossess the equipment.
Moreover, any such actions could negatively impact our ability to obtain
services for the maintenance of our equipment under applicable warranties, and
ultimately make it difficult for our business to continue.

     WE ARE DELINQUENT IN THE PAYMENT OF CERTAIN TRADE PAYABLES.  IF WE ARE
UNABLE TO NEGOTIATE WORKOUT ARRANGEMENTS OR TO MAKE TIMELY PAYMENTS, WE COULD
EXPERIENCE A SEVERE NEGATIVE IMPACT ON OUR BUSINESS OR OUR RESOURCES.

     As of September 4, 2001, we were late in payment of certain creditor trade
payables.  We have initiated contact with these vendors and have offered three
separate payment plans and definitive agreements have been finalized with some,
but not all, of these vendors.  If we are unable to negotiate payment plans
with the remaining vendors, or if we are unable to execute such negotiated
payment plans with those who have accepted such plans, we could experience
a severe negative impact on our business resources.


                               - 14 -
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<PAGE>

     OUR QUARTERLY RESULTS OF OPERATIONS FLUCTUATE, WHICH COULD RESULT IN A
LOWER PRICE FOR OUR COMMON STOCK.

     Our revenue and operating results could vary significantly from quarter to
quarter.  These fluctuations could cause our stock price to fluctuate or
decline.  Important factors that could cause our quarterly results to
materially fluctuate that are within our control include the following:

     *    Difficulty managing growth;
     *    Increases in necessary operating expenses;
     *    Problems with our technology
     *    The amount and timing of costs associated with the development and
          maintenance of new hardware and software products; and
     *    Costs and risks associated with potential acquisitions.

     Important factors that could cause our quarterly results to materially
fluctuate that are not within our control include the following:

     *    Introduction of new products or pricing programs by our competitors;
     *    Changes in pricing for, and changes in the gross margins of, certain
          products, services, or lines of business as our business model
          continues to develop;
     *    Variations in spending patterns by companies;
     *    Technical difficulties or systems downtime affecting our services and
          products
     *    Business interruptions due to outside causes and forces;
     *    Differences with the business practices of third parties with whom we
          do business;
     *    Economic conditions specific to the Internet or to the hardware and
          software hosting business, as well as general economic conditions;
     *    Inability to frame additional bandwidth to adequately service
          customer growth;
     *    Customer acceptance of our products and business model; and
     *    Inability to acquire or lack of availability of necessary hardware or
          software components, or difficulties in manufacturing

     Our current and future levels of operating expenses and capital
expenditures are based largely on our growth plans and estimates of future
revenue.  These expenditure levels are, to a large extent, fixed in the short
term.  We may not be able to adjust spending in a timely manner to compensate
for any unexpected revenue shortfall, and any significant shortfall in revenue
relative to planned expenditures could negatively impact our business and
results of operations.  In addition, if our customer base expands rapidly or
unpredictably, we may not be able to efficiently utilize our leased third-party
data center space and infrastructure or we may not have sufficient capacity to
satisfy our customers' requirements, which could harm our operating results.

     OUR SHARES COULD BE THE VICTIM OF SHORT SELLING AND, IF THIS OCCURS, THE
MARKET PRICE OF OUR STOCK COULD BE ADVERSELY AFFECTED.

     It is conceivable that our stock could be subject to the practice of short
selling.  Short selling, or "shorting," occurs when stock is sold which is not
owned directly by the seller; rather, the stock is "loaned" for the sale by a
broker-dealer to someone who "shorts" the stock.  In most situations, this is
a short-term strategy by a seller, and based upon volume, may at times drive
stock values down.  If such shorting occurs in our common stock, there could
be a negative effect on the trading price of our stock.

     OUR SHARES ARE SUBJECT TO RULES REGULATING BROKER-DEALER ACTIVITY WITH
RESPECT TO PENNY STOCKS, WHICH COULD HAVE A NEGATIVE EFFECT ON THE MARKET FOR
OUR SHARES AND OUR SHARE PRICE.

     Broker-dealers who effect trades in our common stock are subject to SEC
rules that regulate trading in penny stocks.  Such rules require broker-dealers
to provide additional warnings and risk factors pertaining to an investment in
penny stocks.  Such additional warnings may act to inhibit investment in our
common stock, which could have a depressive effect on both the market for our
shares and the trading price of our shares.

     IN ORDER TO EXECUTE OUR BUSINESS PLAN WE WILL NEED TO RAISE ADDITIONAL
CAPITAL.  IF WE ARE UNABLE TO RAISE ADDITIONAL CAPITAL, WE WILL NOT BE ABLE
TO ACHIEVE OUR BUSINESS PLAN AND YOU COULD LOSE YOUR INVESTMENT.

     We need to raise additional funds through public or private debt or equity
financings to be able to fully execute our business plan.  Any additional
capital raised through the sale of equity may dilute your ownership interest.
We may not be able to raise additional funds on favorable terms, or at all.  If
we are unable to obtain additional funds, we will be unable to execute our
business plan and you could lose your investment.

     Our future capital requirements will depend upon many factors, including
the following:

     *    Costs to develop and maintain our on-line hosting of hardware and
          software;
     *    The rate at which we expand our operations;
     *    The extent to which we develop and upgrade our technology;
     *    The occurrence, timing, size and success of acquisitions; and
     *    The response of competitors to our service offerings.

     WE WILL REQUIRE VENDOR CREDIT IN THE FUTURE, WHICH MAY NOT BE AVAILABLE TO
US.

     In order to execute our short-term and long-term strategic plans, we need
to continue to obtain credit from our vendors. If we are unable to maintain
or obtain vendor credit on favorable terms, or at all, we may not be able to
execute our business plan, develop or enhance our products or services, take
advantage of business opportunities or respond to competitive pressures, any
of which could harm our business.

     We have recently negotiated with many of our vendors to reduce the
amounts owed or to extend more favorable payment terms. While these negotiated
terms have reduced cash out-lays and expenditures, we cannot rely on future
relationships with these vendors, which could result in limiting our purchasing
and credit abilities.

                                    - 15 -
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<PAGE>

     WE HAVE CERTAIN CONVERTIBLE SECURITIES OUTSTANDING SOME OF WHOSE
CONVERSION RATE IS CURRENTLY INDETERMINABLE.  AS SUCH, PURCHASERS OR OUR COMMON
STOCK COULD EXPERIENCE SUBSTANTIAL DILUTION OF THEIR INVESTMENT UPON CONVERSION
OF SUCH SECURITIES.

     Pursuant to a recent transaction, we entered into an agreement to
issue debentures and warrants in return for investment dollars.  Under that
agreement, we will receive certain portions of the aggregate investment based
on certain criteria.  As of September 4, 2001, $650,000 principal amount of
secured convertible debentures and 1,300,000 warrants issued in connection
therewith, were issued and outstanding.  If the transaction is completed, there
will be $1,200,000 principal amount of debentures and 2,400,000 warrants issued
in connection therewith.  The debentures are convertible into such number
of shares of common stock as is determined by dividing the principal amount
thereof by the then current conversion price.  If converted on September 4,
2001, the $650,000 debentures would have been convertible into approximately
24,074,074 shares of common stock.  If all $1,200,000 debentures and 2,400,000
warrants were issued and outstanding on September 4, 2001, they would have
equaled 55.6% of our common stock. Pursuant to the terms of the transaction,
however, the number of convertible debentures could prove to be significantly
greater in the event of a decrease in the trading price of the common stock.
For example, if our stock price decreased by 50% from the price as of
September 4, 2001, the number of debentures issuable would be 92,307,692
shares.  Purchasers of common stock could, therefore, experience substantial
dilution of their investment upon conversion of the debentures.  In addition, a
sale by the selling stockholders of large blocks of the shares being registered
pursuant to this registration statement could have a depressive effect on
our stock price.  The debentures are not registered and may be sold only if
registered under the Securities Act of 1933, as amended, or sold in accordance
with an applicable exemption from registration, such as Rule 144.

     The warrants are exercisable over the next ten years at a price equal
to the lesser of $0.04 per share or a variable exercise price based upon the
trading price of the common stock at the time of exercise, which price may be
adjusted from time to time under certain antidilution provisions.  The shares
of common stock into which the debentures may be converted and issuable upon
exercise of the warrants are being registered pursuant to this registration
statement.

     In addition to the securities described above, as of September 4, 2001,
22,772,059 shares of common stock were reserved for issuance upon exercise of
our outstanding warrants and options other than those issued in connection
with the debentures, and an additional 34,997,237 shares of common stock were
reserved for issuance upon conversion of the debentures and exercise of the
warrants issued in connection with the debentures.  As of September 4, 2001,
there were 37,364,932 shares of common stock outstanding.  Of these outstanding
shares, 16,672,291 were freely tradable without restriction under the
Securities Act unless held by affiliates.

     FUTURE DEMAND FOR APPLICATION SERVICE PROVIDER SERVICES IS HIGHLY
UNCERTAIN.

     The market for application service provider services has only recently
begun to develop and is evolving rapidly. Future demand for these services is
highly uncertain. We believe that many of our potential customers are not fully
aware of the benefits of application service provider services. We must educate
potential customers regarding these benefits and convince them of our ability
to provide complete and reliable services. The market for application service
provider services may never become viable or grow further.  If the market for
our application service provider services does not grow or grows more slowly
than we currently anticipate, our business, financial condition and operating
results will be materially adversely affected.

     WE RELY ON THIRD PARTY OUTSIDE SALES ORGANIZATIONS TO REFER MANY OF OUR
CLIENTS TO US.

     We rely on referrals from third-party organizations for a portion of our
business. Companies with whom we have such a relationship, including Remedy and
Macola, refer their customers to us because we can provide an array of services
that complement the products and services they offer. However, these companies
may stop or substantially reduce referring business to us or they may decide
to cooperate with our competitors and thereby adversely impact or eliminate
the amount of referrals made to us. If these third party referrals cease or
materially decrease, our sales will materially decline.

     IF WE ARE UNABLE TO OBTAIN KEY SOFTWARE APPLICATIONS AND HARDWARE
COMPONENTS FROM CERTAIN VENDORS, WE WILL BE UNABLE TO DELIVER OUR SERVICES.

     We rely on third-party suppliers, including Microsoft, Citrix, and Cisco
to provide us with key software applications and hardware components for our
infrastructure. Certain components or applications are only available from
limited sources. If we are unable to obtain these products or other services,
including connectivity services, in a timely manner at an acceptable cost or
at all, may substantially inhibit our ability to deliver our services.

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<PAGE>

     SOME OF OUR APPLICATION SERVICE PROVIDER SERVICE CONTRACTS GUARANTEE
CERTAIN SERVICE LEVELS.

     Some of our application service provider contracts contain service
guarantees that obligate us to provide our hosted applications at a guaranteed
level of performance. To the extent we fail to meet those service levels we may
be obligated to provide our customers certain services free of charge. If we
continue to fail to meet these service levels, our application service provider
customers have the right to cancel their contracts with us. These credits or
cancellations will cost us money and damage our reputation with our customers
and prospective customers.

     RAPID GROWTH IN OUR BUSINESS DUE TO AN INCREASE IN THE NUMBER OF CUSTOMERS
PURCHASING OUR PRODUCTS AND SERVICES COULD STRAIN OUR OPERATIONAL AND FINANCIAL
RESOURCES AND CAUSE US TO LOSE CUSTOMERS AND INCREASE OUR OPERATING EXPENSES.

     Any increase in the volume of users of our computer systems could strain
the capacity of our software or hardware, which could lead to slower response
times or system failures. Any future growth may require us, among other things,
to:

     *    Expand and upgrade our hardware and software systems;
     *    Expand and improve our operational and financial procedures, systems
          and controls;
     *    Improve our financial and management information systems;
     *    Expand, train and manage a larger workforce; and
     *    Improve the coordination among our product development, sales and
          marketing, financial, accounting and management personnel.

     We cannot assure you that our current level of personnel, systems, and
controls will be adequate to support future growth. Our inability to manage
growth effectively or to maintain the quality of our products and services
could cause us to lose customers and could materially increase our operating
expenses.

     IF WE DO NOT INCREASE AWARENESS OF OUR PRODUCTS AND SERVICES, OUR ABILITY
TO REACH NEW CUSTOMERS WILL BE LIMITED.

     Our future success will depend, in part, on our ability to increase
awareness of our products and services. To do so, we must succeed in our
marketing efforts, provide high-quality products and services, and increase
traffic to our Website. If our marketing efforts are unsuccessful, or if
we cannot increase our brand awareness, we may not be able to attract new
customers and increase our revenues.

     WE DEPEND HEAVILY ON OUR MANAGEMENT TEAM THAT HAS LITTLE EXPERIENCE
WORKING TOGETHER OR MANAGING A PUBLIC COMPANY.

     Our success depends, to a significant extent, upon the efforts and
abilities of John P. Gorst, President, Chairman of the Board and Chief
Executive Officer, as well as on the efforts of other officers and senior
management. Loss of the services of any or all of our executive management
team could materially adversely affect our business, results of operations and
financial condition, and could cause us to fail to successfully implement our
business plan. Also, our executive management team has worked together for less
than two years. The short period of time that they have worked together, or
their inability to work successfully together, may adversely affect our ability
to manage growth. Moreover, our executive management team has a limited amount
of experience managing a public company. Our executive management team may
not be able to manage future growth, if any, or the demands of successfully
operating a public company.

     THERE IS INTENSE COMPETITION FOR QUALIFIED TECHNICAL PROFESSIONALS AND
SALES AND MARKETING PERSONNEL, AND OUR FAILURE TO ATTRACT AND RETAIN THESE
PEOPLE COULD AFFECT OUR ABILITY TO RESPOND TO RAPID TECHNOLOGICAL CHANGE AND
TO INCREASE OUR REVENUES.

     Our future success also depends upon our ability to attract and retain
qualified technical professionals and sales and marketing personnel.
Competition for talented personnel, particularly technical professionals, is
intense. This competition could increase the costs of hiring and retaining
personnel. We may not be able to attract, retain, and adequately motivate our
personnel or to integrate new personnel into our operations successfully.

                                    - 17 -
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     WE MAY NOT BE ABLE TO PROTECT OUR PATENTS, COPYRIGHTS, TRADEMARKS AND
PROPRIETARY AND/OR NON-PROPRIETARY TECHNOLOGY, AND WE MAY INFRINGE UPON THE
PATENTS COPYRIGHTS, TRADEMARKS AND PROPRIETARY RIGHTS OF OTHERS.

     Our services are highly dependent upon proprietary technology, including,
for example, our IQ Delivery System, which allows us to upgrade and manage the
customer's computing environment, both at the data center and customer level.
In addition, we rely on contracts, confidentiality agreements, and copyright,
patent, trademark, and trade-secrecy laws to protect our proprietary rights
in our technology. We have also obtained, or are pursuing, several trademark,
copyright, and patent registrations for our various product names. The
protective steps we have taken may not be adequate to deter misappropriation
of our proprietary information. In addition, some end-user license provisions
protecting against unauthorized use, copying, transfer and disclosure of a
licensed program may be unenforceable under the laws of certain jurisdictions
and foreign countries. In addition, the laws of some foreign countries do not
protect proprietary rights to the same extent as the laws of the United States.
Failure to adequately protect our intellectual property could harm our brand
name, devalue our proprietary content, and affect our ability to compete
effectively. Furthermore, defending our intellectual property rights could
result in the expenditure of significant financial and managerial resources,
which could materially adversely affect our business, results of operations and
financial condition. Also, it is possible that our competitors or others will
adopt product or service brands similar to ours, possibly leading to customer
confusion.

     WE UTILIZE OPEN SOURCE SERVICES AND CODE FOR SOME PRODUCTS. WHILE WE CAN
MODIFY OPEN SOURCE AND CHARGE FOR IT, WE MUST RELEASE CERTAIN CHANGES BACK TO
THE OPEN SOURCE COMMUNITY, WHICH MAY INCLUDE COMPETITORS. THIS COULD NEGATIVELY
AFFECT OUR ABILITY TO COMPETE EFFECTIVELY, AND HAVE A MATERIAL ADVERSE AFFECT
ON OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

     Some of our technology, including our proprietary code, performs functions
similar to technology available from third parties. Therefore, we could be
subject to claims that our technology infringes the proprietary rights of third
parties. Claims against us, even if without merit, could subject us to costly
litigation and could divert the time and attention of our technical and
management teams. A claim of infringement may require us, and our customers, to
obtain one or more licenses from third parties. We cannot assure you that we or
our customers will be able to obtain necessary licenses from third parties at
a reasonable cost or at all. Any failure to obtain a required license could
negatively affect our ability to do business.

     DISRUPTIONS TO THE DATA CENTER, OR TO THE OFFSITE BACKUP STORAGE
FACILITIES OF THIRD PARTIES WITH WHOM WE DO BUSINESS, COULD MATERIALLY
AFFECT OUR BUSINESS.

     The continued and uninterrupted performance of our computer systems, and
of the backup storage facilities of third parties with whom we do business,
is critical to our success. Any system failure that causes interruptions in
our ability to deliver our products and services to our customers, including
failures that affect our customers' abilities to access our hosted hardware,
software, and stored data, could reduce customer satisfaction and, if sustained
or repeated, would reduce the attractiveness of our services or result in
material liabilities or costs.

     Our hardware and software hosting business strategy, including data backup
and storage, depends on the consistent performance of the data center and those
of third parties. We offer offsite back-up storage of data for all customers.
The current data center, and those of third parties, may be vulnerable to
interruption from fire, earthquake, flood, power loss, connectivity failures,
vandalism and other malicious acts, and other events beyond our control,
including natural disasters. If the data center is damaged in any way, a
customer whose data is stored there may lose some or all data, despite routine
backup procedures. Our operations are dependent on our ability to protect our
computer system, and customer systems, applications and data against damages,
including, but not limited to those from computer viruses, fire, earthquake,
flood, power loss, connectivity failures, vandalism and other malicious acts,
and other events beyond our control, including natural disasters. Damage to our
computer system, or to the systems, applications, or data of our customers,
could delay or prevent delivery of our products and result in the loss of
our customers or in material liabilities. In addition, a failure of our
telecommunication providers to provide the data communications capacity in
the time frame required by us for any reason could cause interruptions in the
delivery of our products. Substantially all of our computer and communications
hardware is located at a single facility, and the loss of this hardware or the
data it contains would cause severe business interruptions. In the event that
we experience significant disruptions that affect the data center, we could
lose customers or fail to attract new customers.

                                    - 18 -
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<PAGE>

     WE COULD EXPERIENCE BREACHES OF SECURITY WHEN TRANSMITTING DATA TO OR FROM
OUR CUSTOMERS, INCLUDING THE USE OF THIRD PARTY VENDOR SECURITY TECHNOLOGIES
AND METHODOLOGIES.

     Our business depends upon our ability to securely transmit confidential
information between the data center, third-party backup locations, and the
servers of our customers, including the use of third-party vendor security
technologies and methodologies. Despite our physical design and setup, and the
implementation of a variety of security measures, there exists the risk that
certain unauthorized access, computer viruses, accidental or intentional
disturbances could occur. We may need to devote substantial capital and
personnel resources to protect against the threat of unauthorized penetration
of our delivery system or to remedy any problems that such penetration might
cause. The occurrence of any of these events could cause us to lose customers,
cause harm to our reputation, and expose us to material liability.

     WE DEPEND ON LICENSED SOFTWARE APPLICATIONS.

     We depend on contracts with third-party software manufacturers to allow
their software applications to be hosted or run at the data center and provided
to our customers. We have entered into non-exclusive agreements with third-
party companies, including, but not limited to, Microsoft and Citrix that allow
us to host some of their software applications at the data center or re-license
their software applications to our customers. Under most of these agreements,
the software manufacturer can terminate its relationship with us for any reason
by giving us as little as 30 days notice. In these instances, the software
manufacturer is not liable to us, or to our customers, for any damages
resulting from termination. If our relationships with these software
manufacturers are terminated, or if these or other software manufacturers do
not allow our customers to obtain a license to operate the software application
on the data centers, our ability to do business would be severely inhibited.

     THE HARDWARE AND SOFTWARE WE USE IS COMPLEX AND MAY CONTAIN DEFECTS.

     Our service offerings depend on complex hardware and software that may
contain defects, particularly when initially introduced or when new versions
are released. Although we test internal and third party software applications
prior to deployment, we may not discover software defects that could affect our
new or current services or enhancements until deployed. These defects could
cause service interruptions or the loss of data, which could damage our
reputation, increase our operating costs, impair our ability to generate or
collect revenue, delay market acceptance or divert our management and technical
resources. Any software modifications we perform as part of our integration
services could cause problems in application delivery. Also, because we offer
an open-source software solution to our customers, they are likely to hold
us accountable for any problems associated with their software, even if the
manufacturer caused the problem or defect. Typically, software manufacturers
disclaim liability for any damages suffered as a result of software defects and
provide only limited warranties. As a result, we may have no recourse against
the providers of defective software applications.

                                    - 19 -
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<PAGE>

     GROSS MARGINS ON CERTAIN PRODUCTS OR LINES OR BUSINESS MAY DECLINE OVER
TIME.

     Gross margins may be adversely affected by increases in material or labor
costs, heightened price competition, changes in channels of distribution, or in
the mix of products sold. We have recently introduced several new products, and
we plan to release additional new products in the future. If warranty costs
associated with new products are greater than we have experienced historically,
gross margins may be adversely affected. Geographic mix, as well as the mix of
configurations within each product group may also impact our gross margins.
We continue to expand third party and indirect distribution channels, which
generally result in reduced gross margins. In addition, increasing third party
and indirect distribution channels generally results in greater difficulty in
forecasting the mix of our products, and to a certain degree, the timing of our
orders.

     WE ARE INVOLVED IN, AND MAY BECOME INVOLVED IN, LEGAL PROCEEDINGS WITH
FORMER EMPLOYEES, CONSULTANTS, AND OTHER THIRD PARTIES THAT, IF DETERMINED
AGAINST US, COULD REQUIRE US TO PAY DAMAGES. THE PAYMENT OF DAMAGES COULD
MATERIALLY ADVERSELY AFFECT OUR FINANCIAL CONDITION AND THEREFORE, OUR ABILITY
TO ACHIEVE OUR BUSINESS PLAN.

     We are a party to a lawsuit, dated May 31, 2001, in which our former vice
president of sales and marketing seeks payment for various claims in the amount
of approximately $115,000.  See "Legal Proceedings."

     We are a party to a lawsuit, dated August 6, 2001, in which one of our
vendors seeks payment for goods and services provided in the amount of $20,760.
See "Legal Proceedings."

     We have been served with a summons and complaint by a temporary staffing
company which appears to threaten litigation against us.  The allegations
relate to their demand for the payment of their trade payables.  See "Legal
Proceedings."

     We have been served with a summons and complaint by our former landlords
which appears to threaten litigation against us.  The allegations relate to the
default by us of our lease obligations.  See "Legal Proceedings."

     We have been served with a summons and complaint by a temporary staffing
company which appears to threaten litigation against us.  The allegations
relate to their demand for the payment of their trade payables.  See "Legal
Proceedings."

     We were also in negotiations with a vendor regarding its demands for the
payment of trade payables.  The parties have now reached a settlement of the
matter.  See "Legal Proceedings".

     We were also in negotiations with a former acquisition target regarding
his demands for the repayment of a $14,000 loan.  The parties have now reached
a settlement of the matter.  See "Legal Proceedings".

     Certain of our vendors have also indicated that they might file suit
against us if they do not receive satisfactory payment of their trade payables.
See "Legal Proceedings."

     In the past, we have negotiated with third parties and entered into
contracts, in the normal course of our business, with advisors, consultants
and others based on business plans and strategies that we may no longer be
pursuing. We believe that such negotiations were terminated and that those
contracts are no longer effective. However, it is possible that the other
parties to those negotiations and contracts could claim that we did not fulfill
our obligations. If a court found that we are obligated under any of those
contracts, arrangements or otherwise, we could be liable for an undeterminable
amount of compensation or stock or both.

     If any such litigation occurs, it is likely to be expensive for us.  If
such suits are determined against us, and a court awards a material amount of
cash damages, our business, results of operations and financial condition will
be materially adversely affected.  In addition, any such litigation could
divert our management's attention and resources.

                                    - 20 -
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     WE PLAN TO GROW, IN PART, THROUGH MERGERS WITH AND ACQUISITIONS OF OTHER
COMPANIES, HOWEVER, WE MAY NOT BE ABLE TO IDENTIFY, ACQUIRE, AND SUCCESSFULLY
INTEGRATE FUTURE ACQUISITIONS INTO OUR OWN OPERATIONS, WHICH COULD MATERIALLY
ADVERSELY AFFECT OUR GROWTH AND OUR OPERATING RESULTS.

     Our business strategy contemplates that we will seek a number of
significant acquisitions within the next few years.  While we have initiated
discussions with at least one acquisition target, there is no assurance that we
will complete any such acquisitions or, if we do complete acquisitions, whether
we will successfully integrate these acquisitions into our business.  In
addition, there is no assurance that if we acquire any businesses, we will
achieve anticipated revenue and earnings.  Our failure to acquire suitable
companies or to successfully integrate any acquired companies into our
operations could materially affect our ability to maintain our business.

     MANY COMPANIES USE NAMES SIMILAR IN SOUND OR SPELLING TO "INSYNQ."
INTELLECTUAL PROPERTY INFRINGEMENT CLAIM AGAINST US FOR THE USE OF THE NAME
"INSYNQ", OR ONE SIMILAR IN SOUND OR SPELLING, EVEN IF WITHOUT MERIT, COULD BE
EXPENSE TO DEFEND AN DIVERT MANAGEMENT'S ATTENTION FROM OUR BUSINESS.  IF A
CLAIM TO STOP US FROM USING OUR NAME IS SUCCESSFUL, WE WILL HAVE TO EITHER BUY
THE RIGHT TO USE OUR NAME, WHICH MAY BE EXPENSIVE, OR CHANGE OUR NAME, WHICH
MAY ALSO BE EXPENSIVE.

     We are aware that other companies have claimed use of names similar to
"Insynq" for products or services similar to our own. We are in the process
of investigating the rights, if any, others may have to the name. In addition,
we are attempting to register "Insynq" as a trademark in the United States,
Europe, and Canada. However, we may not be able to obtain proprietary rights
to the use of this name. We will incur expenses if called to defend our use
of the "Insynq" name. Any such litigation, even if without merit, may be time
consuming and expensive to defend. It also could divert our management's
attention and resources and require us to enter into costly royalty or
licensing agreements. In addition, if any company in our industry is able to
establish a use of the "Insynq" name that is prior to our use, we could be
liable for damages and could be forced to stop using the name unless we are
able to buy the right to use the name. If we were unable to buy the right to
use our name after we lose an infringement claim, we would have to change our
name, which may require us to spend money to build new brand recognition and
incur other costs. Third parties may assert other infringement claims against
us. Any of these events could divert management attention and complicate our
ability to do business.

                                    - 21 -
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     OTHERS MAY SEIZE THE MARKET OPPORTUNITY WE HAVE IDENTIFIED BECAUSE WE MAY
NOT EFFICIENTLY EXECUTE OUR STRATEGY.

     If we fail to execute our strategy in a timely or effective manner,
our competitors may be able to seize the marketing opportunities we have
identified. Our business strategy is complex and requires that we successfully
and simultaneously complete many tasks. In order to be successful, we will need
to:

     *    Negotiate effective strategic alliances and develop economically
          attractive service offerings;
     *    Attract and retain customers;
     *    Attract and retain highly skilled employees;
     *    Integrate acquired companies into our operations; and
     *    Evolve our business to gain advantages in an increasingly competitive
          environment.

     In addition, although some of our management team has worked together
for approximately one year, there can be no assurance that we will be able
to successfully execute all elements of our strategy.

     OUR INDUSTRY IS CHARACTERIZED BY RAPIDLY CHANGING TECHNOLOGY WITH
CONTINUOUS IMPROVEMENTS IN BOTH COMPUTER HARDWARE AND SOFTWARE, AND RAPID
OBSOLESCENCE OF CURRENT SYSTEMS.  IF WE DO NOT RESPOND EFFECTIVELY AND ON A
TIMELY BASIS TO RAPID TECHNOLOGICAL CHANGE IN OUR INDUSTRY, WE WILL NOT BE
ABLE TO EFFECTIVELY SELL OUR SERVICES AND OUR SALES WILL MATERIALLY ADVERSELY
DECLINE.

     We must continually buy new computer hardware and license new computer
software systems to effectively compete in our industry.  Our software delivery
methodologies must be able to support changes in the underlying software
applications that are delivered to our customers.  The rapid development of new
technologies increases the risk that current or new competitors could develop
products or services that would reduce the competitiveness of our products or
services.  We rely on software providers to produce software applications that
keep pace with our customers' demands.

     There is no assurance that we will successfully develop or adopt new
technologies, introduce new services or enhance our existing services on
a timely basis, or that new technologies, new services or enhancements we
use or develop will achieve market acceptance. If we fail to address these
developments, we will lose sales to our competitors.

     ALTHOUGH OUR CURRENT OPERATIONS INCLUDE OPERATING AS A TECHNOLOGY-FOCUSED
COMPANY, OUR PREVIOUS BUSINESS ACTIVITIES INCLUDED GAMING, NATURAL RESOURCE
MINING, AND EXPLORATION.  AS A RESULT, WE MAY BE EXPOSED TO UNKNOWN
ENVIRONMENTAL AND OTHER LIABILITIES THAT COULD REQUIRE US TO EXPAND OUR
FINANCIAL RESOURCES AND MATERIALLY ADVERSELY AFFECT OUR FINANCIAL CONDITION.

     The assets of a predecessor company were acquired by a publicly-traded
company that was engaged, prior to August 1999, in gaming, and prior to 1993,
in natural resource exploration and development, including mining, and oil and
gas. We no longer own any mining, oil and gas, or gaming-related assets. The
mining, mineral processing, and oil and gas industries are subject to extensive
governmental regulations for the protection of the environment, including
regulations relating to air and water quality, site reclamation, solid and
hazardous waste handling and disposal and the promotion of occupational safety.
We could be held responsible for any liabilities relating to our previous
involvement in gaming, mining or oil and gas exploration and development,
which liabilities would result in our spending our cash resources.

     RELIABILITY OF MARKET DATA.

     Market data used within this report was obtained from internal sources
and from industry publications. Such industry publications typically contain
a statement to the effect that the information contained therein was obtained
from sources considered to be reliable, but that the completeness and accuracy
of such information is not guaranteed. While we believe that the market data
presented herein is reliable, we have not independently verified such data.
Similarly, market data supplied by internal sources, which we believe to be
reliable, has not been verified by independent sources.

                                    - 22 -
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     THIRD PARTY REPORTS AND PRESS RELEASES.

     We do not make financial forecasts or projections, nor do we endorse the
financial forecasts or projections of third parties or comment on the accuracy
of third party reports. We do not participate in the preparation of the reports
or the estimates given by analysts. Analysts who issue financial reports are
not privy to non-public financial information. Any purchase of our securities
based on financial estimates provided by analysts or third parties is done
entirely at the risk of the purchaser.

     We periodically issue press releases to update stockholders on new
developments relating to Insynq and our business.  These releases may contain
certain statements of a forward-looking nature relating to future events or
our future financial performance.  Readers are cautioned that such statements
are only predictions, and actual events or results may materially differ with
those statements.  In evaluating such statements, readers should specifically
review the various risk factors described herein, among others we identify in
documents we file with the SEC, which could cause actual results to differ
materially from those indicated by such forward-looking statements.

Risks Related to our Industry

     THE FAILURE OF THE INTERNET TO GROW OR REMAIN A VIABLE COMMERCIAL MEDIUM
COULD HARM OUR GROWTH.

     Our success depends in large part on the maintenance of the Internet
infrastructure as a reliable network frame that provides adequate speed, data
capacity, and security. Our success also depends on the timely development of
products, such as high-speed modems, that enable reliable Internet access and
services. The Internet may continue to experience significant growth in the
number of users, frequency of use and amount of data transmitted. The Internet
infrastructure may not be able to support the demands placed on it and the
performance or reliability of the Internet may be adversely affected by this
continued growth. In addition, the Internet could lose its commercial viability
if the number of people who use the Internet does not continue to grow.  A
number of factors, including unreliable service, unavailability of cost-
effective, high-speed access to the Internet or concerns about security, could
impede this growth. The infrastructure or complementary products and services
necessary to maintain the Internet, as a viable commercial medium may not be
developed, and, as a result, the Internet may not continue to be a viable
commercial medium for us.

     IF THE GOVERNMENT ADAPTS REGULATIONS THAT CHARGE INTERNET ACCESS FEES OR
IMPOSE TAXES ON SUBSCRIPTIONS TO OUR WEB-BASED PRODUCTS, OUR OPERATING EXPENSE
WILL INCREASE.

     Currently there are few laws or regulations that specifically regulate
communications or commerce on the Internet. However, laws and regulations
may be adopted that address issues such as pricing and the characteristics
of products and services. In addition, several connectivity companies have
petitioned the Federal Communications Commission to regulate Internet and on-
line service providers in a manner similar to long-distance telephone carriers
and to impose access fees on them. This regulation, if imposed, could increase
the cost of transmitting data over the Internet. Moreover, it may take years
to determine the extent to which existing laws relating to issues such as
intellectual property ownership and infringement, libel, obscenity and personal
privacy are applicable to the Internet. Finally, state tax laws and regulations
relating to the provision of products and services over the Internet are still
developing. A few states have tried to impose taxes on products and services
provided over the Internet. If additional states try to do so, our operating
costs may increase and we may not be able to increase the price that we charge
for our products to cover these costs. Any new laws or regulations or new
interpretations of existing laws and regulations relating to the Internet could
decrease the growth in the use of the Internet, decrease the demand for traffic
on our Website, increase our operating expenses, or otherwise adversely affect
our business.

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<PAGE>

     OUR INDUSTRY IS RAPIDLY CHANGING.

     Our industry is characterized by rapidly changing technology with
continuous improvements in both computer hardware and software. If we do not
respond effectively and on a timely basis to rapid technological change in our
industry, we will not be able to effectively sell our services and our sales
will materially decline. We must continually purchase new computer hardware and
license new computer software systems to effectively compete in our industry.
In addition, our software delivery methodologies must be able
to support changes in the software applications that are delivered to our
customers. The rapid development of new technologies increases the risk that
current or new competitors could develop products or services that would reduce
the competitiveness of our products or services. And moreover, we rely on
software providers to produce software that keeps pace with our customers'
demands.

     We may not successfully develop or adopt new technologies, introduce
new services or enhance our existing services on a timely basis; in addition,
new technologies, services, or enhancements we use may never achieve market
acceptance. If we fail to address these developments, we will lose sales to
our competitors.

Risks Related to our Common Stock

     ANTI-TAKEOVER ACTIONS AND/OR PROVISIONS COULD PREVENT OR DELAY A CHANGE IN
CONTROL.

     Provisions of our certificate of incorporation and bylaws and Delaware law
may make it more difficult for a third party to acquire us, even if so doing
would be beneficial to our stockholders. These include the following:

     *    Our board of directors is authorized to issue of up to 10,000,000
          shares of preferred stock and to fix the rights, preferences,
          privileges and restrictions of those shares without any further vote
          or action by the stockholders, which may be used by the board to
          create voting impediments or otherwise delay or prevent a change in
          control or to modify the rights of holders of our common stock;

     *    Our board of directors is authorized to issue of up to 10,000,000
          shares of class A common stock pursuant to which the holders of such
          stock are entitled to three (3) votes for each share held, on all
          matters submitted to stockholders, which voting power may be used by
          the holders of such stock to create voting impediments or otherwise
          delay or prevent a change in control or to modify the rights of
          holders of our common stock;

     *    A prohibition on cumulative voting in the election of directors,
          which would otherwise allow less than a majority of stockholders to
          elect directors;

     *    Our articles of incorporation provide that Section 203 of the
          Delaware General Corporation Law, an anti-takeover law, will not
          apply to us. In general, this statute prohibits a publicly held
          Delaware corporation from engaging in a business combination with an
          interested stockholder for a period of three years after the date of
          the transaction by which that person became an interested
          stockholder, unless the business combination is approved in a
          prescribed manner. For purposes of Section 203, a business
          combination includes a merger, asset sale of other transaction
          resulting in a financial benefit to the interested stockholder, and
          an interested stockholder is a person who, together with affiliates
          and associated, owns, or within three years prior, did own, 15% or
          more of our voting stock; and

     *    Limitations on who may call annual and special meetings of
          stockholders.

     CONTROL BY OFFICERS AND DIRECTORS COULD HAVE AN ADVERSE EFFECT ON OUR
STOCKHOLDERS.

     As of September 4, 2001, our directors, executive officers, and their
affiliates beneficially owned approximately 41% of our outstanding common
stock. John P. Gorst, our chairman of the board, chief executive officer and
president, beneficially owns approximately 25.2 % of our outstanding common
stock and M. Carroll Benton, our chief administrative officer, secretary and
treasurer beneficially owns approximately 16.0% of our outstanding common
stock. As a result, these stockholders, acting together and with others, have
the ability to potentially control substantially all matters submitted to our
stockholders for approval, including the election and removal of directors and
any merger, consolidation, takeover or other business combination involving
us, and to control our management and affairs. This may discourage a potential
acquirer from making a tender offer or otherwise attempting to obtain control
of us, which could materially adversely affect the market price of our common
stock.

                                    - 24 -
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<PAGE>

     THE VOLATILITY OF OUR STOCK PRICE COULD ADVERSELY AFFECT OUR STOCKHOLDERS.

     There currently is a public market for our common stock, but there is no
assurance that there will always be such a market. The trading price of our
common stock is highly volatile and could be subject to wide fluctuations in
response to factors such as:

     *    Actual or anticipated variations in quarterly operating results;
     *    Announcements of technological innovations;
     *    New sales methodologies, contracts, products or services by us or our
          competitors;
     *    Changes in financial estimates by securities analysts;
     *    Announcements of significant acquisitions, strategic partnerships,
          joint ventures or capital commitments;
     *    Additions or departures of key personnel;
     *    Sales of common stock; or
     *    Other general economic or stock market conditions, many of which are
          beyond our control.

      In addition, the stock market in general, and the market for Internet-
related and technology companies in particular, have experienced extreme price
and volume fluctuations that have often been unrelated or disproportionate
to the operating performance of such companies. The trading prices of many
technology companies' stock were at or near unprecedented levels in the past
year; however, such levels have recently given way to a depressed stock price
for technology companies, and there can be no assurance that these trading
prices will increase again. Such fluctuation may materially adversely affect
the market price of our common stock, regardless of our operating performance.
Historically, following periods of volatility in the market price of a
company's securities, securities class action litigation has often been
instituted against that company. The institution of similar litigation against
us could result in substantial costs and a diversion of our management's
attention and resources.


ITEM 2.        DESCRIPTION OF PROPERTY

     Under our current internal cost restructuring, we have leased, for a term
of one year, new facilities which consist of approximately 5,000 square feet
and is located in Tacoma Washington.  These new facilities consolidate all
of our departments, such as, sales, customer, engineering and administrative
services. We moved from the leased data center facilities at the Tacoma
Technology Center and entered into a co-location agreement at commercial
facilities located near our new officespace.  In addition, we have terminated
leased facilities in Newport Beach, California and three leased facilities in
Tacoma, Washington.  We believe this consolidation arrangement will satisfy our
future operations.


ITEM 3.        LEGAL PROCEEDINGS

     We are a party to a lawsuit filed in the Superior Court of New Jersey
Hudson County, dated August 6, 2001, by PR Newswire Association, Inc., one of
our vendors.  The lawsuit alleges that we breached a promise to pay for goods
and services rendered.  PR Newswire alleges that under such promise it is owed
$20,760.  We intend to vigorously defend against the lawsuit.

     We are a party to a lawsuit filed in the Superior Court for the State of
Washington for Pierce County, dated May 31, 2001, by William G. Hargin, former
vice president of sales and marketing.  The lawsuit alleges that we breached a
written employment contract and breached a written termination agreement.  Mr.
Hargin alleges that under such contract and agreement, he is owed $114,858.39
plus 12% interest and 150,000 fully vested shares of our common stock
exercisable at $0.34 per share.  We are currently negotiating a settlement with
Mr. Hargin and are very close to a full settlement.

     We have been served with a summons and complaint by Business Careers, a
temporary staffing company, which threatens litigation against us relating to
nonpayment of trade payables  We intend to initiate negotiations regarding an
out of court settlement.

     We have been served with a summons and complaint by Howe/Horizon Holdings
I, LLC and Horizon Holdings, our former landlords, which threatens litigation
against us relating to the default by us of our lease obligation.  We intend to
initiate negotiations regarding an out of court settlement.

     We have been served with a summons and complaint by Accountants on Call, a
temporary staffing company, which threatens litigation against us relating to
nonpayment of trade payables. We intend to initiate negotiations regarding an
out of court settlement.

     Certain of our vendors, including Sprint PCS, RR Donnelley and Sons
Company, Accountants on Call, HSC Real Estate, Inc., Merrill Corporation and
Veca Electric have also indicated in writing that they might file suit against
us if they do not receive satisfactory payment of their trade payables.  We
intend to initiate discussions regarding the negotiation of payment schedules.

                                    - 25 -
===============================================================================
<PAGE>

     On August 29, 2001, subsequent to threatened litigation by Chuckals Inc.
for office products purchased last year, we entered into a settlement agreement
with Chuckals which provides for a $3,000 payment to Chuckals.

     On September 3, 2001, subsequent to threatened litigation by Mr. Martin E.
Darrah, the owner of a former acquisition target, relating to allegations of an
improper termination of acquisition proceedings and the repayment of a $14,000
loan,  we entered into a settlement agreement with Mr. Darrah.  The settlement
agreement provides for the issuance of  (a) 200,000 options to purchase shares
of our common stock at an exercise price of $0.07 per share to Mr. Darrah; and,
(b) 50,000 options to purchase shares of our common stock at an exercise price
of $0.07 per share to Mr. Darrah's attorneys.

                                    - 26 -
===============================================================================
<PAGE>

ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     None.


                                    PART II


ITEM 5.        MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market for Common Stock

     Our common stock currently trades on the OTC Bulletin Board under the
symbol "ISNQ."  Until August 3, 2000, our common stock was traded on the OTC
Bulletin Board under the symbol "XCLL." The following table sets forth, for the
periods indicated, the high and low bid and ask prices for the common stock as
reported on the OTC Bulletin Board. The table gives effect to our two-for-one
stock split that occurred on August 3, 2000. The quotations reflect inter-
dealer prices, without retail mark-up, markdown or commission and may not
represent actual transactions:
<TABLE>
                                             BID                   ASK
                                      -----------------     -----------------
 FISCAL YEAR          QUARTER          HIGH       LOW        HIGH       LOW
-------------     ---------------     ------     ------     ------     ------
<S>               <C>                 <C>        <C>        <C>        <C>
Ended 5/31/00     August 31, 1999     $ 0.01       +        $ 0.5      $ 0.5
                  November 30, 1999     0.04       0.01       0.12       0.5
                  February 29, 2000     N/A        N/A        N/A        N/A
                  May 31, 2000         10.00       2.00      12.75       2.06
Ended 5/31/01     August 31, 2000       6.25       1.75       6.38       0.06
                  November 30, 2000     2.50       0.69       2.75       0.72
                  February 28, 2001     0.94       0.31       1.00       0.31
                  May 31, 2001          0.72        .01       0.81       0.08
<FN>
+    Less than $0.01.
</TABLE>

Holders of Common Stock

     As of September 4, 2001, there were approximately 979 holders of record of
our common stock.

Dividends

     We currently do not anticipate paying any cash dividends on our common
stock in the foreseeable future and we intend to retain our earnings, if any,
to finance the expansion of our business and for general corporate purposes.
Any payment of future dividends will be at the discretion of our board of
directors and will depend upon, among other things, our earnings, financial
condition, capital requirements, level of indebtedness, contractual
restrictions, and other factors that our board of directors deems relevant.

Recent Sales of Unregistered Securities

     The following sets forth information regarding all sales of our
unregistered securities during the past three years. All of these shares were
exempt from registration under the Securities Act by reason of Section 4(2) of
the Securities Act, or Regulation D promulgated thereunder, as transactions
by an issuer not involving a public offering, or were exempt by reason of the
application of Regulation S. The recipients of securities in each of these
transactions represented their intentions to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution of the securities, and appropriate legends were affixed to the
share certificates and warrants issued in such transactions. All recipients
had adequate access, through their relationships with us or otherwise,
to information about us. Unless otherwise indicated, the issuances of
the securities described below were affected without the involvement of
underwriters. Where applicable, each of the disclosures has been adjusted to
account for the 1.41056 to 1 stock split of Insynq-WA, the 1 for 2 stock split
of Xcel effective on January 24, 2000, and the 2 for 1 stock split of Insynq-
Delaware effective on August 3, 2000.

                                    - 27 -
===============================================================================
<PAGE>

1.   We assumed a business services contract dated November 18, 1999, with
     Consulting & Strategy International, LLC, or CSI, under which we granted
     to CSI options to purchase a total of 600,000 shares at a price of $1.00
     per share, and warrants to purchase up to a total of 2,000,000 shares,
     exercisable at any time after May 1, 2001 and before February 20, 2003, in
     increments of 500,000 shares, at exercise prices of $1.25, $1.50, $2.00
     and $2.25. These warrants have a "cashless" exercise provision allowing
     CSI to exercise the warrants for a reduced number of shares pursuant to a
     formula set forth in the warrants. On January 31, 2001, we entered into
     an amendment under which $80,000 of accrued service fees were abated in
     exchange for the re-pricing of the warrants to purchase 2,000,000 shares
     of common stock at an exercise price of $0.50 per share each.

2.   We assumed an equipment financing arrangement dated June 1, 1999, with
     Hewlett-Packard under which we granted to Hewlett-Packard an option to
     purchase a total of 282,112 shares of common stock at any time prior to
     June 1, 2002, at a price of $0.35 per share.

3.   We assumed a financial public relations consulting agreement dated
     September 20, 1999, with One Click Investments, L.L.C., or One Click,
     under which we issued One Click 700,000 restricted shares of common stock
     and granted One Click warrants to purchase a total of 1,500,000 shares of
     common stock, exercisable at any time after February 28, 2001, and prior
     to December 31, 2003, in one-third increments of 500,000 shares, at
     exercise prices of $2.00, $4.00 and $7.50 per share. On June 21, 2001,
     in exchange for the waiver of certain registration rights by One Click
     Investments, LLC, John P. Gorst gifted to One Click 1,000,000 shares of
     common stock with voting rights retained by Gorst and agreed that One
     Click's securities dated August 2000 and January 2001 will be included
     in the next SB-2 Registration, other than contemplated registration on or
     before August 1, 2001, that we shall file, and the February 2000 warrants
     shall be re-priced to bear an exercise price of $0.25 per share of common
     stock with an exercise date extending to December 31, 2004 with a cashless
     provision.

4.   We assumed a Consulting Agreement dated October 28, 1999, with
     Robert J. Torres and Lowell Cooper. In consideration of consulting
     services rendered we granted options to each of Mssrs. Torres and Cooper
     entitling them to purchase a total of 218,637 shares and 134,003 shares,
     respectively, at any time prior to November 2, 2003, at an exercise price
     of $2.13 per share.

5.   We assumed the obligations under a bridge financing with CSI, dated
     December 14, 1999, pursuant to which 1,300,000 common shares were issued
     to nine investors at a price of $0.50 per share.

6.   In January of 2000, Insynq-WA completed a private offering of a total of
     1,311,821 shares of common stock at an offering price of approximately
     $0.71 per share. Each purchaser in the private offering was issued one
     Series A Warrant and one Series B Warrant for each share of common stock
     purchased by such purchaser. The Series A Warrants and Series B Warrants
     entitle the purchasers to purchase a share of common stock at any time on
     or before December 31, 2001, at a price of $1.77 and $2.84, respectively.

7.   In January 2000, Timothy Horan, as trustee on behalf of certain parties
     named below, advanced to Insynq-WA the sum of $150,000 to provide
     Insynq-WA with capital to secure the leased facility at 1101 Broadway
     Plaza, Tacoma, Washington. In consideration of this financing, and
     pursuant to an agreement, Mr. Horan, as trustee, was issued a total of
     300,000 shares of restricted common stock, as follows: 150,000 shares to
     Timothy Horan; 75,000 shares to Travin Partners, L.L.L.P. and 75,000
     shares to International Fluid Dynamics, Inc.

8.   On February 20, 2000, we entered into a consulting agreement with
     Vijay Alimchandani (VJ), under the terms of which we engaged VJ to provide
     us with general consulting services for which we granted options to VJ as
     follows: (a) 500,000 shares, exercisable at any time prior to
     February 21, 2005, at a price of $0.25 per share; and (b) 400,000 shares,
     exercisable one year from the commencement date of the contract, for a
     period of five years, at an exercise price of $0.50 per share. We also
     agreed to grant to VJ (a) an additional option, entitling him to purchase
     a total of 180,000 shares for a five-year period beginning at the end of
     24 months from the date of the agreement, if such agreement is extended by
     us, at price of $0.75 per share; and (b) bonus options of between 50,000
     to 100,000 shares to be granted at the discretion of the board of
     directors at an exercise price of not more than $1.50 per share. On
     July 10, 2001, we entered into an agreement to provide professional
     services with Central Software Services Inc. (Central Software). Under the
     terms of the agreement, a previous agreement with VJ, dated
     February 20, 2000, was cancelled in its entirety. For a term of six
     months, Central Software will provide professional services in the form of
     identifying and negotiating acquisition opportunities and other merger
     consulting as appropriate.  Under the terms of the agreement, Central
     Software will receive 2,000,000 shares of restricted common stock at
     $0.07 per share and a monthly payment of $10,000. In addition, we will
     issue an additional 500,000 shares of restricted shares of common stock
     upon the successful completion of each acquisition.

                                    - 28 -
===============================================================================
<PAGE>

9.   On or about April 6, 2000, we sold a total of 61,944 shares of common
     stock to two investors, The Perry Family Trust and John Anderson, under
     the terms of which the Perry Trust and Mr. Anderson were granted a total
     of 61,944 warrants to purchase shares of common stock at an exercise price
     of $3.25 per share.

10.  On or about April 26, 2000, we sold a total of 285,714 shares of common
     stock to Plazacorp Investors Limited, an Ontario corporation, at a price
     of $1.75 per share. In connection with this sale, Plazacorp was granted
     warrants to purchase an additional 571,428 shares of common stock,
     exercisable at any time for a five (5) year period, at a price of
     $2.75 per share with respect to 285,714 shares, and $3.75 per share with
     respect to the remaining 285,714 shares. In connection with this
     transaction, Plazacorp was granted registration rights under a
     Registration and Repurchase Agreement (the "Agreement") requiring us to
     file a registration statement by October 31, 2000 and to cause the
     registration statement to be effective on or before January 31, 2001. In
     the event we did not file a registration statement by October 31, 2000, or
     the registration statement was not declared effective by
     December 13, 2000, Plazacorp had the right, but not the obligation, to
     require us to repurchase the shares (but not shares issuable on exercise
     of the warrants), at a price of $2.50 per share. On November 1, 2000, we
     entered into an Agreement with Plazacorp under which Plazacorp agreed to
     relinquish its right to require us to repurchase the 285,714 shares at
     $2.50 in exchange for the conversion of those shares into the right to
     receive 1,428,730 shares with an agreed value of $0.50 per share.

11.  On or about May 17, 2000, we sold a total of 125,000 shares of common
     stock at a price of $2.00 per share to the following investors:
     Raymond Betz - 25,000 shares; Timothy Horan - 50,000 shares; and
     International Fluid Dynamics, Inc. (IFD) - 50,000 shares. In connection
     with this transaction, the purchasers were granted warrants to purchase an
     equivalent number of additional shares (or a total of 125,000 shares), at
     any time on or before May 17, 2005, at an exercise price of $3.00 per
     share. In connection with this transaction, the purchasers were granted
     registration rights under a Registration and Repurchase Agreement (the
     "Agreement") requiring us to file a registration statement by
     October 31, 2000, and to cause the registration statement to be effective
     on or before January 31, 2001. In the event we did not file a registration
     statement by October 31, 2000, or the registration statement was not
     declared effective by January 31, 2001, the purchasers had the right, but
     not the obligation, to require us to repurchase the shares (but not shares
     issuable on exercise of warrants), at a price of $2.86 per share. On
     November 1, 2000, we entered into an Agreement with each of Betz, Horan
     and IFD under which each agreed to relinquish the right to require us to
     repurchase their respective number of shares at $2.86 in exchange for the
     conversion of those shares into the right to receive an aggregate of
     715,000 shares with an agreed value of at $0.50 per share.

12.  On May 26, 2000, we entered into a consulting agreement with MQ Holdings,
     Inc. (MQ), under the terms of which we issued a total of 40,000 shares of
     restricted common stock to two individuals - Mark DeStefano and T J Jesky
     - for services to be rendered in assisting us in our corporate and
     securities filings, and other consulting services. Under the terms of the
     consulting agreement, we filed an S-8 registration statement for the
     registration of the shares issued on October 4, 2000.  In December 2000,
     MQ Holding, rescinded 20,000 shares of common stock with no future claims.

13.  On or about June 15, 2000, we entered into a non-exclusive financial
     advisory agreement with Sunstate Equity Trading, Inc., a Florida
     corporation, which is a member of the NASD, under the terms of which we
     have engaged Sunstate, on a non-exclusive basis, to provide financial
     advisory services and advice. In consideration of the services undertaken
     by Sunstate, we issued to Sunstate a total of 125,000 shares of restricted
     common stock. This agreement was amended on September 22, 2000, to include
     the provision of additional services by Sunstate, including, but not
     limited to, sponsoring us in conferences with various investments groups.
     In consideration of these additional services, we issued to Sunstate an
     additional 250,000 shares of restricted common stock.

                                    - 29 -
===============================================================================
<PAGE>

14.  On June 16, 2000, we entered into a private financing transaction with two
     investors, Travin Partners, L.L.L.P. (TPL) and TCA Investments, Inc.
     (TCA), under the terms of which TPL and TCA each loaned us the sum of
     $325,000 (the loans), and were sold convertible debentures and granted
     warrants, described below. The loans are payable pursuant to the terms of
     identical convertible debentures, providing for full payment on or before
     June 16, 2002 (the due date), with interest at the current Bank of America
     prime rate, plus 1/2%. All accrued interest under each Debenture is
     payable only in shares of our common stock at a price of $0.71 per share.
     In addition to the Debentures, TPL and TCA were granted warrants entitling
     each of them to purchase a total of 457,746 shares of our common stock at
     a price of $1.00 per share, at any time after November 15, 2000 and before
     June 15, 2005.  On November 1, 2000, we entered into an Agreement with
     each of TPL and TCA under which each agreed to relinquish its right to
     convert the debentures into shares of common stock at $0.71 per share in
     exchange for the conversion of those debentures into the right to receive
     an aggregate of 1,300,000 shares with an agreed value of $0.50 per share.

15.  On July 17, 2000, we entered into a private financing transaction with two
     investors, International Fluid Dynamics, Inc. (IFD) and Garnier Holdings,
     Inc. (Garnier), under the terms of which IFD and Garnier each loaned us
     the sum of $127,500 (the loans), and were granted warrants described
     below. The loans are payable pursuant to the terms of a promissory note
     (the note), providing for full payment on or before August 1, 2000 (the
     due date), with interest compounded annually at the Chase Manhattan Bank,
     N.A. rate quoted as its prime. The warrants entitle each of IFD and
     Garnier to purchase a total of 325,000 shares of our common stock at a
     price of $2.00 per share at any time after December 28, 2000 and before
     July 17, 2005. If the notes were not paid by 5:00 p.m. CST on
     August 17, 2000, the exercise price would have decreased by one-half, or
     $1.00, and on and after each additional ten (10) day period that the notes
     remain unpaid, the exercise price would have decreased by an additional
     ten percent (10%).  On November 1, 2000, we entered into an Agreement with
     each of Garnier and IFD under which each of them agreed to relinquish its
     right to payment under the promissory notes in exchange for the conversion
     of those notes into the right to receive an aggregate of 510,000 shares
     with an agreed value of $0.50 per share.  Under that same agreement, each
     of Garnier and IFD agreed to lock in the exercise price of the warrants
     under the Warrant Agreement at $0.50 per share.

16.  On August 2, 2000, we entered into a private financing transaction with
     five foreign investors under the terms of which the investors purchased an
     aggregate of 200,000 shares of our common shares at a price of $0.60 per
     share.

17.  On August 4, 2000, we sold a total of 200,000 shares of common stock to
     One Click Investments, LLC, at a price of $0.60 per share. In connection
     with this sale, One Click was granted warrants to purchase an additional
     200,000 shares of common stock, exercisable at any time for a five (5)
     year period, at a price of $2.00 per share.

18.  On August 24, 2000, we entered into a private financing transaction with
     certain foreign investors under the terms of which the investors purchased
     an aggregate of 135,000 of our common shares at a price of $0.2963 per
     share.

19.  On September 11, 2000, we entered into a private financing transaction
     with two investors, Travin Partners, L.L.L.P. (TPL) and TCA Investments,
     Inc. (TCA), under the terms of which Travin and TCA each loaned us the sum
     of $125,000 (the loans), and we issued the convertible debentures and
     granted warrants, described below. The loans were payable pursuant to the
     terms of identical convertible debentures providing for full payment on or
     before October 11, 2000 (the due date), with interest at the current Bank
     of America prime rate, plus 1/2%. All principal and accrued interest under
     each debenture was convertible into shares of our common stock at a
     conversion price of (a) $1.00 per share or (b) sixty percent (60%) of the
     average of the bid price, whichever is lower on the date of conversion. In
     addition to the debentures, TPL and TCA were granted warrants entitling
     each of them to purchase a total of 125,000 shares of our common stock at
     a price of $1.00 per share, at any time after September 11, 2000 and
     before September 11, 2005. These warrants have a "cashless" exercise
     provision allowing TPL and/or TCA to exercise the warrants for a reduced
     number of shares pursuant to a formula set forth in the warrants.  On
     November 1, 2000, we entered into an Agreement with each of TPL and TCA
     under which each agreed to relinquish its right to convert the debentures
     into shares of common stock in exchange for the conversion of those
     debentures into the right to receive an aggregate of 500,000 shares with
     an agreed value of $0.50 per share.

                                    - 30 -
===============================================================================
<PAGE>

20.  On October 20, 2000, we entered into a private financing transaction with
     three investors, International Fluid Dynamics, Inc. (IFD), Plazacorp
     Investments Limited (Plazacorp) and Travin Partners, L.L.L.P. (TPL), under
     the terms of which IFD and TPL each loaned us the sum of $125,000 and
     Plazacorp loaned us the sum of $250,000 (the loans). The loans are payable
     pursuant to the terms of a promissory note (the note), providing for full
     payment on or before November 3, 2000 (the maturity date), with interest
     payable on the maturity date of ten percent (10%) per annum based on a
     365-day year. On November 1, 2000, we entered into an Agreement with each
     of IFD, Plazacorp and TPL under which each of them agreed to relinquish
     its right to payment under the promissory notes in exchange for the
     conversion of those notes into the right to receive an aggregate of
     1,000,000 shares with an agreed value of $0.50 per share.

21.  On November 1, 2000, we entered into a private financing transaction with
     Plazacorp Investments Limited (Plazacorp) under the terms of which
     Plazacorp agreed to loan us up to $1,120,000 (the loan). The loan is
     payable pursuant to the terms of a promissory note (the note), providing
     for full payment on or before November 2, 2001 (the maturity date), with
     interest payable on the maturity date of ten percent (10%) per annum based
     on a 365-day year. Under the terms of the note, upon our written request
     Plazacorp shall advance to us up to $300,000.00 under this note in each
     calendar month during which advances can be requested thereunder (a
     monthly advance).  An advance can be requested during each of
     November 2000, December 2000 and January 2001 at any time after the 10th
     day of each month. During the term of the note and after the effective
     date of a registration statement filed with the SEC registering the shares
     of our common stock held by Plazacorp, we can request in writing, and
     Plazacorp shall pay within 10 business days of the written request, an
     advance of up to an additional $220,000.00 (an additional advance) for the
     payment of certain obligations of ours that are currently due and owing.
     Notwithstanding the foregoing, if we raise funds in a financing of either
     our debt or equity securities during the term of the note (a new
     financing), and (a) the new financing is up to, but does not exceed,
     $220,000.00, Plazacorp's obligation to advance the additional advance
     amount, if it has not already done so, shall be reduced dollar for dollar
     by the amount of the new financing, or (b) the new financing exceeds
     $220,000.00, Plazacorp shall not be obligated to advance the additional
     advance amount, if it has not already done so, and in addition, the
     obligation of Plazacorp to advance the monthly advances remaining to be
     advanced thereunder, if any, shall be reduced dollar for dollar by the
     amount of the funds raised in the new financing.

22.  On November 11, 2000, we entered into an agreement with Bridge 21, Inc., a
     Wyoming corporation, under the terms of which we have formed a
     relationship to provide seats to Bridge 21's members. In consideration of
     the relationship, we granted to Bridge 21 a total of 30,000 options to
     purchase our common stock at a price to be determined on the date of
     exercise based on certain performance goals.

23.  On December 7, 2000, for services rendered, we granted to Locke Liddell &
     Sapp LLP warrants to purchase 100,000 shares of common stock,
     exercisable at any time for a five (5) year period, at an exercise price
     of $0.50 per share.

24.  On February 19, 2001, we entered into a business advisory and consulting
     services agreement with Tarshish Capital Markets, Ltd., an Israel
     corporation, under the terms of which we have engaged Tarshish, on a best
     efforts basis, to seek funding sources for a private offering exempt from
     registration requirements.  In consideration of the services undertaken by
     Tarshish, we will compensate Tarshish in the form of a success fee equal
     to 13% of funds so invested and warrants equal to 10% of the funds raised
     at an exercise price of 110% of the sales price of each transaction. In
     connection with the agreement, on March 2, 2001 4 foreign investors
     purchased 135,000 shares of restricted stock at $0.25 per share and
     March 15, 2001, two foreign investors purchased 22,000 shares of
     restricted stock at $0.20 per share. In addition we issued to Tarshish
     warrants to purchase in the amount of 13,500 shares at an exercise price
     of $0.275 per share and 2,200 shares at an exercise price of $0.22 per
     share.

                                    - 31 -
===============================================================================
<PAGE>

25.  On March 5, 2001, for services rendered, we granted to Americom
     Technology, Inc., specifically Patrick Berkil, Ronald Richter and
     Patrick Richter (collectively, Americom), warrants to purchase an
     aggregate of 75,000 shares of restricted common stock, exercisable at any
     time for a one year period, at an exercise price of $0.432 per share.

26.  On March 26, 2001, we entered into a consulting agreement with Internet
     PR Group under the terms of which we have engaged Internet PR Group, on a
     non-exclusive basis, to provide investor relations and related advisory
     services and advice. The agreement is for an initial term of one year, and
     may be extended for additional terms as agreed upon by the parties. In
     consideration of the services undertaken by Internet PR Group, we issued
     to Internet PR Group a total of 225,000 shares of restricted common stock
     at $0.3438 per share. In connection with this transaction, Internet PR
     Group was granted registration rights granting Internet PR Group (a) one
     demand registration right on or after November 1, 2001, and
     (b) "piggyback" registration rights.

27.  On March 22, 2001, we entered into a consulting agreement with Metromedia
     Research Group, LLC under the terms of which we have engaged Metromedia,
     on a non-exclusive basis, to provide investor relations and related
     advisory services and advice. The agreement is for an initial term of
     ninety days and must be renewed in writing by both parties. In
     consideration of the services undertaken by Metromedia, we issued a total
     200,000 shares of restricted stock at $0.3438 per share. In connection
     with this transaction, Metromedia was granted registrations rights
     granting Metromedia (a) one demand registration right on or after
     April 30, 2001, and (b) "piggyback" registration rights. On April 9, 2001
     the consulting agreement was amended to include an additional issuance of
     300,000 shares of restricted common stock, with a fair market value of
     $0.18 per share, as compensation for a designated consultant specializing
     in the small and micro-cap markets. All other provisions of the consulting
     agreement remain the same.

28.  On March 22, 2001, for services rendered, we granted to Ward and
     Associates, specifically William Collins, Stephen Ward, Cheryl Ward and
     Lucia Churches (collectively, Ward), warrants to purchase an aggregate of
     22,028 shares of restricted common stock, exercisable at any time for a
     one year period, at an exercise price of $0.50 per share.

29.  On April 1, 2001, we entered into a consulting agreement with The N.I.R.
     Group, LLC for a term of three months.  Under the terms of the agreement,
     in consideration of the services undertaken by NIR, we shall issue
     monthly, through the term of the agreement, (a) 125,000 shares of our
     common stock and (b) $25,000.  The fair market value for each issuance is
     $0.3281, $0.17 and $0.10, respectively.

30.  On April 1, 2001, we entered into a letter agreement with Barretto Pacific
     Corporation under the terms of which we have engaged Barretto, on a non-
     exclusive basis, to provide investor relations and related advisory
     services and advice. The agreement is for an initial term of one year and
     may be extended for such periods of time and upon such terms and
     conditions as may be mutually agreed upon, in writing, by the parties, and
     may be cancelled by either party giving the other party written notice
     received by the end of each three month period ending on July 1, 2001,
     October 1, 2001, and January 1, 2002. In consideration of the services
     undertaken by Barretto, we issued an initial payment of 92,000 shares of
     restricted stock with a fair market value of $0.3281 per share, and,
     subsequent payments of $27,500, whether in cash or stock equivalents,
     payable quarterly through the term of the agreement, providing the
     agreement has not been terminated by either party. In connection with this
     transaction we have granted Barretto a warrant to purchase 100,000 shares
     of restricted common stock with an exercise price of $0.30 per share, of
     which 25,000 shares vest immediately and the remainder vest quarterly,
     provided the agreement has not been terminated, and are exercisable
     through November 1, 2002.

31.  On April 4, 2001, in consideration of past consulting services rendered to
     us, we granted a warrant to Robert J. Torres entitling him to purchase a
     total of 43,360 shares of restricted common stock at any time prior to
     April 4, 2002, at an exercise price of $0.25 per share.

32.  On April 12, 2001, we granted 20,000 shares of restricted common stock to
     each of our then 27 employees located at the Broadway Plaza, Tacoma
     Washington facility. The fair market value on the date of grant was $0.17
     per share.

                                    - 32 -
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<PAGE>

33.  On or about April 25, 2001 we sold a total of 315,000 shares of common
     stock at a price of $0.07 per share to International Fluid Dynamics (IFD).
     In connection with this transaction, IFD was granted warrants to purchase
     an equivalent number of additional shares, at any time on or before the
     fifth anniversary date of the registration rate, of such securities, at an
     exercise price of $0.07 per share. In connection with this transaction,
     IFD was granted registration rights granting IFD one demand registration
     right on or after June 30, 2001.

34.  On or about May 3, 2001, we entered into a consulting agreement with
     DiabloStocks, Inc. under the terms of which we have engaged DiabloStocks,
     on a non-exclusive basis, to provide investor relations and related
     advisory services and advice. The agreement is for a term of one year. In
     consideration for the services undertaken by DiabloStocks, we issued to
     them a total of 290,000 shares of restricted common stock at $0.16 per
     share.

35.  On May 3, 2001, we entered into a consulting agreement with
     Eugene R. Zachman for a term of two years.  Under the terms of the
     agreement, and in consideration of the services undertaken by Zachman, we
     issued a stock option for 750,000 shares of common stock under our 2000
     Long Term Incentive Plan with a fair market value of $0.3438, which will
     vest upon performance.  On May 30, 2001 we amended the agreement to
     include a grant of 500,000 shares of our common stock upon the signing of
     certain contracts.  In addition, we have agreed to register the grant on
     Form S-8.

36.  On or about May 4, 2001, for services rendered, we issued to Internet
     Solutions Partners, Inc. 66,667 shares of restricted stock at $0.15 per
     share.

37.  On May 17, 2001, we entered into a settlement agreement with our landlord
     Howe/Horizon Holdings, LLC, owner of the facilities located at 1101
     Broadway Plaza, Tacoma WA and Horizon Holdings I, Inc. owner and landlord
     of the facilities located 1401 Court C, Tacoma WA. In connection with the
     settlement, we issued the following: (a) 290,000 shares of common stock
     and a warrant to purchase 800,000 shares of restricted common stock with
     an exercise price per share of $0.50 to Howe/Horizon Holdings and
     (b) 210,000 shares of restricted common stock and a warrant to purchase
     200,000 shares of common stock with an exercise price of $0.50 per share
     to Horizon Holdings I.  In connection with this transaction, we granted
     each of Howe/Horizon Holdings and Horizon Holdings I registration rights
     granting both one demand registration right on or after
     September 17, 2001.

38.  On May 17, 2001, we entered into a consulting agreement with James Zachman
     for a term of six months.  Under the terms of the agreement and in
     consideration of the services undertaken by Zachman, we will issue monthly
     payments of $4,500 and a stock option for 350,000 shares of common stock
     issued under our 2000 Long Term Incentive Plan with a fair market value of
     $0.19, which will vest upon performance.  On May 30, 2001 we amended the
     agreement to include a grant of 500,000 shares of our common stock upon
     the signing of certain contracts.  In addition, we have agreed to register
     the grant on Form S-8.

39.  On or about May 28, 2001, we entered into a selling agreement with Taconic
     Capital Partners, LP, Internet Solutions Partners, Inc, and Salvani
     Investments, Inc., specifically Joseph Salvani and Rene Jimenez, under the
     terms of which we agreed to issue an aggregate of 435,000 shares of common
     stock to the parties for entering into this agreement. In addition, if
     total sales during the campaign reach certain amounts, we will issue up to
     1.5 million additional shares as follows: (a) $750,000, we will issue an
     additional 435,000 shares; (b) $1.25 million we will issue an additional
     290,000 shares; and (c) $2 million we will issue an additional 335,000
     shares. We also agreed to file an S-8 registration statement within one
     month of signing of this agreement. The term of the selling agreement is
     for one year unless terminated with thirty (30) days written notice. On
     July 16, 2001 we terminated the selling agreement for non-performance.

40.  On June 29, 2001, we entered into a private financing transaction with
     three investors, AJW Partners LLC, New Millennium Capital Partners II,
     LLC, and AJW/New Millennium Offshore, Ltd. (collectively, the Buyers),
     under the terms of which the Buyers purchased (a) 12% convertible
     debentures in the aggregate principal amount of up to $1,200,000 (together
     with any debenture(s) issued in replacement thereof or as a dividend
     thereon or otherwise with respect thereto in accordance with the terms
     thereof, convertible into shares of our common stock, $0.001 par value per
     share, and (b) warrants to purchase up to 2,400,000 shares of our common
     stock, each as described below. The terms of debentures provide for full
     payment on or before June 29, 2002, with interest of 12% per annum.  The
     terms of the warrants entitle each buyer to purchase shares of our common
     stock at a price equal to the lesser of (i) $.04 per share and (ii) the
     average of lowest three (3) trading prices during the twenty trading days
     immediately prior to exercise, at any time after June 29, 2001 and before
     June 29, 2003.

                                    - 33 -
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<PAGE>

41.  On September 3, 2001, in settlement of a loan dispute, we entered into
     a settlement agreement with Martin E. Darrah.  In connection with the
     settlement, we issued the following: (a) 200,000 options to purchase
     shares of common stock with an exercise price per share of $0.07 to Mr.
     Darrah, and (b) 50,000 options to purchase shares of common stock with
     an exercise price of $0.07 per share to John Spencer, legal counsel to
     Mr. Darrah, as consideration for legal fees.


ITEM 6.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
               AND RESULTS OF OPERATIONS.

     The following discussion and analysis should be read in conjunction
with the financial statements and notes thereto included elsewhere in this
prospectus. The statements contained in this report that are not historical
facts, including, without limitation, statements containing the words
"believes," "anticipates," "estimates," "expects," and words of similar import,
constitute "forward-looking statements." Forward-looking statements are made
based upon management's current expectations and beliefs concerning future
developments and their potential effects upon us. Our actual results could
differ materially from those anticipated for many reasons, including risks
faced by us described in this prospectus under "Risk Factors."

Overview

     Insynq, Inc. was incorporated in the state of Washington on
August 31, 1998.  We are a development stage company that provides Internet
appliances, known as customer premise equipment, managed and hosted software
services, Web hosting services, Web-based local and wide area networks, and
access to Internet marketing assistance and related equipment and services.
These products and services are offered a components or as an integrated whole,
either sold directly or on a fee or subscription basis.

     In late 1999, Insynq decided to seek out a combination with a public
company.  On February 18, 2000, Xcel Management, Inc., a publicly held company,
and Insynq closed an asset purchase transaction in which Xcel acquired
substantially all of the assets of Insynq.  Xcel continued to develop the
business of Insynq, and on August 3, 2000, at a special meeting of Xcel's
stockholders, Xcel completed a re-incorporation merger with its wholly owned
subsidiary, Insynq, Inc., a Delaware corporation.  Today, as a combined and
surviving entity, Insynq, Inc. continues to develop the IQ Utility Service
while incorporating the customer premise equipment developed as part of the
IQ Delivery System.

     We target small and medium enterprises and the high-end segment of
the small office and home office market for the sale of hardware and hosted
software and access to Internet-related services. The products and services are
provided by developing a customer subscriber base that adopts a cost-effective,
on-line solution to building and maintaining an information technology system
through the adoption of "Web-based" computing as an alternative to both
traditional local wide area networks and traditional client-server
implementations. Generally, we market our self as an Internet utility company
that can cost-effectively provide all of the computer software, hardware,
connectivity and Internet-access needs for its customers.

                                    - 34 -
===============================================================================
<PAGE>

     We currently have several independent software vendors' products on line
using the IQ Data Utility Service computing services and anticipate signing
various agreements with additional organizations in the next few months. We
expect to increase the subscriber base through these respective sales channels.
Software vendor relationships currently in place include Microsoft Corporation,
Network Associates, Inc./McAfee, Remedy Corporation, Macola Software, and
Novell, Inc.

     The complete IQ Delivery System and Internet Utility Service includes
managed network and application services, and can span from a customer's
keyboard to the data center.  Insynq provides certain equipment, which is kept
on its customer's premises, including a simplified, diskless workstation or
thin client, and a multi-function router, our IQ Delivery System, which is
entirely managed and maintained by us.  The system can also include Internet-
access services provided by us or by a user selected telecommunications
partner/provider.  The final piece of the system is the data center, which is
located in Tacoma Washington.  This facility, with redundant power, bandwidth,
and cooling, houses the server equipment and routers.  While this is the
recommended configuration for customer use to take advantage of the full
services, customers are free to choose which components they use.

     In the process of developing the IQ Delivery System, our management
believes we have acquired valuable technological expertise.  We have created
new methodologies and produced proprietary hardware and software that is
believed to be essential to the configuration and effective management of
Internet-based networks and outside deployment of shared software applications.

Results of Operations

     During the year ended May 31, 2000 (Fiscal 2000), we had limited active
operations, and therefore, we believe that a comparison of the results of
operations of Fiscal 2000 to the year ended May 31, 2001 (Fiscal 2001) has
limited value for evaluating trends and/or as a basis for predicting future
results.

     We incurred a net loss of $14,075,218 for Fiscal 2001 and a $3,778,867
loss for Fiscal 2000. The respective fiscal year losses resulted primarily
from:  (1) providing discounted or free services as we test- marketed our
products and services, (2) initial network, infrastructure, and research
and development costs associated with start-up operations, (3) increases in
salaries and related benefits, reflecting headcount increases in our technical,
development, sales, marketing, finance, accounting, and administrative staff,
(4) increased professional and consulting fees, and (5) the issuance of warrant
and options for services.

     Total revenue for Fiscal 2001 was $493,008, an increase of $257,200 over
Fiscal 2000.  The primary sources of Fiscal 2001 revenue includes: (1) seat
subscription revenue of $379,423, (2) managed software and support service
revenue of $76,208, and (3) hardware and software sales revenue of $9,975.
We expect future revenue from all sources to trend away from our practice
of providing discounts and free offerings experienced in Fiscal 2001 as we
continue to develop our sales and implement our sales and marketing strategies,
increase consumer understanding and awareness of our technology and prove our
business model.

     Our continued growth is significantly dependent upon our ability to
generate sales relating to our subscription and managed software services.
Our main priorities relating to revenue are: (1) increase market awareness of
our products and services through our strategic marketing plan, (2) growth in
the number of customers and seats per customer, (3) continue to accomplish
technological economies of scale, and (4) continue to streamline and maximize
efficiencies in our system implementation model.

                                    - 35 -
===============================================================================
<PAGE>

Costs And Expenses

     During Fiscal 2001, we recorded direct costs of services of $1,258,932, an
increase of $469,025 over the limited operations experienced in Fiscal 2000.
Network and infrastructure costs were $154,445 for Fiscal 2001, which is an
increase of $60,142 from Fiscal 2000.

     Selling, general, and administrative costs increased to $4,572,004 in
Fiscal 2001, an increase of $2,715,782 over Fiscal 2000.  The increase is a
direct result of: (1) the continuing build-out of our infrastructure, including
hiring management and support staff, (2) the development of the sales and
delivery systems, (3) continued increase of professional and consulting fees,
and (4) the issuance of options and warrants. In addition, non-cash
compensation and service expense for Fiscal 2001 and 2000 was $4,242,072 and
$1,116,666, respectively, which is the fair value of common stock, options and
warrants issued for services.

     Total interest expense increased to $3,941,175 during Fiscal 2001 versus
$98,611 in Fiscal 2000. The increase was due primarily to: (1) accounting for
non-cash interest recognized on the fair value of warrants issued with notes
payable and convertible debentures, (2) interest recognized for the beneficial
conversion features on the conversion of debentures and notes payable, (3) for
the reductions in the original conversion prices offered significantly below
the fair market value of the common stock on the conversion dates, and
(4) capitalized equipment lease obligations.  Accounting for non-cash interest
resulted in $3,680,583 and $23,600 of the reported expense for Fiscal 2001 and
2000, respectively.

     Other income decreased $35,217 during the same time periods, primarily due
to trademark revenue that commenced in Fiscal 2000.

Liquidity and Capital Resources

     Insynq had cash and cash equivalents of $26,900 as of May 31, 2001, and
$106,806 at May 31, 2000, and a deficit in working capital of $4,111,060 and
$441,029 at the same dates, respectively.  For Fiscal year ended May 31, 2001,
Insynq used cash in its operating activities and investing activities totaling
$3,711,974 and $2,809,240, respectively.

     We finance our operations and capital requirements primarily through
private debt and equity offerings.  For the twelve months ended May 31, 2001,
we received cash totaling $2,929,887 from the issuance of notes payable and
convertible debentures, most of which were converted into common stock as of
May 31, 2001.  For the same period ending May 31, 2000, we received cash
totaling $100,000 from a stockholder advance.  During Fiscal 2001, we received
$734,320 and $2,853,402 during Fiscal 2000, from the sale of common stock and
the issuance of common stock for the exercise of options and warrants.

     On June 29, 2001, the Company entered into a private financing transaction
with three investors under which the investors initially purchased $550,000
from a total of $1,200,000 12% convertible debentures.  The debentures are
convertible into shares of common stock at the lesser of (i) $0.18 or (ii) the
average of the lowest three trading prices on the twenty trading days prior to
the notice of such conversion, divided by two.  The common stock carry attached
warrants that allow the investor, under the terms of the warrants, to purchase
up to 2,400,000 shares of common stock at $0.04 per share.  Terms of the
debentures provide for full payment on or before June 29, 2002, with accrued
interest of 12% per annum.  Proceeds from this initial transaction, net of
fees, were $465,000. Upon the filing of this registration statement, we
received an additional $100,000 less fees.  We anticipate receiving the
remaining $550,000, less fees, upon this registration statement being declared
effective by the SEC. Management believes that the likelihood of receiving the
remaining $550,000 is very good.  However, our continuation as a going concern
is dependent on our ability to obtain additional financing and generate
sufficient cash flow from operations to meet our obligations on a timely basis.

     From June 1, 2001 through September 4, 2001, we raised additional funding
of $92,000 through the exercise of options and a promissory note.

     As of September 4, 2001, we were late in payment of certain creditor trade
payables of  $650,978.  In June 2001, our management negotiated either
substantial reduction of amounts owed or negotiated more favorable long-term
payment plans.  We offered three payment plans: (1) seventy percent reduction
in the amount owed with payment due in one installment; (2) fifty percent
reduction of the amount owed with payment in twelve installments; and (3) no
reduction of the amount owed with payment in twenty-four installments.  We
believe that these negotiations were well received by our vendors.  As of
September 4, 2001,  creditors whose payables totaled $432,351 (including the
discounts described above) have accepted such plans as follows:  (i) $55,964 in
trade payables have accepted option 1; (ii) $2,887 have accepted option 2;
(iii) $125,308 have accepted option 3; and (iv) $175,133 have accepted various
payment plans of varying time periods ranging from 2-18 months.  In addition,
vendors forgave $75,659 in trade payables.

     We lease equipment under a capital leases expiring in 2003.  Our principal
capital lease obligation for computer hardware, printers and related
infrastructure is in default in the amount of $668,136.  We have initiated
discussions to restructure this obligation and, given the current market
conditions, believe we will be successful in such attempt.  If we are unable to
successfully restructure this obligation, options remain open to us including,
for example, returning the equipment and purchasing new equipment on the open
market.   However, there can be no assurance that we will able to locate other
equipment or raise the funds necessary to make such purchases.  In addition, if
all other methods fail, we might be able to outsource our data center function;
however, there is no assurance that such methods will be available to us on
favorable terms, or at all.  If this were to occur then we may be unable to
deliver to our customers their contracted services.

     In addition, approximately $493,000 of business and payroll taxes are
delinquent, plus $103,000 of related assessed penalties and interest.  We and
the Internal Revenue Service have informally agreed to a payment plan for the
past due taxes, subject to our remaining current on all future payroll tax
deposits.  We have also been in contact with other respective taxing
authorities to initiate payment plans in settlement of their respective past
due taxes.  There can be no assurances, however, that we will be able to
continue to meet the terms informally agreed to with the Internal Revenue
Service or negotiate terms with other taxing authorities.  If we are
unsuccessful, the taxing authorities could obtain a lien against some or all of
our assets.  Should this occur, we likely would be forced to cease our
operations.

     We currently have no material commitments for capital requirements.  If we
are forced to purchase new equipment to replace the equipment we currently
lease, any new leases would constitute a material capital commitment; however,
we are currently unable to quantify such amounts.  If this occurs, we will
attempt to raise the necessary finances to make such purchases, but there is no
assurance that we will be able to do so.  Without the ability to quantify these
amounts, we nonetheless believe that it would have a material impact on our
business and our ability to maintain our operations.

     Additionally, two liens have been filed by two different states for past
due taxes, plus accrued penalties and interest.  One lien, for approximately
$28,000, is to the State of Utah for prior year's income taxes assessed to the
predecessor company of Insynq, Inc.  This amount is in dispute and amended
returns to correct this deficiency have been filed.  The second lien, for
approximately $5,500, is to the State of Washington and has been subsequently
paid in full.

     Since September 2000, we began implementation of an internal cost
restructuring of our operations, both in sales and marketing, as well in the
executive management team, and other critical cost-cutting measures. In June
2001, we negotiated with many of our vendors to materially reduce amounts owed
or attain more favorable long-term payment terms. As a result of these
measures, we have tightened the controls over our use of cash and,
additionally, have taken steps to improve the billing and collection process.
Our management forecasts the effects of these changes will result in a
substantial improvement of monthly cash flows. In addition to these changes, we
have implemented a marketing program through our recently developed accounting
vertical, which has dramatically reduced customer acquisition costs. The
combination of the internal restructuring efforts and increased operational
efficiencies will allow us to move toward profitability and to achieve our
business plan and goals. We are also aggressively pursuing opportunities to
merge and/or acquire compatible companies with which to leverage management,
financial and operational resources. We believe these changes and strategies
will position us well for future opportunities.

     We have recently signed several sales and marketing agreements.  In
particular, an agreement with an accounting affiliation of approximately 60,000
subscribers has recently been finalized. The adoption of the IQ Data Utility
Service solution by these and other accountants is providing access to
professional accounting organizations and their client bases. There can be no
assurance that our entering into this agreement will substantially increase our
monthly recurring revenues.  In addition, we are currently negotiating with two
large national corporations to provide hosting and application services.  The
immediate performance in this market indicates that use of enabling
technologies for accounting on-line and business process outsourcing is gaining
momentum.  There can be no assurances, however, that we will successfully
negotiate and execute these agreements.

     We believe that technology outsourcing, focused on business fundamentals,
such as finance, accounting, customer relationship management and sales force
automation, will be the primary adopters application service provider and
managed service solutions in the next year. We are focusing all possible
resources in developing our domain expertise in these areas to gain additional
leverage and build broader service offerings that compliment our current
services already being delivered to those markets.

     We cannot be sure that we will be able to obtain the additional financing
to satisfy the cash requirements or to implement the growth strategy on
acceptable terms, or at all.  If we cannot obtain such financing on acceptable
terms, the ability to fund the planned business expansion and to fund the on-
going operations will be materially adversely affected.  Presently, our
management is pursuing a variety of sources of debt and equity financing.  If
debt is incurred, the financial risks associated with the business and with
owning our common stock could increase.  If enough capital is raised through
the sale of equity securities, the percentage ownership of the current
stockholders will be diluted.  In addition, any new equity securities may have
rights, preferences, or privileges senior to those of the common stock.

     Our continuation as a going concern is currently dependent on our ability
to obtain additional financing, acquire strategic business entities and
generate sufficient cash flow from our operations to meet, and in certain
cases, restructure certain obligations on a timely basis.  We also believe the
need for additional capital going forward will be met from public and private
debt and equity offerings.  In essence, future operations will be dependent
upon our ability to secure sufficient sources of financing, continuation of
adequate vendor credit and increased sales of services.

     We currently have no arrangements or commitments for accounts or accounts
receivable financing. We believe our need for additional capital going forward
will be met from private debt and equity offerings, and, increasingly, from
revenues from operations as we continue to implement our strategic plan;
however, future operations will be dependent upon our ability to secure
sufficient sources of financing and adequate vendor credit. However, there can
be no assurance that we will achieve any or all of these requirements.

     We are currently developing and refining our acquisition and expansion
strategy. If we expand more rapidly than currently anticipated, if our working
capital needs exceed our current expectations, or if we consummate
acquisitions, we will need to raise additional capital from equity or debt
sources. We cannot be sure that we will be able to obtain the additional
financings to satisfy our cash requirements or to implement our growth strategy
on acceptable terms or at all. If we cannot obtain such financings on terms
acceptable to us, our ability to fund our planned business expansion and to
fund our on-going operations will be materially adversely affected. We are
presently pursuing a variety of sources of debt and equity financings. If we
incur debt, the risks associated with our business and with owning our common
stock could increase. If we raise capital through the sale of equity
securities, the percentage ownership of our stockholders will be diluted. In
addition, any new equity securities may have rights, preferences, or privileges
senior to those of our common stock.

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<PAGE>


ITEM 7.        FINANCIAL STATEMENTS

     The information required by this item is included in pages F-1 through
F-26 attached hereto and incorporated by reference. The index to the
consolidated financial statements can be found on page F-1.


ITEM 8.        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
               AND FINANCIAL DISCLOSURE.

     In our Form 8-K filed October 13, 2000, we reported that on
October 11, 2000, we terminated G. Brad Beckstead, and engaged Grant Thornton
LLP as our accountants for the year ended May 31, 2001. Grant Thornton's
office is located at 701 Pike Street, Suite 1500, Seattle, Washington 98101.

During the year ended May 31, 2000, and up to and including the present, there
have been no disagreements between Beckstead and us on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedures. Beckstead's report on our financial statements for the fiscal year
ended May 31, 2000, indicated there was substantial doubt regarding our ability
to continue as a going concern.

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<PAGE>


                                   PART III


ITEM 9.        DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
               COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

     The information set forth under the captions "Election of Directors" and
"Executive Officers of the Company" in our definitive Proxy Statement for the
2001 Annual Meeting of Stockholders is incorporated herein by reference.


ITEM 10.       EXECUTIVE COMPENSATION.

     The information set forth under the caption "Executive Compensation and
Other Matters" in our definitive Proxy Statement for the 2001 Annual Meeting of
Stockholders is incorporated herein by reference.


ITEM 11.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The information set forth under the caption "Outstanding Capital Stock and
Stock Ownership of Directors, Certain Executive Officers and Principal
Stockholders" in our definitive Proxy Statement for the 2001 Annual Meeting of
Stockholders is incorporated herein by reference.


ITEM 12.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The information set forth under the caption "Compensation and Other
Committee Interlocks and Insider Participation" in our definitive Proxy
Statement for the 2001 Annual Meeting of Stockholders is incorporated herein by
reference.


ITEM 13.       EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
     (a)  Exhibits
<CAPTION>
EXHIBIT
 NUMBER     DESCRIPTION
-------     -------------------------------------------------------------------
<S>         <C>
  2.1       Asset Purchase Agreement, dated as of February 18, 2000, by and
            between Xcel Management, Inc. and Insynq, Inc. (Incorporated by
            reference to Exhibit 2 to the Company's Current Report on Form 8-K,
            filed March 3, 2000).

  3.1       Certificate of Incorporation of Insynq, Inc. (Incorporated by
            reference to Exhibit 2 to the Company's Current Report on Form 8-K
            filed August 17, 2000).

  3.2       By-Laws of Insynq, Inc. (Incorporated by reference to Exhibit 3 to
            the Company's Current Report on Form 8-K filed August 17, 2000).

  4.1       Form of Specimen Common Stock Certificate. (Incorporated by
            reference to Exhibit 4.1 to the Company's Annual Report on
            Form 10-KSB filed September 13, 2000).

  4.2       Form of Warrant Agreement issued to Consulting & Strategy
            International, LLC on February 24, 2000, as amended by Amendment
            No. 1 dated June 9, 2000, Amendment No. 2 dated July 31, 2000,
            Amendment No. 3 dated August 31, 2000, Amendment No. 4 dated
            October 1, 2000, Amendment No. 5 dated October 28, 2000 and
            Amendment No. 6 dated December 1, 2000 (Incorporated by reference
            to Exhibit 4.2 to the Company's Registration Statement on
            Form SB-2 filed December 14, 2000).

  4.3       Amendment No. 7 dated February 1, 2001 and Amendment No. 8 dated
            February 27, 2001, to Warrant Agreement issued to Consulting &
            Strategy International, LLC on February 24, 2000 (Incorporated by
            reference to Exhibit 4.2 to the Company's Quarterly Report on
            Form 10-QSB filed April 20, 2001).

  4.4*      Letter Agreement dated January 31, 2001 between Consulting &
            Strategy International, LLC and Insynq, Inc.

  4.5       Form of Warrant Agreement issued to International Fluid Dynamics,
            Inc. on May 17, 2000. (Incorporated by reference to Exhibit 4.3 to
            the Company's Annual Report on Form 10-KSB filed
            September 13, 2000).

  4.6       Form of Registration and Repurchase Agreement issued to
            International Fluid Dynamics, Inc. on May 17, 2000, as amended
            (Incorporated by reference to Exhibit 4.4 to the Company's Annual
            Report on Form 10-KSB filed September 13, 2000).

  4.7       Form of Warrant Agreement issued to Plazacorp Investors Limited on
            April 26, 2000. (Incorporated by reference to Exhibit 4.5 to the
            Company's Annual Report on Form 10-KSB filed September 13, 2000).

  4.8       Form of Registration and Repurchase Agreement issued to Plazacorp
            Investors Limited on April 26, 2000, as amended. (Incorporated by
            reference to Exhibit 4.6 to the Company's Annual Report on
            Form 10-KSB filed September 13, 2000).

  4.9       Form of Warrant Agreement issued to TCA Investments, Inc. on
            June 16, 2000, as amended by Amendment No. 1 dated August 31, 2000,
            Extension dated September 5, 2000, Amendment No. 2 dated
            September 14, 2000, Amendment No. 3 dated October 1, 2000,
            Amendment No. 4 dated October 28, 2000 and Amendment No. 5 dated
            December 1, 2000 (Incorporated by reference to Exhibit 4.7 to the
            Company's Registration Statement on Form SB-2 filed
            December 14, 2000).

  4.10      Amendment No. 6 dated February 28, 2001, to Warrant Agreement
            issued to TCA Investments, Inc. on June 16, 2000 (Incorporated by
            reference to Exhibit 4.7 to the Company's Quarterly Report on
            Form 10-QSB filed April 20, 2001).

  4.11      Form of Convertible Debenture issued to TCA Investments, Inc. on
            June 16, 2000, as amended. Form of Convertible Debenture issued to
            TCA Investments, Inc. on June 16, 2000, as amended by Amendment
            No. 1 dated August 31, 2000, Extension dated September 5, 2000,
            Amendment No. 2 dated September 14, 2000, Amendment No. 3 dated
            October 1, 2000 and Amendment No. 4 dated October 28, 2000.
            (Incorporated by reference to Exhibit to Exhibit 4.2 to the
            Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

  4.12      Form of Warrant Agreement issued to Garnier Holdings, Ltd. on
            July 17, 2000, as amended by Amendment No. 1 dated
            September 22, 2000, Amendment No. 2 dated October 1, 2000,
            Amendment No. 3 dated October 19, 2000, Amendment No. 4 dated
            October 28, 2000 and Amendment No. 5 dated December 1, 2000, and
            Amendment No. 6 dated February 27, 2001  (Incorporated by reference
            to Exhibit 4.9 to the Company's Registration Statement on Form SB-2
            filed December 14, 2001 and the Company's Quarterly Report on
            Form 10-QSB filed April 20, 2001)

  4.13      Amendment No. 6 dated February 27, 2001, to Warrant Agreement
            issued to Garnier Holdings, Ltd. on July 17, 2000 (Incorporated by
            reference to Exhibit 4.9 to the Company's Quarterly Report on
            Form 10-QSB filed April 20, 2001).

  4.14      Form of Promissory Note issued to Garnier Holdings, Ltd. on
            July 17, 2000, as amended by Extension No. 1 dated
            September 11, 2000 and Extension No. 2 dated October 1, 2000.
            (Incorporated by reference to Exhibit 4.10 to the Company's
            Quarterly Report on Form 10-QSB filed October 23, 2000).

  4.15      Form of Warrant Agreement issued to One Click Investments, LLC on
            August 4, 2000. (Incorporated by reference to Exhibit 4.11 to the
            Company's Annual Report on Form 10-KSB filed September 13, 2000).

  4.16      Form of Registration Rights Agreement issued to One Click
            Investments, LLC on August 4, 2000. (Incorporated by reference to
            Exhibit 4.12 to the Company's Annual Report on Form 10-KSB filed
            September 13, 2000).

  4.17      Form of Warrant Agreement issued to Series A & B warrant holders.
            (Incorporated by reference to Exhibit 4.13 to the Company's Annual
            Report on Form 10-KSB filed September 13, 2000).

  4.18      Form of Warrant Agreement issued to One Click Investments, LLC on
            September 20, 1999, as amended. (Incorporated by reference to
            Exhibit 4.14 to the Company's Annual Report on Form 10-KSB filed
            September 13, 2000).

  4.19      Form of Warrant Agreement issued to Hewlett-Packard on
            June 1, 1999. (Incorporated by reference to Exhibit 4.15 to the
            Company's Annual Report on Form 10-KSB filed September 13, 2000).

  4.20      Form of Registration Agreement issued to Hewlett-Packard on
            February 20, 2000.  (Incorporated by reference to Exhibit 4.16 to
            the Company's Amendment No. 1 to Annual Report on Form 10-KSB/A
            filed December 6, 2000).

  4.21      Form of Subscription Agreement between TCA Investments, Inc. and
            Insynq, Inc. dated June 16, 2000. (Incorporated by referenced to
            Exhibit 4.17 to the Company's Quarterly Report on Form 10-QSB filed
            October 23, 2000).

  4.22      Form of Subscription Agreement between TCA Investments, Inc. and
            Insynq, Inc. dated September 11, 2000. (Incorporated by reference
            to Exhibit 4.17 to the Company's Quarterly Report on Form 10-QSB
            filed October 23, 2000).

  4.23      Form of Warrant Agreement issued to TCA Investments, Inc. dated
            September 11, 2000, as amended by Amendment No. 1 dated
            December 1, 2000. (Incorporated by reference to Exhibit to
            Exhibit 4.19 to the Company's Registration Statement on Form SB-2
            filed December 14, 2000)

  4.24      Form of Convertible Debenture issued to TCA Investments, Inc. dated
            September 11, 2000, as amended by Amendment No. 1 dated
            October 6, 2000 and Amendment No. 2 dated October 19, 2000.
            (Incorporated by reference to Exhibit 4.20 to the Company's
            Quarterly Report on Form 10-QSB filed October 23, 2000).

  4.25      Form of Consent of Plazacorp Investors Limited to the Extension of
            the filing of the Registration Statement on Form SB-2 dated
            September 22, 2000. (Incorporated by reference to Exhibit 4.21 to
            the Company's Quarterly Report on Form 10-QSB filed
            October 23, 2000).

  4.26      Form of Consent of Plazacorp Investors Limited to the Extension of
            the filing of the Registration Statement on From SB-2 dated
            October 2, 2000. (Incorporated by reference to Exhibit 4.22 to the
            Company's Quarterly Report on Form 10-QSB filed October 23, 2000).

  4.27      Form of Consent of TCA Investments, Inc. to Extension of the filing
            of the Registration Statement on From SB-2 dated
            September 22, 2000. (Incorporated by reference to Exhibit 4.23 to
            the Company's Quarterly Report on Form 10-QSB filed
            October 23, 2000).

  4.28      Form of Consent of TCA Investments, Inc. to Extension of the filing
            of the Registration Statement on Form SB-2 dated October 2, 2000.
            (Incorporated by reference to Exhibit 4.24 to the Company's
            Quarterly Report on Form 10-QSB filed October 23, 2000).

  4.29      Form of Consent of International Fluid Dynamics, Inc. to Extension
            of the filing of the Registration Statement on Form SB-2 dated
            September 22, 2000. (Incorporated by reference to Exhibit 4.25 to
            the Company's Quarterly Report on Form 10-QSB filed
            October 23, 2000).

  4.30      Form of Consent of International Fluid Dynamics, Inc. to Extension
            of the filing of the Registration Statement on Form SB-2 dated
            October 2, 2000. (Incorporated by reference to Exhibit 4.26 to the
            Company's Quarterly Report on Form 10-QSB filed October 23, 2000).

  4.31      Registration Rights Agreement dated September 22, 2000 between
            Charles Benton and Insynq, Inc. (Incorporated by reference to
            Exhibit 4.27 to the Company's Quarterly Report on Form 10-QSB filed
            October 23, 2000).

  4.32      Form of Promissory Note issued to International Fluid Dynamics,
            Inc. on October 20, 2000. (Incorporated by reference to
            Exhibit 4.28 to the Company's Quarterly Report on Form 10-QSB filed
            October 23, 2000).

  4.33      Agreement dated November 1, 2000 between International Fluid
            Dynamics, Inc. and Insynq.  (Incorporated by reference to
            Exhibit 4.29 to the Company's Registration Statement on Form SB-2
            filed December 14, 2000)

  4.34      Agreement dated November 1, 2000 between Travin Partners, L.L.L.P.
            and Insynq.  (Incorporated by reference to Exhibit 4.30 to the
            Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

  4.35      Agreement dated November 1, 2000 between TCA Investments, Inc. and
            Insynq.  (Incorporated by reference to Exhibit 4.31 to the
            Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

  4.36      Agreement dated November 1, 2000 between Plazacorp Investors
            Limited and Insynq.  (Incorporated by reference to Exhibit 4.32 to
            the Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

  4.37      Agreement dated November 1, 2000 between Garnier Holdings, Ltd. and
            Insynq.  (Incorporated by reference to Exhibit 4.33 to the
            Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

  4.38      Agreement dated November 1, 2000 between International Fluid
            Dynamics, Inc. and Insynq.  (Incorporated by reference to
            Exhibit 4.34 to the Company's Registration Statement on Form SB-2
            filed December 14, 2000)

  4.39      Agreement dated November 1, 2000 between Timothy Horan and Insynq.
            (Incorporated by reference to Exhibit 4.35 to the Company's
            Registration Statement on Form SB-2 filed December 14, 2000)

  4.40      Agreement dated November 1, 2000 between Raymond Betz and Insynq.
            (Incorporated by reference to Exhibit 4.36 to the Company's
            Registration Statement on Form SB-2 filed December 14, 2000)

  4.41      Agreement dated November 1, 2000 between Travin Partners, L.L.L.P.
            and Insynq. (Incorporated by reference to Exhibit 4.37 to the
            Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

  4.42      Form of Warrant Agreement dated December 7, 2000 between Locke
            Liddell & Sapp LLP and Insynq. (Incorporated by reference to
            Exhibit 4.38 to the Company's Registration Statement on Form SB-2
            filed December 14, 2000)

  4.43      Lock-Up and Waiver Agreement dated October 17, 2000, as amended by
            Amendment No. 1 dated December 1, 2000, by Charles F. Benton.
            (Incorporated by reference to Exhibit 4.39 to the Company's
            Registration Statement on Form SB-2 filed December 14, 2000)

  4.44      Lock-Up and Waiver Agreement dated October 17, 2000 by
            John P. Gorst. (Incorporated by reference to Exhibit 4.40 to the
            Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

  4.45      Lock-Up and Waiver Agreement dated October 17, 2000 by
            M. Carroll Benton. (Incorporated by reference to Exhibit 4.41 to
            the Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

  4.46      Lock-Up and Waiver Agreement dated October 15, 2000 by
            Vijay Alimchandani. (Incorporated by reference to Exhibit 4.42 to
            the Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

  4.47      Lock-Up and Waiver Agreement dated October 16, 2000 by One Click
            Investments LLC. (Incorporated by reference to Exhibit 4.43 to the
            Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

  4.48      Promissory Note dated December 1, 2000 between One Click
            Investments, LLC and Insynq, Inc. (Incorporated by reference to
            Exhibit 4.44 to the Company's Quarterly Report on Form 10-QSB filed
            April 20, 2001)

  4.49      Agreement dated January 30, 2001 between One Click Investments, LLC
            and Insynq, Inc. (Incorporated by reference to Exhibit 4.45 to the
            Company's Quarterly Report on Form 10-QSB filed April 20, 2001)

  4.50      Registration Agreement dated January 30, 2001 between One Click
            Investments, LLC and Insynq, Inc. (Incorporated by reference to
            Exhibit 4.46 to the Company's Quarterly Report on Form 10-QSB filed
            April 20, 2001)

  4.51      Warrant Agreement dated February 20, 2001 between TCA Investments,
            Inc. and Insynq, Inc. (Incorporated by reference to Exhibit 4.47 to
            the Company's Quarterly Report on Form 10-QSB filed April 20, 2001)

  4.52      Registration Agreement dated February 20, 2001 between TCA
            Investments, Inc. and Insynq, Inc. (Incorporated by reference to
            Exhibit 4.48 to the Company's Quarterly Report on Form 10-QSB filed
            April 20, 2001)

  4.53*     Form of Warrant Agreement dated March 5, 2001 between
            Patrick Birkel and Insynq, Inc.

  4.54*     Warrant Agreement dated March 5, 2001 between Bransville Limited
            and Insynq, Inc.

  4.55*     Form of Warrant Agreement dated March 22, 2001 between
            William R. Collins and Insynq, Inc.

  4.56*     Registration Rights Agreement dated March 26, 2001 between Internet
            PR Group and Insynq, Inc
 .
  4.57*     Warrant Agreement dated March 25, 2001 between Bransville Limited
            and Insynq, Inc.

  4.58*     Form of Warrant Agreement dated April 25, 2001 between
            International Fluid Dynamics, Inc. and Insynq, Inc.

  4.59*     Form of Subscription Agreement dated April 25, 2001 between
            International Fluid Dynamics, Inc. and Insynq, Inc.

  4.60*     Form of Registration Agreement dated April 25, 2001 between
            International Fluid Dynamics, Inc. and Insynq, Inc.

  4.61*     Warrant Agreement dated April 1, 2001 between Barretto Pacific
            Corporation and Insynq, Inc.

  4.62*     Form of Warrant Agreement dated May 17, 2001 between Horizon
            Holdings I, LLC and Insynq, Inc.

  4.63*     Form of Registration Agreement dated May 17, 2001 between Horizon
            Holdings I, LLC and Insynq, Inc.

  4.64*     Securities Purchase Agreement dated June 29, 2001 between AJW
            Partners, LLC, New Millennium Capital Partners II, LLC, AJW/New
            Millennium Offshore, Ltd and Insynq. Inc.

  4.65*     Form of Stock Purchase Warrant dated June 29, 2001 between AJW
            Partners, LLC and Insynq, Inc.

  4.66*     Form of Secured Convertible Debenture dated June 29, 2001 between
            AJW Partners, LLC and Insynq, Inc.

  4.67*     Guaranty and Pledge Agreement dated June 29, 2001 between
            M. Carroll Benton, AJW Partners, LLC, New Millennium Capital
            Partners II, LLC, and AJW/New Millennium Offshore, Ltd.

  4.68*     Registration Rights Agreement dated June 29, 2001 between AJW
            Partners, LLC, New Millennium Capital Partners II, LLC Millennium
            Capital Partners II, LLC and Insynq, Inc.

 10.1       Insynq, Inc. 2000 Executive Long Term Incentive Plan.
            (Incorporated by reference to Exhibit 10.1 to the Company's Annual
            Report on Form 10-KSB filed September 13, 2000).

 10.2       Insynq, Inc. 2000 Long Term Incentive Plan, as amended by Amendment
            No. 1 dated September 1, 2000. (Incorporated by reference to
            Exhibit 10.2 to the Company's Quarterly Report on Form 10-QSB filed
            October 23, 2000).

 10.3       Business Services Contract with Consulting & Strategy
            International, L.L.C. dated November 18, 1999, as amended by
            Amendment No. 1 dated August 31, 2000, Amendment No. 2 dated
            September 14, 2000, Amendment No. 3 dated October 1, 2000,
            Amendment No. 4 dated October 28, 2000, Amendment dated
            October 31, 2000, and Amendment No. 5 dated December 1, 2000
            (Incorporated by reference to Exhibit 10.3 to the Company's
            Registration Statement on Form SB-2 filed December 14, 2000).

 10.4       Amendment No. 6 dated February 6, 2002, to Business Services
            Contract with Consulting & Strategy International, L.L.C. dated
            November 18, 1999 (Incorporated by reference to Exhibit 10.3 to the
            Company's Quarterly Report on Form 10-QSB filed April 20, 2001).

 10.5       Independent Marketing Consultant Agreement with Vijay Alimchandani
            dated February 20, 2000, as amended by Amendment No. 1 dated
            June 30, 2000. (Incorporated by reference to Exhibit 10.4 to the
            Company's Quarterly Report on Form 10-QSB filed October 23, 2000).

 10.6       Financial Public Relations Consulting Agreement with One Click
            Investments, LLC dated September 20, 1999, as amended by Amendment
            No. 1 dated June 30, 2000, Amendment No. 2 dated
            October 31, 2000 and Amendment No. 3 dated
            January 30, 2001 (Incorporated by reference to Exhibit 10.5 to the
            Company's Registration Statement on Form SB-2 filed
            December 14, 2000 and the Company's Quarterly Report on Form 10-QSB
            filed April 20, 2001).

 10.7       Amendment No. 3 dated January 30, 2001, to Financial Public
            Relations Consulting Agreement with One Click Investments, LLC
            dated September 20, 1999 (Incorporated by reference to Exhibit 10.5
            to the Company's Quarterly Report on Form 10-QSB filed
            April 20, 2001).

 10.8       Form of Registration Rights Agreement upon the issuance of shares
            to investors under the bridge financing dated December 14, 1999.
            (Incorporated by reference to Exhibit 10.6 to the Company's Annual
            Report on Form 10-KSB filed September 13, 2000).

 10.9       Form of Registration Rights Agreement upon the issuance of shares
            to investors under the bridge financing dated January 24, 2000.
            (Incorporated by reference to Exhibit 10.7 to the Company's Annual
            Report on Form 10-KSB filed September 13, 2000)

 10.10      Engagement Letter with Rosenblum Partners, LLC dated July 7, 2000.
            (Incorporated by reference to Exhibit 10.8 to the Company's Annual
            Report on Form 10-KSB filed September 13, 2000).

 10.11      Employment Agreement, dated as of February 20, 2000, between
            John P. Gorst and Xcel Management, Inc., as amended by Amendment
            No. 1 dated September 25, 2000 and Amendment No. 2 dated
            January 30, 2001 (Incorporated by reference to Exhibit 10.9 to the
            Company's Registration Statement on Form SB-2 filed
            December 14, 2000 and the Company's Quarterly Report on Form 10-QSB
            filed April 20, 2001).

 10.12      Amendment No. 2 to Employment Agreement dated January 30, 2001,
            between John P. Gorst and Xcel Management, Inc. (Incorporated by
            reference to Exhibit 10.9 to the Company's Quarterly Report on
            Form 10-QSB filed April 20, 2001).

 10.13      Employment Agreement, dated as of February 20, 2000, between
            M. Carroll Benton and Xcel Management, Inc., as amended by
            Amendment No. 1 dated September 27, 2000. (Incorporated by
            reference to Exhibit 10.10 the Company's Registration Statement
            on Form SB-2 filed December 14, 2000).

 10.14      Amendment No. 2 dated January 30, 2001, between M. Carroll Benton
            and Xcel Management, Inc. (Incorporated by reference to
            Exhibit 10.10 to the Company's Quarterly Report on Form 10-QSB
            filed April 20, 2001).

 10.15      Employment Agreement dated as of February 20, 2000, between
            James R. Leigh, III, and Xcel Management, Inc. (Incorporated by
            reference to Exhibit 10.11 to the Company's Annual Report on
            Form 10-KSB filed September 13, 2000).

 10.16      Employment Agreement, dated as of February 20, 2000, between
            DJ Johnson and Xcel Management, Inc. (Incorporated by reference to
            Exhibit 10.12 to the Company's Annual Report on Form 10-KSB filed
            September 13, 2000).

 10.17      Employment Agreement, dated as of February 20, 2000, between
            Joanie C. Mann and Xcel Management, Inc., as amended by Amendment
            No.1 dated September 25, 2000 and Amendment No. 2 dated
            September 25, 2000. (Incorporated by reference to Exhibit 10.13 the
            Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

 10.18      Employment Agreement, dated as of February 20, 2000, between
            Jim Zachman and Xcel Management, Inc., as amended by Amendment
            No. 1 dated September 16, 2000 and Amendment No. 2 dated
            September 27, 2000. (Incorporated by reference to Exhibit 10.14 the
            Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

 10.19      Employment Agreement, dated as of July 20, 1999, between
            Donald L. Manzano and Insynq, Inc.- Washington. (Incorporated by
            reference to Exhibit 10.15 to the Company's Annual Report on
            Form 10-KSB filed September 13, 2000).

 10.20      Employment Agreement, dated as of July 20, 1999, between
            Carey M. Holladay and Insynq, Inc.- Washington. (Incorporated by
            reference to Exhibit 10.16 to the Company's Annual Report on
            Form 10-KSB filed September 13, 2000).

 10.21      Employment Agreement, dated as of June 28 2000, between
            William G. Hargin and Xcel Management, Inc. (Incorporated by
            reference to Exhibit 10.17 to the Company's Annual Report on
            Form 10-KSB filed September 13, 2000).

 10.22      Employment Agreement, dated as of June 5, 2000, between
            Barbara D. Brown and Xcel Management, Inc., as amended by
            Addendum No. 1 dated November 29, 2000. (Incorporated by reference
            to Exhibit 10.18 the Company's Registration Statement on Form SB-2
            filed December 14, 2000)

 10.23      Employment Agreement, dated as of June 16, 2000, between
            Christopher Todd and Xcel Management, Inc. (Incorporated by
            reference to Exhibit 10.19 to the Company's Annual Report on
            Form 10-KSB filed September 13, 2000).

 10.24      Employment Agreement, dated as of September 1, 2000, between
            David Wolfe and Insynq, Inc., as amended by Amendment No. 1 dated
            September 27, 2000, Amendment No. 1 dated October 19, 2000,
            Amendment No. 2 dated November 29, 2000 and Addendum dated
            December 7, 2000. (Incorporated by reference to Exhibit 10.20 the
            Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

 10.25      Lease Agreement dated January 3, 2000 between Howe/Horizon Holdings
            LLC and Insynq, Inc., for 1101 Broadway Plaza, Tacoma, Washington,
            as amended by Amendment No. 1 dated October 26, 2000. (Incorporated
            by reference to Exhibit 10.21 the Company's Registration Statement
            on Form SB-2 filed December 14, 2000)

 10.26      Sublease Agreement dated November 1, 1999 between Duane and
            Wendy Ashby, d/b/a Cargocare and Insynq Data Utilities for the
            property in the Seafirst Plaza Building in Tacoma, Washington, at
            the Northwest corner of South 9th and A Streets.  Incorporated by
            reference to Exhibit 10.22 to the Company's Annual Report on
            Form 10-KSB filed September 13, 2000)

 10.27*     Lease Termination Agreement dated April 1, 2001 between Duane and
            Wendy Ashby, d/b/a Cargocare; and Insynq Data Utilities.

 10.28      Lease Agreement dated March 21, 2000 between Walaire, Inc. and
            Insynq, Inc., for 3017 Douglas Boulevard, Suite 220 and 240,
            Roseville, California. (Incorporated by reference to Exhibit 10.23
            to the Company's Annual Report on Form 10-KSB filed
            September 13, 2000).

 10.29      Master Licensing Agreement dated May 19, 2000 between Macola, Inc.
            and Insynq, Inc. (Incorporated by reference to Exhibit 10.24 to the
            Company's Annual Report on Form 10-KSB filed September 13, 2000).

 10.30      Citrix iLicense Agreement dated March 2, 2000 between Citrix and
            Insynq, Inc. (Incorporated by reference to Exhibit 10.25 to the
            Company's Annual Report on Form 10-KSB filed September 13, 2000).

 10.31      Citrix iBusiness Application Service Provider Agreement dated
            March 2, 2000 between Citrix and Insynq, Inc. (Incorporated by
            reference to Exhibit 10.26 to the Company's Annual Report on
            Form 10-KSB filed September 13, 2000).

 10.32      Master Licensing Agreement dated March 1, 2000 between Legacy
            Solutions and Insynq, Inc. (Incorporated by reference to
            Exhibit 10.27 to the Company's Annual Report on Form 10-KSB filed
            September 13, 2000).

 10.33      Master Licensing Agreement dated April 7, 2000 between Electronic
            Registry Systems, Inc. and Insynq, Inc. (Incorporated by reference
            to Exhibit 10.28 to the Company's Annual Report on Form 10-KSB
            filed September 13, 2000).

 10.34      Master Licensing Agreement dated March 22, 2000 between Viking
            Software Services, Inc. and Insynq, Inc. (Incorporated by reference
            to Exhibit 10.29 to the Company's Annual Report on Form 10-KSB
            filed September 13, 2000).

 10.35      Master Licensing Agreement dated June 1, 2000 between My Partner
            Online and Insynq, Inc. (Incorporated by reference to Exhibit 10.30
            to the Company's Annual Report on Form 10-KSB filed
            September 13, 2000).

 10.36      Master Licensing Agreement dated April 24, 2000 between Veracicom
            and Insynq, Inc. (Incorporated by reference to Exhibit 10.31 to the
            Company's Annual Report on Form 10-KSB filed September 13, 2000).

 10.37      Master Licensing Agreement dated August 21, 2000 between
            CastaLink.com, Inc. and Insynq, Inc. (Incorporated by reference to
            Exhibit 10.32 to the Company's Annual Report on Form 10-KSB filed
            September 13, 2000).

 10.38      Application Hosting Agreement dated May 12, 2000 between Remedy
            Corporation and Insynq, Inc. (Incorporated by reference to
            Exhibit 10.33 to the Company's Annual Report on Form 10-KSB filed
            September 13, 2000).

 10.39      Novell Internet Commercial Service Provider Agreement dated
            July 24, 2000 between Novell, Inc. and Insynq, Inc. (Incorporated
            by reference to Exhibit 10.34 to the Company's Annual Report on
            Form 10-KSB filed September 13, 2000).

 10.40      Agreement to Provide Collaborative Management Services dated
            July 15, 1999 between Horizon Holdings I, LLC, and Insynq, Inc.
            (Incorporated by reference to Exhibit 10.35 to the Company's Annual
            Report on Form 10-KSB filed September 13, 2000).

 10.41      Referral Partner Agreement dated July 29, 1999 between Global
            Crossing Telecommunications, Inc. and Insynq, Inc. (Incorporated by
            reference to Exhibit 10.36 to the Company's Annual Report on
            Form 10-KSB filed September 13, 2000).

 10.42      Application Hosting and Delivery Agreement dated August 18, 2000
            between Donor Management, Inc. and Insynq, Inc. (Incorporated by
            reference to Exhibit 10.37 to the Company's Quarterly Report on
            Form 10-QSB dated October 23, 2000).

 10.43      Application Service Provider Agreement dated August 21, 2000
            between Corel Corporation and Insynq, Inc. (Incorporated by
            reference to Exhibit 10.38 to the Company's Quarterly Report on
            Form 10-QSB dated October 23, 2000).

 10.44      Application Services Agreement dated September 6, 2000 between
            Microsoft and Insynq, Inc. (Incorporated by reference to
            Exhibit 10.39 to the Company's Quarterly Report on Form 10-QSB
            dated October 23, 2000).

 10.45      Consulting Agreement dated September 20, 2000 between
            David D. Selmon and Insynq, Inc. (Incorporated by reference to
            Exhibit 10.40 to the Company's Quarterly Report on Form 10-QSB
            dated October 23, 2000).

 10.46      Release Agreement dated September 22, 2000 with Charles Benton.
            (Incorporated by reference to Exhibit 10.41 to the Company's
            Quarterly Report on Form 10-QSB dated October 23, 2000).

 10.47      Release Agreement dated September 22, 2000 with Charles Benton.
            (Incorporated by reference to Exhibit 10.42 to the Company's
            Quarterly Report on Form 10-QSB dated October 23, 2000).

 10.48      Employment Agreement dated September 18, 2000 between
            Stephen C. Smith and Insynq, Inc. as amended by Amendment No. 1
            dated December 1, 2000. (Incorporated by reference to Exhibit 10.43
            to the Company's Quarterly Reported file October 23, 2000).

 10.49*     Amendment No. 2 dated July 20, 2001 to Employment Agreement between
            Stephen C. Smith and Insynq, Inc.

 10.50      Non-Exclusive Financial Advisory Agreement dated June 15, 2000
            between Sunstate Equity Trading, Inc. and Xcel Management, Inc., as
            amended by Amendment No. 1 dated September 22, 2000. Incorporated
            by reference to Exhibit 10.44 to the Company's Registration
            Statement on Form SB-2 filed December 14, 2000)

 10.51      Independent Consulting Agreement dated September 16, 2000 between
            Steven Tebo and Insynq, Inc. (Incorporated by reference to
            Exhibit 10.45 to the Company's Quarterly Report on Form 10-QSB
            dated October 23, 2000).

 10.52      Independent Consulting Agreement dated September 16, 2000 between
            Franklin C. Fisher and Insynq, Inc. (Incorporated by reference to
            Exhibit 10.46 to the Company's Quarterly Report on Form 10-QSB
            dated October 23, 2000).

 10.53      Independent Consulting Agreement dated October 31, 2000 between
            Charles F. Benton and Insynq, Inc. (Incorporated by reference to
            Exhibit 10.47 to the Company's Registration Statement on Form SB-2
            filed December 14, 2000)

 10.54      Independent Consulting Agreement dated November 28, 2000 between My
            Partner Online, Inc. and Insynq. Inc. (Incorporated by reference to
            Exhibit 10.48 to the Company's Registration Statement on Form SB-2
            filed December 14, 2000)

 10.55      Letter of Understanding dated November 11, 2000 and Agreement dated
            November 11, 2000 between Bridge 21, Inc. and Insynq, Inc.
            (Incorporated by reference to Exhibit 10.49 to the Company's
            Registration Statement on Form SB-2 filed December 14, 2000)

 10.56      Contract of Engagement dated September 27, 2000 between Cardinal
            Securities, L.L.C. and Insynq, Inc. (Incorporated by reference to
            Exhibit 10.50 to the Company's Registration Statement on Form SB-2
            filed December 14, 2000)

 10.57      Agreement dated November 30, 2000 between Kathleen McHenry,
            John P. Gorst and Insynq, Inc. (Incorporated by reference to
            Exhibit 10.51 to the Company's Registration Statement on Form SB-2
            filed December 14, 2000)

 10.58      Voting Agreement dated November 30, 2000 between Kathleen McHenry,
            Hagens Berman LLP, John P. Gorst and Insynq, Inc. (Incorporated by
            reference to Exhibit 10.52 to the Company's Registration Statement
            on Form SB-2 filed December 14, 2000).

 10.59      Registration Rights Agreement dated November 30, 2000 between
            Kathleen McHenry, Hagens Berman LLP and Insynq, Inc. (Incorporated
            by reference to Exhibit 10.53 to the Company's Registration
            Statement on Form SB-2 filed December 14, 2000).

 10.60      Application Service Provider Reseller Agreement dated
            October 27, 2000 between Wireless Knowledge, Inc. and Insynq, Inc.
            (Incorporated by reference to Exhibit 10.54 to the Company's
            Registration Statement on Form SB-2 filed December 14, 2000).

 10.61      Independent Consultant Agreement dated January 2, 2001 between One
            Click Investments, LLC and Eric Estoos and Insynq, Inc.
            (Incorporated by reference to Exhibit 10.55 to the Company's
            Quarterly Report on Form 10-QSB dated April 20, 2001).

 10.62      Independent Consultant Agreement dated January 2, 2001 between
            Michael duPont and Insynq, Inc. (Incorporated by reference to
            Exhibit 10.56 to the Company's Quarterly Report on Form 10-QSB
            dated April 20, 2001).

 10.63      Non-Exclusive Financial Advisory Agreement dated January 26, 2001
            between Morgan Brewer Securities, Inc. and Insynq, Inc.
            (Incorporated by reference to Exhibit 10.57 to the Company's
            Quarterly Report on Form 10-QSB dated April 20, 2001).

 10.64      Business Advisory and Consulting Services Agreement dated
            February 19, 2001 between Tarshish Capital Markets, LTD. and
            Insynq, Inc. (Incorporated by reference to Exhibit 10.58 to the
            Company's Quarterly Report on Form 10-QSB dated April 20, 2001).

 10.65*     Consulting Agreement dated March 22, 2001 between Metromedia
            Research Group LLC and Insynq, Inc., as amended dated
            April 9, 2001.

 10.66*     Registration Rights Agreement dated March 22, 2001 between
            Metromedia Research Group, LLC and Insynq, Inc.

 10.67*     Consulting Agreement dated March 23, 2002 between Internet PR Group
            and Insynq, Inc.

 10.68*     Letter Agreement dated April 1, 2001 between Barretto Pacific
            Corporation and Insynq, Inc.

 10.69*     Consulting Agreement dated April 1, 2001 between The N.I.R. Group,
            LLC and Insynq, Inc.

 10.70*     Consulting Agreement dated May 3, 2001 and Amendment dated
            May 30, 2001 between Eugene R. Zachman and Insynq, Inc.

 10.71*     Settlement Agreement dated May 17, 2001 between Howe/Horizon
            Holdings, LLC, Horizon Holdings I, LLC and Insynq, Inc.

 10.72*     Equipment Co-Location License Agreement dated May 16, 2001 between
            Horizon Holdings I, LLC and Insynq, Inc.

 10.73*     Lease Agreement dated May 10, 2001 between Howe/Horizon Holdings,
            LLC and Insynq, Inc.

 10.74*     Consulting Agreement dated May 17, 2001 and Amendment dated
            May 30, 2001 between James Zachman and Insynq, Inc.

 10.75*     Agreement to Provide Professional Service dated July 10, 2001
            between Central Software Services and Insynq, Inc.

 10.76*     Consulting Agreement dated May 3, 2001 between DiabloStocks, Inc.
            and Insynq, Inc.

 10.77*     Selling Agreement dated May 28, 2001 between Taconic Capital
            Partners, LP, Internet Solutions Partners, Inc, Salvani
            Investments, Inc. and Insynq, Inc.

 10.78*     Acquisition Purchase Agreement dated June 1, 2001 between Omnibus
            Subscriber Computing, Inc. and Insynq, Inc.

 10.79*     Settlement Agreement dated June 21, 2001 between One Click
            Investments, LLC and John P. Gorst.

 16.1       Letter on Change in Certifying Accountant (Incorporated by
            reference to Exhibit 1 to the Company's Current Report on
            Form 8- K/A filed May 23, 2000).

 23.1*      Consent of Grant Thornton, LLP for Financial Statements for the
            year ended May 31, 2001.

 23.2*      Consent of Brad G. Beckstead, CPA for Financial Statements for the
            year ended May 31, 2000.

 24.1*      Power of Attorney (included on the signature page of this
            Annual Report).
 .
<FN>
*    Filed Herewith
</TABLE>
     (b)  Reports on Form 8-K

     None


                                    - 39 -
===============================================================================
<PAGE>


                                  SIGNATURES


     In accordance with the Section 13 or 15(d) of the Securities Exchange Act,
the Company caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.


                                       INSYNQ, INC.


                                       /s/ John P. Gorst
                                       -----------------
                                       John P. Gorst
                                       President and Chief Executive Officer

Date:  October 1, 2001



                               POWER OF ATTORNEY


     Each person whose signature appears below hereby authorizes and
constitutes John P. Gorst as, his, her or its true and lawful attorney-in-fact
with full power of substitution and reconstitution, for him, her or its and in
his, her or its name, place and stead, in any and all capacities to sign and
file any and all amendments to this report with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
and he, she or it hereby ratifies and confirms all that said attorney-in-fact
or his substitute, may lawfully do or cause to be done by virtue hereof.


      SIGNATURES                       TITLE                         DATE
----------------------     ------------------------------       ---------------
/s/ John P. Gorst          Chief Executive Officer,             October 1, 2001
 ---------------------     President, Chief Operations
    John P. Gorst          Officer and Director
                           (Principal Executive Officer)

/s/ Stephen Smith          Chief Financial Officer              October 1, 2001
---------------------      (Principal Financial and
    Stephen Smith          Accounting Officer)

/s/ M. Carroll Benton      Chief Administrative Officer,        October 1, 2001
---------------------      Secretary, Treasurer
    M. Carroll Benton      and Director

/s/ David D. Selmon        Director                             October 1, 2001
---------------------
    David D. Selmon


                                    - 40 -
===============================================================================
<PAGE>

<TABLE>
                         INDEX TO FINANCIAL STATEMENTS
  Audited Financial Statements as of and for the Years Ended May 31, 2001 and
        2000, and from Inception (August 31, 1998) through May 31, 2001


<CAPTION>
                                                                     Page
                                                                     ----
<S>                                                                <C>
Index to Financial Statements . . . . . . . . . . . . . . . . . . .  F  1

Report of Independent Certified Public Accountants  . . . . . . . .  F  2

Balance Sheets  . . . . . . . . . . . . . . . . . . . . . . . . . .  F  4

Statements of Operations  . . . . . . . . . . . . . . . . . . . . .  F  5

Statement of Stockholders' Deficit  . . . . . . . . . . . . . . . .  F  6

Statements of Cash Flows  . . . . . . . . . . . . . . . . . . . . .  F 12

Notes to Financial Statements . . . . . . . . . . . . . . . . . . .  F 13

</TABLE>

                                   - F  1 -
===============================================================================
<PAGE>

              Report of Independent Certified Public Accountants



Board of Directors
Insynq, Inc.

We have audited the accompanying balance sheet of Insynq, Inc. (a development
stage company) as of May 31, 2001, and the related statements of operations,
stockholders' deficit, and cash flows for the year then ended.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based on
our audit.  The financial statements of Insynq, Inc. as of May 31, 2000 and for
the year then ended, including cumulative results of operations, statement of
stockholders' deficit and cash flows from inception (August 31, 1998)
through May 31, 2000, were audited by another auditor whose report dated
December 5, 2000, expressed an unqualified opinion with an explanatory
paragraph addressing a substantial doubt about the Company's ability to
continue as a going concern.  Our opinion, insofar as it relates to the
cumulative amounts through May 31, 2000, is based solely on the report of the
other auditor.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America.  Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, based on our audit and the report of the other auditors, the
financial statements referred to above present fairly, in all material
respects, the financial position of Insynq, Inc. as of May 31, 2001 and the
results of its operations and its cash flows for the year then ended and the
period from inception through May 31, 2001, in conformity with accounting
principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.  As shown in the financial
statements, the Company incurred a net loss of $14,075,218 during the year
ended May 31, 2001 and, at that date had deficits in working capital and
stockholders' equity.  These factors, among others, as discussed in note D to
the financial statements, raise substantial doubt about the Company's ability
to continue as a going concern.  Management's plans in regard to these matters
are also described in note D.  The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

/s/GRANT THORNTON LLP

Seattle, Washington
July 26, 2001

                                   - F  2 -
===============================================================================
<PAGE>

G. BRAD BECKSTEAD
Certified Public Accountant
                                                            330 E. Warm Springs
                                                            Las Vegas, NV 89119
                                                                   702.257.1984
                                                               702.362.0540 fax


INDEPENDENT AUDITOR'S REPORT


Board of Directors
Insynq, Inc.
(A Development Stage Company)
Tacoma, WA 98405

I have audited the Balance Sheet of Insynq, Inc. (formerly Xcel Management,
Inc. )(the "Company") (A Development Stage Company) as of May 31, 2000, and the
related Statements of Income, Stockholders' Equity, and Cash Flows for the year
then ended.  These financial statements are the responsibility of the Company's
management.  My responsibility is to express an opinion on these financial
statements based on my audit.

I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement presentation.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.  I believe that my audit provides a reasonable basis
for my opinion.

In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Insynq, Inc. (A Development
Stage Company) as of May 31, 2000, and the results of its operations, changes
in stockholders' equity, and cashflows for the year then ended, in conformity
with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern.  As discussed in Note 14 to the financial
statements, the Company has had limited operations.  This raises substantial
doubt about its ability to continue as a going concern.  Management's plans in
regard to these matters are also described in Note D.  The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.

September 13, 2001


                                   - F  3 -
===============================================================================
<PAGE>

                                 Insynq, Inc.
                         (a development stage company)
<TABLE>
                                BALANCE SHEETS

<CAPTION>
                                                             May 31,
                                                       2001           2000
                                                   ------------   ------------
<S>                                                <C>            <C>
                ASSETS
Current assets
  Cash                                             $     26,900   $    106,806
  Accounts receivable, net of allowance for
    doubtful accounts of $25,000 and $1,469
    at May 31, 2001 and 2000                             27,469         63,405
  Related party receivables                              98,990           -
  Inventories                                              -            29,512
  Prepaid expenses                                       61,962         46,098
                                                   ------------   ------------
     Total current assets                               215,321        245,821

Property and equipment, net                             756,493      1,031,675

Other assets
  Intangible assets, net                                 52,585         87,824
  Deposits                                               72,000        165,584
                                                   ------------   ------------

     Total assets                                  $  1,096,399   $  1,530,904
                                                   ============   ============


 LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities
  Current portion of capital lease obligations     $    692,208   $    166,869
  Notes payable                                          27,973         14,470
  Related party notes payable                         1,318,251         25,000
  Accounts payable                                    1,001,395        296,946
  Accrued liabilities                                 1,129,695        134,279
  Customer deposits                                      49,684         49,286
  Deferred compensation                                 107,175           -
                                                   ------------   ------------
     Total current liabilities                        4,326,381        686,850

Advances from stockholder                                  -           100,000

Capital lease obligations, net of current portion        29,256        442,087

Commitments and contingencies                              -              -

Put option obligation                                      -         1,071,785

Stockholders' deficit
  Preferred stock, $0.001 par value,
    10,000,000 shares authorized,
    no shares issued and outstanding                       -              -
  Class A common stock, $0.001 par value,
    10,000,000 shares authorized,
    no shares issued and outstanding                       -              -
  Common stock, $0.001 par value,
    100,000,000 shares authorized                        33,532         19,621
  Additional paid-in capital                         15,430,507      3,132,903
  Unearned compensation and services                   (725,717)          -
  Accumulated development stage deficit             (17,997,560)    (3,922,342)
                                                   ------------   ------------
     Total stockholders' deficit                     (3,259,238)      (769,818)
                                                   ------------   ------------

     Total liabilities and stockholders' deficit   $  1,096,399   $  1,530,904
                                                   ============   ============

<FN>
  The accompanying notes are an integral part of these financial statements.
</TABLE>
                                   - F  4 -
===============================================================================
<PAGE>

                                 Insynq, Inc.
                         (a development stage company)
<TABLE>
                           STATEMENTS OF OPERATIONS

<CAPTION>
                                                          Cumulative results of
                                 Year ended May 31,         operations since
                            ---------------------------         inception
                                2001           2000         (August 31, 1998)
                            ------------   ------------   --------------------
<S>                         <C>            <C>            <C>
Revenues                    $    493,008   $    235,808       $    742,432

Costs and expenses
  Direct cost of services      1,258,932        789,907          2,102,102
  Selling, general and
    administrative
    Non-cash compensation      4,242,072      1,116,666          5,363,995
    Other                      4,572,004      1,856,222          6,513,291
    Network and
      infrastructure costs       154,445         94,303            255,786
  Research and development       296,703        105,752            402,455
                            ------------   ------------       ------------
                              10,524,156      3,962,850         14,637,629
                            ------------   ------------       ------------
  Loss from operations       (10,031,148)    (3,727,042)       (13,895,197)

Other income (expense)
  Other income                    11,569         46,786             58,355
  Loss on disposal of
    equipment                   (114,464)          -              (114,464)
  Interest expense
    Non-cash                  (3,680,583)       (23,600)        (3,704,183)
    Other                       (260,592)       (75,011)          (342,071)
                            ------------   ------------       ------------
                              (4,044,070)       (51,825)        (4,102,363)
                            ------------   ------------       ------------
Net loss                    $(14,075,218)  $ (3,778,867)      $(17,997,560)
                            ============   ============       ============
Net loss per common share
  - basic and diluted       $     (0.57)   $     (0.27)       $     (1.05)
                            ============   ============       ============

<FN>
  The accompanying notes are an integral part of these financial statements.
</TABLE>
                                   - F  5 -
===============================================================================
<PAGE>

                                 Insynq, Inc.
                         (a development stage company)
<TABLE>
                      STATEMENT OF STOCKHOLDERS' DEFICIT
               Inception (August 31, 1998) through May 31, 2001

<CAPTION>
                                                                                      Accumulated
                                     Common Stock       Additional      Unearned      Development      Total
                                 --------------------     Paid-in     Compensation       Stage      Stockholders'
                                   Shares     Amount      Capital     and Services      Deficit       Deficit
                                 ----------   -------   -----------   ------------   ------------   ------------
<S>                              <C>          <C>       <C>           <C>            <C>            <C>
Issuance to founders,
  August 31, 1998                11,284,479   $11,284   $   123,716   $       -      $        257   $    135,257

Net loss, year ended
  May 31, 1999                         -         -             -              -          (143,732)      (143,732)
                                 ----------   -------   -----------   ------------   ------------   ------------
Balance, May 31, 1999            11,284,479    11,284       123,716           -          (143,475)        (8,475)

Common stock warrants issued
  for fair value of services
  rendered in 1999                     -         -          782,844           -              -           782,844

Issuance of common stock for
  services performed in 1999
  valued at $0.07 per share         700,000       700        50,050           -              -            50,750

Allocation of discount on lease
  obligation with attached
  warrants in September 1999           -         -          118,000           -              -           118,000

Issuance of common stock at
  $0.71 per share in August 1999    373,798       374       264,626           -              -           265,000

Issuance of common stock for
  services valued at $1.00 per
  share in September 1999            59,000        59        58,941           -              -            59,000

Issuance of common stock for
  services valued at $1.00 per
  share in November 1999             59,000        59        58,941           -              -            59,000

Issuance of common stock for
  services valued at $0.71 per
  share in December 1999             76,735        77        54,323           -              -            54,400

Issuance of units of common
  stock with one A warrant and
  one B  warrant at $0.71 in
  January 2000                    1,311,821     1,312       928,688           -              -           930,000

Issuance of common stock in
  reverse merger transaction with
  Xcel Management                 3,600,090     3,600        (2,359)          -              -             1,241

Issuance of common stock at $0.50
  per share in February 2000      1,300,000     1,300       648,700           -              -           650,000

<FN>
- Continued
</TABLE>
                                   - F  6 -
===============================================================================
<PAGE>

                                 Insynq, Inc.
                         (a development stage company)
<TABLE>
                STATEMENT OF STOCKHOLDERS' DEFICIT - Continued
               Inception (August 31, 1998) through May 31, 2001

<CAPTION>
                                                                                      Accumulated
                                     Common Stock       Additional      Unearned      Development      Total
                                 --------------------     Paid-in     Compensation       Stage      Stockholders'
                                   Shares     Amount      Capital     and Services      Deficit       Deficit
                                 ----------   -------   -----------   ------------   ------------   ------------
<S>                              <C>          <C>       <C>           <C>            <C>            <C>
Issuance of common stock for
  services valued at $0.71 per
  share in February 2000             43,265        43        30,629           -              -            30,672

Issuance of common stock at
  $0.50 per share in
  February 2000                     300,000       300       149,700           -              -           150,000

Issuance of common stock at
  $1.75 per share in April 2000      61,944        62       108,340           -              -           108,402

Issuance of common stock at
  $1.75 per share in April 2000
  with repurchase agreement and
  record put option obligation      285,714       286       499,714           -              -           500,000

Record put option obligation           -         -       (1,071,785)          -              -        (1,071,785)

Issuance of common stock at
  $2.00 per share in May 2000       125,000       125       249,875           -              -           250,000

Issuance of common stock for
  services valued at $2.00 per
  share in May 2000                  40,000        40        79,960           -              -            80,000

Net loss, May 31, 2000                 -         -             -              -        (3,778,867)    (3,778,867)
                                 ----------   -------   -----------   ------------   ------------   ------------
Balance, May 31, 2000            19,620,846    19,621     3,132,903           -        (3,922,342)      (769,818)

Issuance of common stock for
  services valued at $3.25 per
  share in June 2000 and record
  unearned compensation over
  service period                    250,000       250       812,250        (33,858)          -           778,642

Issuance of common stock at
  $0.60 per share in August 2000    200,000       200       119,800           -              -           120,000

Issuance of common stock at
  $0.60 per share in August 2000    200,000       200       119,800           -              -           120,000

Issuance of common stock at
  $0.2963 per share in
  August 2000                       135,000       135        39,865           -              -            40,000

Issuance of common stock for
  services valued at $1.32 per
  share in August 2000                3,500         3        22,932           -              -            22,935

Issuance of common stock for
  services valued at $1.32 per
  share in September 2000 and
  record unearned compensation
  over service period               250,000       250       327,250        (18,193)          -           309,307

<FN>
- Continued -
</TABLE>
                                   - F  7 -
===============================================================================
<PAGE>

                                 Insynq, Inc.
                         (a development stage company)
<TABLE>
                STATEMENT OF STOCKHOLDERS' DEFICIT - Continued
               Inception (August 31, 1998) through May 31, 2001

<CAPTION>
                                                                                      Accumulated
                                     Common Stock       Additional      Unearned      Development      Total
                                 --------------------     Paid-in     Compensation       Stage      Stockholders'
                                   Shares     Amount      Capital     and Services      Deficit       Deficit
                                 ----------   -------   -----------   ------------   ------------   ------------
<S>                              <C>          <C>       <C>           <C>            <C>            <C>
Issuance of common stock for the
  exercise of stock options at
  $0.30 per share in
  September 2000                    600,000       600       179,400           -              -           180,000

Issuance of common stock for
  exercising of warrants at
  $1.77 per share in
  September 2000                      8,000         8        14,152           -              -            14,160

Forfeiture of common stock
  issued for services               (35,264)      (35)           35           -              -              -

Issuance of common stock for
  services valued at $0.9843 per
  share in November 2000              3,500         4         3,441           -              -             3,445

Allocation of discount on
  convertible debentures with
  warrants and beneficial
  conversion feature                   -         -          900,000           -              -           900,000

Allocation of discount on notes
  payable with warrants                -         -          229,000           -              -           229,000

Issuance of common stock for
  conversion of debentures and
  accrued interest at $0.50
  per share in November 2000      1,855,796     1,856     2,313,658           -              -         2,315,514

Issuance of common stock for
  conversion of notes payable at
  $0.50 per share in
  November 2000                   1,510,000     1,510     1,885,990           -              -         1,887,500

Issuance of common stock for the
  exercise of stock options at
  $0.01 per share in
  December 2000                     500,000       500         4,500           -              -             5,000

Issuance of common stock for the
  exercise of stock options at
  $0.9675 per share
  in December 2000                   15,504        16        14,984           -              -            15,000

Issuance of common stock at
  $0.34 per share pursuant to
  settlement agreement
  in December 2000.                  85,000        85        29,138           -              -            29,223

Forfeiture of common stock issued
  for services in December 2000     (63,170)      (63)           63           -              -              -

Issuance and exercise of options
  for services at $0.4062 per
  share in January 2001 and
  record unearned compensation
  over service period               600,000       600     1,038,310       (203,100)          -           835,810

Issuance of common stock in lieu
  of payment on note payable at
  $0.3438 per share in
  January 2001                      148,488       148        50,902           -              -            51,050

<FN>
- Continued -
</TABLE>
                                   - F  8 -
===============================================================================
<PAGE>

                                 Insynq, Inc.
                         (a development stage company)
<TABLE>
                STATEMENT OF STOCKHOLDERS' DEFICIT - Continued
               Inception (August 31, 1998) through May 31, 2001

<CAPTION>
                                                                                      Accumulated
                                     Common Stock       Additional      Unearned      Development      Total
                                 --------------------     Paid-in     Compensation       Stage      Stockholders'
                                   Shares     Amount      Capital     and Services      Deficit       Deficit
                                 ----------   -------   -----------   ------------   ------------   ------------
<S>                              <C>          <C>       <C>           <C>            <C>            <C>
Issuance of common stock for
  services valued at $0.75 per
  share in February 2001              3,500         3         2,622           -              -             2,625

Issuance of common stock for the
  exercise of warrants at $0.50
  per share in February 2001        100,000       100        44,310           -              -            44,410

Issuance of common stock at $0.25
  per share in March 2001, net of
  stock issuance cost               135,000       135        29,227           -              -            29,362

Issuance of common stock at
  $0.4062 per share through the
  exercise of stock options in
  March 2001 for cash and in
  employee compensation payable      50,000        50        20,260           -              -            20,310

Issuance of common stock in lieu
  of employee compensation at
  $0.4062 per share in March 2001    25,000        25        10,130           -              -            10,155

Issuance of common stock at $0.20
  per share in March 2001, net of
  stock issuance cost                22,000        22         3,806           -              -             3,828

Issuance of common stock at
  $0.3438 per share in March 2001
  for services and record
  unearned compensation over
  service period                    425,000       425       145,690       (105,936)          -            40,179

Issuance of common stock at
  $0.3438 per share in lieu of
  accounts payable in March 2001     10,908        11         3,739           -              -             3,750

Issuance of common stock at
  $0.20 per share for the
  exercise of stock warrants
  in March 2001                     125,000       125        24,875           -              -            25,000

Issuance of common stock at
  $0.3281 per share in March 2001
  for services and record
  unearned compensation over
  service period                     92,000        92        30,093        (27,669)          -             2,516

Issuance of common stock at
  $0.3281 per share in April 2001
  for services                      125,000       125        40,888           -              -            41,013

Issuance of common stock at
  $0.18 per share in March 2001
  for services and record
  unearned compensation over
  service period                    300,000       300        53,700        (33,387)          -            20,613

Issuance of common stock in
  return of put shares during
  January 2001 through
  May 17, 2001                    1,733,016     1,733     1,070,052           -              -         1,071,785

<FN>
- Continue -
</TABLE>
                                   - F  9 -
===============================================================================
<PAGE>

                                 Insynq, Inc.
                         (a development stage company)
<TABLE>
                STATEMENT OF STOCKHOLDERS' DEFICIT - Continued
               Inception (August 31, 1998) through May 31, 2001

<CAPTION>
                                                                                      Accumulated
                                     Common Stock       Additional      Unearned      Development      Total
                                 --------------------     Paid-in     Compensation       Stage      Stockholders'
                                   Shares     Amount      Capital     and Services      Deficit       Deficit
                                 ----------   -------   -----------   ------------   ------------   ------------
<S>                              <C>          <C>       <C>           <C>            <C>            <C>
Issuance of common stock at
  $0.17 per share in lieu of
  employee compensation in
  April 2001                        540,000       540        91,260           -              -            91,800

Issuance of common stock at
  $0.07 per share for the
  exercise of stock options
  in April 2001                     315,000       315        21,735           -              -            22,050

Issuance of common stock at
  $0.07 per share in lieu of
  employee compensation in
  April 2001                         25,000        25         1,725           -              -             1,750

Issuance of common stock at
  $0.07 per share in lieu of
  employee compensation in
  April 2001 through the
  exercise of stock options         600,275       600        41,419           -              -            42,019

Issuance of common stock at
  $0.3281 per share in
  April 2001 for services           125,000       125        21,125           -              -            21,250

Issuance of common stock at
  $0.16 per share for services
  in May 2001                       290,000       290        46,110        (42,533)          -             3,867

Issuance of common stock at
  $0.50 per share in lieu of
  accounts payable in May 2001
  through the exercise of stock
  warrants                           22,028        22        10,997           -              -            11,019

Issuance of common stock at
  $0.4312 per share in lieu of
  accounts payable in May 2001
  through the exercise of stock
  warrants                           75,000        75        32,265           -              -            32,340

Issuance of common stock at
  $0.15 per share for services
  in May 2001                        66,667        67         9,933           -              -            10,000

Issuance of common stock at
  $0.07 per share for the
  exercise of stock options
  in May 2001                     1,360,000     1,360        93,840           -              -            95,200

Issuance of common stock at
  $0.0949 per share in lieu of
  employee compensation
  in May 2001                       500,000       500        46,974           -              -            47,474

<FN>
- Continued -
</TABLE>
                                   - F 10 -
===============================================================================
<PAGE>

                                 Insynq, Inc.
                         (a development stage company)
<TABLE>
                STATEMENT OF STOCKHOLDERS' DEFICIT - Continued
               Inception (August 31, 1998) through May 31, 2001

<CAPTION>
                                                                                      Accumulated
                                     Common Stock       Additional      Unearned      Development      Total
                                 --------------------     Paid-in     Compensation       Stage      Stockholders'
                                   Shares     Amount      Capital     and Services      Deficit       Deficit
                                 ----------   -------   -----------   ------------   ------------   ------------
<S>                              <C>          <C>       <C>           <C>            <C>            <C>
Issuance of common stock at
  $0.07 per share in lieu of
  employee compensation through
  the exercise of stock options
  in May 2001                       140,000       140         9,660           -              -             9,800

Issuance of common stock at
  $0.17 per share for services in
  May 2001 and record unearned
  compensation over service
  period                            435,000       435        73,515        (44,370)          -            29,580

Issuance of common stock at
  $0.12 per share for services
  in May 2001                         3,500         4           416           -              -               420

Issuance of warrants to non-
  employees for services and
  record unearned compensation
  over the service period
  during 2001                          -         -          991,952        (13,205)          -           978,747

Issuance of stock options to non-
  employees for services and
  record unearned compensation
  over service period during 2001      -         -          352,006       (203,466)          -           148,540

Issuance of stock options to
  employees with exercise price
  below fair market on date of
  grant during 2001                    -         -          867,810           -              -           867,810

Net loss for the year                  -         -             -              -       (14,075,218)   (14,075,218)
                                 ----------   -------   -----------   ------------   ------------   ------------
Balance, May 31, 2001            33,531,094   $33,532   $15,430,507   $   (725,717)  $(17,997,560)  $ (3,259,238)
                                 ==========   =======   ===========   ============   ============   ============

<FN>
  The accompanying notes are an integral part of this financial statement.
</TABLE>
                                   - F 11 -
===============================================================================
<PAGE>

                                 Insynq, Inc.
                         (a development stage company)
<TABLE>
                           STATEMENTS OF CASH FLOWS

<CAPTION>
                                                                                Cumulative cash
                                                      Year ended May 31,          cash flows
                                                 ---------------------------    since inception
                                                     2001           2000       (August 31, 1998)
                                                 ------------   ------------   -----------------
<S>                                              <C>            <C>            <C>
Increase (Decrease) in Cash
  Net loss                                       $(14,075,218)  $ (3,778,867)     $(17,997,560)
  Adjustment to reconcile net loss to
    cash used in operating activities:
    Depreciation and amortization                     279,329        195,610           484,586
    Loss on disposal of equipment                     114,464           -              114,464
    Issuance of common stock for services           2,246,975        333,822         2,586,054
    Issuance of options and warrants for services   1,127,287        782,844         1,910,131
    Issuance of options to employees
      under fair market value                         867,810           -              867,810
    Warrants issued with debt and capital leases    1,392,967         23,600         1,416,567
    Warrants and beneficial conversion
      features of debentures                        2,287,616           -            2,287,616
      Change in assets and liabilities:
        Accounts receivable and
          related party receivables                   (63,054)       (59,981)         (126,459)
        Inventories                                    29,512        (27,266)             -
        Prepaid expenses                              (14,705)        (9,726)          (73,973)
        Deposits                                       93,584       (165,583)          (72,000)
        Accounts payable                              795,282        268,247         1,092,228
        Accrued liabilities                         1,167,466         11,061         1,351,031
        Customer deposits                                 398         49,286            49,684
        Deferred compensation                         107,175           -              107,175
                                                 ------------   ------------      ------------
          Net cash used in operating activities    (3,643,112)    (2,376,953)       (6,002,646)
                                                 ------------   ------------      ------------

Cash flows from investing activities
  Purchase of equipment                               (68,862)      (397,544)         (481,776)
  Acquisition of intellectual property                   -              -               (1,548)
  Deposit on future acquisition                          -           (35,000)          (35,000)
  Cash received from Xcel acquisition                    -               257               257
                                                 ------------   ------------      ------------
          Net cash used in investing activities       (68,862)      (432,287)         (518,067)
                                                 ------------   ------------      ------------

Cash flows from financing activities
  Proceeds from notes payable and related
    party notes payable                             2,129,887           -            2,129,887
  Proceeds from issuance of common stock              734,320      2,853,402         3,587,722
  Proceeds from convertible debentures                800,000           -              800,000
  Payments on short term notes payable                (18,133)       (30,530)          (48,663)
  Payments on capital lease obligations               (14,006)        (7,327)          (21,333)
  Advances from stockholder                              -           100,000           100,000
                                                 ------------   ------------      ------------
          Net cash provided by
            financing activities                    3,632,068      2,915,545         6,547,613
                                                 ------------   ------------      ------------

Net increase (decrease) in cash                       (79,906)       106,305            26,900
Cash at beginning of period                           106,806            501              -
                                                 ------------   ------------      ------------

Cash at end of period                            $     26,900   $    106,806      $     26,900
                                                 ============   ============      ============

Supplemental non-cash investing and financing activities - see note Q

<FN>
  The accompanying notes are an integral part of these financial statements.
</TABLE>
                                   - F 12 -
===============================================================================
<PAGE>

                                 Insynq, Inc.
                         (a development stage company)

                         NOTES TO FINANCIAL STATEMENTS
                                 May 31, 2001


NOTE A - NATURE OF BUSINESS

Insynq, Inc. (the Company or Insynq) is a Delaware corporation headquartered in
Tacoma, Washington USA.  The Company is an application hosting and managed
software service provider that provides server-based computing access and
services to customers who decide to augment all or part of their information
technology requirements.  Customers pay a monthly fee for their services and
connect to Insynq's server farm primarily through either the Internet, wireless
or DSL connection.  During the year ended May 31, 2001, the Company's planned
principal operations began however, there has been no significant revenues
generated. In accordance with Statement of Financial Accounting Standard No. 7
(SFAS 7), it is management's position that it has been devoting most of its
efforts toraising capital as evidenced by the number of financing and equity
transactions.  In addition, the Company is continuing the practice of offering
discounted services in an effort to establish new market segments and
acceptance.  Accordingly, the Company is considered to be a development stage
company.

NOTE B - BASIS OF PRESENTATION

On February 18, 2000, the Company closed an asset purchase transaction
(Acquisition) in which Xcel Management, Inc. (Xcel), a non-operating public
shell company, acquired substantially all of the assets of Insynq.  Under
accounting principles generally accepted in the United States of America, the
Acquisition is considered to be a capital transaction in substance, rather than
a business combination.  That is, the Acquisition is equivalent to the issuance
of stock by Insynq for the net monetary assets of Xcel accompanied by a
recapitalization, and is accounted for as a change in capital structure.
Accordingly, the accounting for the Acquisition is identical to that resulting
from a reverse acquisition, except that no goodwill is recorded.  Under reverse
takeover accounting, the post-reverse-acquisition financial statements of the
"legal acquirer" Xcel, are those of the "legal acquiree" Insynq (the
accounting acquirer).

On August 3, 2000, Xcel completed a re-incorporation as a Delaware corporation
and changed its' name to Insynq, Inc.  In connection with the re-incorporation
of the Company in the State of Delaware, the shareholders unanimously voted for
the adoption of a plan of recapitalization pursuant to which the issued and
outstanding shares of the Company's common stock, would forward split, two-for-
one, so that holders of common stock would receive two shares of the Company's
$0.001 par value common stock for each share held. The 9,915,424 shares of
common stock outstanding immediately prior to the reorganization were converted
to 19,830,848 shares of common stock, and outstanding options and warrants to
purchase shares were converted into options and warrants entitling the holders
to purchase twice as many shares upon exercise of such options and warrants.
Loss per share calculations includes the Company's change in capital structure
for all periods presented.


NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies consistently applied in the
preparation of the accompanying financial statements is as follows.

Revenue Recognition

The Company's principal source of revenue is generated from application
hosting, managed software and related type services.  Payments received in
advance of the service, even if non-refundable, are recorded as customer
deposits.  Generally, any prepaid amount is an advance payment and is applied
to the last month service fee.  Revenues are recognized over the service
period.  Revenue from the sale of computer hardware is recorded upon delivery,
or upon installation when specified under contact terms.

                                   - F 13 -
===============================================================================
<PAGE>

                                 Insynq, Inc.
                         (a development stage company)

                         NOTES TO FINANCIAL STATEMENTS
                                 May 31, 2001


NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

Inventories

Inventories consist of computer hardware and equipment held for resale and is
recorded at the lower of cost (first in, first out) or market.

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation
and amortization.  Depreciation and amortization is calculated using the
straight-line method over the estimated useful lives of the assets ranging
between three to seven years.  Leasehold improvements are depreciated over the
lesser of the useful lives of the improvements or the term of the lease.

Intangible Assets

Intangible assets consist of the rights to a proprietary data utility services
system acquired by the Company.  The cost is being amortized over sixty months.
Accumulated amortization totaled $77,415 and $43,724 as of May 31, 2001 and
2000, respectively.

Long-Lived Assets

Long-lived assets, including, but not limited to, property and equipment and
identifiable intangibles held and used by the Company are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of the asset may not be recoverable.  The Company believes
that no impairment of the carrying amount of its long-lived assets existed
at May 31, 2001 and 2000.

Class A Common Stock

The Board of Directors is authorized to issue of up to 10,000,000 shares of
Class A common stock pursuant to which the holders of such stock are entitled
to three votes for each share held, on all matters submitted to stockholders,
which voting power may be used by the holders of such stock to create voting
impediments or otherwise delay or prevent a change in control  or to modify the
rights of holders of the Company's common stock.  As of May 31, 2001, 5,000,000
options to purchase Class A common stock at $0.50 per share were granted to two
officers and were outstanding. These options are included in the employee stock
options referenced in Notes L and M.

Loss Per Share

Basic loss per share is based on the weighted average number of common shares
outstanding during the period.  The weighted average number of common shares
outstanding was 24,808,590 and 14,050,928 for the years ended May 31, 2001 and
2000, respectively, and 17,201,296 since inception (August 31, 1998) through
May 31, 2001.  Diluted loss per share includes the effect of all potentially
dilutive common stock issuances.  Diluted loss per share is not presented
because the effect would be anti-dilutive.  At May 31, 2001 and 2000, there
were 21,447,545 and 8,572,248 shares of potentially issuable common stock,
respectively.

Research and Development Costs

Research and development costs are charged to expense in the period when
incurred.

                                   - F 14 -
===============================================================================
<PAGE>

                                 Insynq, Inc.
                         (a development stage company)

                         NOTES TO FINANCIAL STATEMENTS
                                 May 31, 2001


NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

Advertising Expense

Advertising costs are expensed in the period incurred.  For the years ended
May 31, 2001 and 2000, advertising costs totaled $198,726 and $97,715,
respectively.

Concentrations of Credit Risk

The Company sells the majority of its services throughout North America.  The
majority of the Company's sales are made to customers who are billed monthly on
an open account and no collateral is required.  For the year ended
May 31, 2001, approximately thirty percent (30%) of revenues were to four
customers, one of which is a related party comprising eight percent (8%) of the
total revenues.

Insynq has established four vendor relationships that are critical to the
day-to-day operations of the Company.  The vendors are in the software,
hardware, systems and communications industries.  These vendors supply software
and hardware to run the programs and systems, and provide the means through
which the Company connects and communicates with its customers.

Fair Value of Financial Instruments

Financial instruments, consisting principally of cash, accounts receivable,
payables, accrued liabilities, short and long-term obligations, and their
carrying amounts in the accompanying balance sheets, approximate their fair
values.  It is management's opinion that the Company is not exposed to
significant currency or credit risks arising from these financial instruments.

Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period.  Actual results could differ from
those estimates.

Reclassifications

Certain reclassifications have been made to the 2001 presentation in order to
conform to the 2000 presentation.

New Authoritative Accounting Pronouncements

In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 (SAB 101), Revenue Recognition in Financial
Statements.  SAB 101 provides guidance on applying accounting principles
generally accepted in the United States to revenue recognition in financial
statements and is effective in the fourth quarter of all fiscal years beginning
after December 15, 1999.  During fiscal year 2001, the Company had recorded
revenues in accordance with SAB 101, so the implementation of SAB 101 did not
have an impact on the Company's operating results.

                                   - F 15 -
===============================================================================
<PAGE>

                                 Insynq, Inc.
                         (a development stage company)

                         NOTES TO FINANCIAL STATEMENTS
                                 May 31, 2001


NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

In April 2000, the Financial Accounting Standards Board issued
FASB Interpretation No. 44 (FIN 44), Accounting for Certain Transactions
Involving Stock Compensation, an interpretation of APB Opinion No. 25.
FIN 44 is effective for transactions occurring after July 1, 2000.  During
fiscal year 2001, the Company had been applying FIN 44.

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141 (SFAS 141), Business Combinations.
SFAS 141 applies to all business combinations initiated after June 30, 2001.
The Statement also applies to all business combinations accounted for using
the purchase method for which the date of acquisition is July 1, 2001, or
later.  The adoption of SFAS 141 will not have an impact on the Company's
financial statements.

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 142, Goodwill and Other
Intangible Assets.  The provisions of SFAS 142 are required to be applied
starting with fiscal years beginning after December 15, 2001 with earlier
application permitted for entities with fiscal years beginning after
March 15, 2001 provided that the first interim financial statements have
previously been issued.   The statement is required to be applied at the
beginning of the entity's fiscal year and to be applied to all goodwill and
other intangible assets recognized in its financial statements to that date.
The initial application of the SFAS 142 will have no impact on the Company's
financial statements.


NOTE D - MANAGEMENT PLANS

The Company is a development stage company as defined under Statement of
Financial Accounting Standards No. 7.  The Company is devoting substantially
all of its present efforts to establishing a new business and its planned
operations have recently commenced.  However, no significant operating revenues
have been derived to date.  The Company has incurred recurring losses from
operations and has a total accumulated development stage deficit of $17,997,560
at May 31, 2001.  As discussed in Note J, the Company is in default on a
capitalized lease obligation.  The underlying leased assets are critical to the
Company's operations. The Company has initiated contact to restructure the
lease obligation and, due to the current economic climate and current market
for theequipment, the Company anticipates that it can successfully restructure
this obligation.  The development of the Company's technology and products will
continue to require a commitment of substantial funds.  Currently, the Company
has no material capital commitments.  However, should the Company be forced to
seek other equipment in the open market based on its inability to restructure
its capital lease obligation, the Company would attempt to raise the necessary
finances.  These amounts, however, are currently unquantifiable.

The Company has implemented cost restructuring strategies, cost-cutting
measures, and continues to devote significant efforts to develop markets.  In
addition, the Company initiated vendor negotiations resulting in improved
payment terms or reductions in the total amounts due.

However, the rate at which the Company expends its resources is variable, may
be accelerated, and will depend on many factors.  The Company will need to
raise substantial additional capital to fund its operations and may seek such
additional funding through public or private equity or debt financing. There
can be no assurance that such additional funding will be available on
acceptable terms, if at all.  The Company's continued existence as a going
concern is ultimately dependent upon its ability to secure additional funding
for completing and marketing its technology and the success of its future
operations.

                                   - F 16 -
===============================================================================
<PAGE>

                                 Insynq, Inc.
                         (a development stage company)

                         NOTES TO FINANCIAL STATEMENTS
                                 May 31, 2001

NOTE D - MANAGEMENT PLANS -  Continued

In addition, on June 29, 2001, the Company entered into a private financing
transaction with three investors under which the investors initially purchased
$550,000 from a total of $1,200,000 12% convertible debentures. The Company
anticipates receiving the remaining $650,000, less certain fees, upon
successful registration of certain shares of the common stock.

NOTE E - PROPERTY AND EQUIPMENT
<TABLE>
Property and equipment consist of the following as of May 31:
<CAPTION>
                                                2001           2000
                                             ----------     ----------
<S>                                          <C>            <C>
          Computer hardware                  $   86,820     $  144,621
          Software                               97,550        105,536
          Equipment                             149,715        217,468
          Furniture and fixtures                 43,990         86,650
          Capitalized leased equipment          668,959        587,517
          Leasehold improvements                 58,036         51,365
                                             ----------     ----------
                                              1,105,070      1,193,157
                                             ----------     ----------
          Less accumulated depreciation
               and amortization                 348,577        161,482
                                             ----------     ----------
                                             $  756,493     $1,031,675
                                             ==========     ==========
</TABLE>
Accumulated depreciation on capital lease equipment totaled $216,264 and
$83,686 as of May 31, 2001 and 2000, respectively.


NOTE F - ACCRUED LIABILITIES
<TABLE>
Accrued liabilities consist of the following as of May 31:
<CAPTION>
                                             2001           2000
                                          ----------     ----------
<S>                                       <C>            <C>
          Salaries and benefits           $  254,285     $   62,309
          Payroll taxes                      448,061         37,779
          Interest and penalties             102,565           -
          Other taxes                         45,082           -
          Interest                            50,247           -
          Consulting and other               229,455         34,191
                                          ----------     ----------
                                          $1,129,695     $  134,279
                                          ==========     ==========
</TABLE>
As of May 31, 2001, the Company was delinquent on its payroll and business
taxes.  The majority of the past due amount is for payroll taxes which are due
to the Internal Revenue Service.  The Company and the Internal Revenue Service
have informally agreed to a payment plan for the past due taxes, subject to the
Company remaining current on all future payroll tax deposits.  The Company has
been in contact with other respective taxing authorities to initiate payment
plans in settlement of their respective past due taxes.

                                   - F 17 -
===============================================================================
<PAGE>

                                 Insynq, Inc.
                         (a development stage company)

                         NOTES TO FINANCIAL STATEMENTS
                                 May 31, 2001


NOTE F - ACCRUED LIABILITIES - Continued

Additionally, two liens have been filed by two different States for past due
taxes, plus accrued penalties and interest.  One lien, for approximately
$28,000, is to a State for prior year's income taxes assessed to the
predecessor company of Insynq, Inc.  This amount is in dispute and amended
returns to correct this deficiency have been filed.


NOTE G - RELATED PARTY NOTES PAYABLE
<TABLE>
The Company has entered into short-term promissory notes with stockholders,
a corporate officer, a prior employee and two vendors.  All notes, plus accrued
interest, are due within one year of issuance and consist of the following at
May 31:
<CAPTION>
                                                  2001           2000
                                               ----------     ----------
<S>                                            <C>            <C>
     Note payable to stockholder, due
     November 2, 2001, plus accrued interest;
     bears interest at 10% per annum and is
     unsecured                                 $1,162,000     $     -

     Various notes payable to related parties,
     due on demand to dates ranging through
     April 20, 2002; bearing interest ranging
     from 10% to 12%                              146,402         25,000

     Two notes payable to related party
     vendors, installment payment of $1,692
     due monthly through August 15, 2001 and
     final payment due March 2002; bearing
     interest ranging from 10% to 12%               9,849           -
                                               ----------     ----------

                                               $1,318,251     $   25,000
                                               ==========     ==========
</TABLE>
On July 17, 2000, the Company entered into two stockholder promissory note
agreements totaling $255,000.  In addition, the stockholders were granted
warrants to purchase a total of 325,000 shares of common stock at a price of
$2.00 per share.  The Company recorded a discount on the loans totaling
$229,000 for the fair value of warrants granted.  The Company recognized
$229,000 of interest expense on the discount for the year ended May 31, 2001.
In November 2000, the loans were converted into 510,000 shares of common stock
at $0.50 per share.

In October 2000, the Company entered into three additional shareholder loans
totaling $500,000.  These notes were also converted in November 2000 into
1,000,000 shares of common stock at $0.50 per share.  As an inducement to the
holders to convert the loans, the Company agreed to convert the loans into
common stock at a price below the fair market value of the common stock at the
time of conversion.  This resulted in additional interest expense totaling
$1,132,500 for the year ended May 31, 2001.

On December 1, 2000, the Company entered into a promissory note agreement with
a stockholder for $50,000 with accrued interest of prime, plus 3%.  The
principal and accrued interest was converted to 148,488 shares of common stock
on January 30, 2001.

                                   - F 18 -
===============================================================================
<PAGE>

                                 Insynq, Inc.
                         (a development stage company)

                         NOTES TO FINANCIAL STATEMENTS
                                 May 31, 2001


NOTE H - NOTES PAYABLE

The Company has a $15,000 revolving line of credit.  As of May 31, 2001 and
2000, the balance was $13,973 and $10,200, respectively.  As of May 31, 2001,
the Company has an additional payable totaling $14,000 due on demand.


NOTE I - CONVERTIBLE DEBENTURES

On June 16, 2000, the Company entered into two loan agreements for a total of
$650,000, in the form of convertible debentures.  The principal balance of the
loans and accrued interest were convertible into common stock at $1.42 and
$0.71 per share, respectively.  In addition, the Company granted 915,492
warrants to purchase common stock at $2.00 per share.  On September 16, 2000,
the Company entered into two additional convertible debenture agreements
totaling $250,000.  The loans and accrued interest was convertible into common
stock at $1.00 per share.  In addition, the Company granted 250,000 warrants to
purchase common stock at $1.00 per share to the holders of the debentures.

The Company recorded a discount on the convertible debentures totaling
$900,000, equal to the fair value of the warrants received and the intrinsic
value of the beneficial conversion feature.  The Company has recognized
$900,000 of interest expense on the discount for the year ended May 31, 2001.
As an inducement to convert the balance of principal and related accrued
interest of the debentures, the Company reduced the original conversion share
prices to $0.50.  This resulted in an additional interest charge in the amount
of $1,387,616 for the year ended May 31, 2001.

In November 2000, the Company converted the debentures totaling $900,000, plus
accrued interest of $55,796, into common stock at $0.50.


NOTE J - CAPITAL LEASE OBLIGATIONS

The Company leases equipment under capital leases expiring in 2003.  As of
May 31, 2001, the Company's principal capital lease (for computer hardware,
printers and related infrastructure) obligation is in default; accordingly,
the entire lease obligation plus imputed interest net of the discount, is
classified as a current obligation on the accompanying financial statements.
Total net obligation due this lessor is $668,136, net of a discount of $62,933.

                                   - F 19 -
===============================================================================
<PAGE>

                                 Insynq, Inc.
                         (a development stage company)

                         NOTES TO FINANCIAL STATEMENTS
                                 May 31, 2001


NOTE J - CAPITAL LEASE OBLIGATIONS - Continued
<TABLE>
The following is a schedule by years of future minimum lease payments together
with the present value of the minimum payments under capital lease obligations,
net of discount, as of May 31, 2001:
<S>                                                      <C>
                   Years Ending May 31,
         ----------------------------------------
                           2002                          $ 828,598
                           2003                             33,040
                                                         ---------

         Future minimum lease payments                     861,638
         Less amount representing interest and discount    140,174
                                                         ---------

         Present value of minimum lease payments         $ 721,464
                                                         =========

         Current portion                                 $ 692,208
         Long-term portion                                  29,256
                                                         ---------

                                                         $ 721,464
                                                         =========
</TABLE>

NOTE K - PUT OPTION OBLIGATION

Pursuant to conversion agreements with four investors (stockholders), the
Company exchanged 1,733,016 of the investors' put shares for 1,733,016 shares
of common stock. The recorded amount of the converted put shares was $1,071,785
at May 31, 2001.


NOTE L - COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company conducts a substantial portion of its operations utilizing leased
facilities for its corporate headquarters and for its server farm racks.

Effective August 1, 2001, the Company entered into two separate facility leases
for its corporate operations. The first lease is with the Company's existing
landlord and was amended pursuant to a settlement agreement between each party
on May 17, 2001.  Terms of this lease call for base rent plus charges for a
portion of the Company's share of taxes and utilities over the next sixty
months.  The second facility lease commences on August 1, 2001, and terminates
on July 31, 2002.  Rent per month is $1,600 for the first twelve months.

A server farm racking agreement is for a term of twenty-four months,
expiring on May 31, 2003.  The first year of the agreement calls for a monthly
fee of $500 per rack, with a minimum of seven racks, or $3,500.  The second
year of the agreement calls for a minimum fee of $550 per rack or $3,850.
As of May 31, 2001, the Company has nine racks at the server farm.

                                   - F 20 -
===============================================================================
<PAGE>

                                 Insynq, Inc.
                         (a development stage company)

                         NOTES TO FINANCIAL STATEMENTS
                                 May 31, 2001


NOTE L - COMMITMENTS AND CONTINGENCIES - Continued
<TABLE>
The following is a schedule of approximate future minimum operating lease
payments as of May 31, 2001:
<CAPTION>
                   Years Ending May 31,
              ------------------------------
<S>                                              <C>
                           2002                  $  235,500
                           2003                     236,500
                           2004                     189,800
                           2005                     194,400
                           2006                     199,200
                        Thereafter                   34,000
                                                 ----------

                                                 $1,089,400
                                                 ==========
</TABLE>
For the years ended May 31, 2001 and 2000, rent expense for facilities and
racking, including forfeited lease deposits as a result of amendments to the
lease terms during 2001, were approximately $375,000 and $179,000,
respectively.

Lawsuit

The Company is party to one lawsuit filed by a prior employee. The lawsuit
claim is for approximately $115,000 (plus accrued interest) for unpaid wages,
severance, bonuses, benefits and expenses.  The Company's management believes
the claim is without merit and intends to vigorously defend its position of no
liability.

The Company has settled a lawsuit filed by a prior employee and has issued to
such employee $10,000 and 85,000 shares of common stock as of May 31, 2001.

Consulting Agreements

During the year ended May 31, 2001, the Company has several on-going agreements
with investor relation consultants, financial advisory, advertising and
marketing consultants, and sales persons.  Terms of these agreements range from
six months to three years and most have automatic renewable provisions.
Compensation for these agreements may be in the form of cash or cash plus
common stock or options.  Certain agreements contain provisions that are
performance based only, whereby an individual representing the Company must
consummate an acceptable transaction before the common stock or stock options
will be issued.  Short-term (six months or less) monthly cash fees for
consultants approximate $18,500 and one long-term agreement (three years) is
$10,000 per month.  In addition, a consulting group was paid its final $25,000
installment of a three-month agreement in June 2001.

On July 1, 2001, the Company entered into a six-month agreement with an
independent consultant/advisor, in which the consultant will provide expertise
in financing, mergers and acquisitions. Terms of the agreement call for the sum
total of $67,000 paid over the contract, $7,500 at effective date of the
agreement and $60,000 paid in equal installments over the next six months.
The consultant will also receive 2,000,000 shares of common stock in July 2001.
An additional 500,000 shares of common stock will be issued to the consultant
if there is an acquisition of another company or its assets.

                                   - F 21 -
===============================================================================
<PAGE>

                                 Insynq, Inc.
                         (a development stage company)

                         NOTES TO FINANCIAL STATEMENTS
                                 May 31, 2001


NOTE L - COMMITMENTS AND CONTINGENCIES - Continued

Employment Contracts

As of May 31, 2001, the Company has six employment contracts with its key
officers and employees.  Each agreement calls for a base annual compensation,
currently ranging between $96,000 and $180,000.  Five agreements contain
wage escalation clauses effective on the anniversary date of the agreement.
The agreements generally are written for three to fours years in duration.
Each agreement has an incentive clause with rights to exercise vested stock
options agreements at a predetermined price, generally granted at market value,
and range between $.50 and $2.00 per share.  A total 6,560,000 options have
been granted under these agreements.


NOTE M - STOCK OPTIONS

On March 31, 2000, the Company's Board of Directors adopted two long-term
incentive plans (Plans), described as follows:

2000 Long Term Incentive Plan (LTIP)

The LTIP provides for the issuance of incentive and non-qualified stock
options, stock appreciation rights and restricted stock to directors, officers,
employees and consultants.  At the adoption of this plan, the Company set aside
16,675,300 shares of common stock, which may be issued upon the exercise of
options granted.  As of May 31, 2001, incentive options available for issuance
are 7,946,540.

2000 Executive Long Term Incentive Plan (Executive LTIP)

The Executive LTIP provides for the issuance of incentive and non-qualified
stock options, stock appreciation rights and restricted stock to executive
officers of the Company.  The Company set aside 5,400,000 shares of Class A
common stock under this plan at its adoption.  As of May 31, 2001, two
corporate officers have been granted options to purchase a total of 5,000,000
shares of Class A common stock.

The Company's Board of Directors administers the Plans and the Board may amend
or terminate the Plans if it does not cause any adverse effect on any then
outstanding options or unexercised portion thereof.  All options generally have
an exercise price equal the fair value of the underlying common stock on the
date of grant, vest immediately and expire in ten years.

The Company's stock option plan is subject to the provisions of SFAS No 123,
Accounting for Stock-Based Compensation.  Under the provisions of this
standard, employee and director stock-based compensation expense is measured
using either the intrinsic-value method as prescribed by Accounting Principles
Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees and
related Interpretations, or the fair value method described in SFAS No. 123.
The Company has elected to account for its employee and director stock-based
awards under the provisions of APB Opinion No. 25.  Under APB Opinion No. 25,
compensation cost for stock options is measured as the excess, if any, of the
fair value of the underlying common stock on the date of grant over the
exercise price of the stock option.

                                   - F 22 -
===============================================================================
<PAGE>

                                 Insynq, Inc.
                         (a development stage company)

                         NOTES TO FINANCIAL STATEMENTS
                                 May 31, 2001


NOTE M - STOCK OPTIONS - Continued

The Company is required to implement the provisions of SFAS No. 123 for
stock-based awards to those other than employees and directors.  Stock-based
compensation expense for all equity instruments is recognized on an accelerated
basis based on the related service or vesting periods.  Companies choosing
the intrinsic-value method are required to disclose the pro forma impact of the
fair value method on net income.  The pro forma effect on net loss and loss per
share are as follows for the years ended May 31:

                                            2001             2000
                                        ------------     ------------
     Net loss as reported               $(14,075,218)    $ (3,778,867)
     Pro Forma net loss                  (17,054,018)      (5,700,015)

     Loss per share as reported               (0.57)           (0.27)
     Pro Forma loss per share                 (0.69)           (0.33)

The fair value of options granted under the Company's stock option plans during
the years ended May 31, 2001 and 2000 was estimated on the date of grant, using
the Black-Scholes pricing model with the following assumptions:

     Weighted average of expected risk-free interest rates      6.50%
     Expected years from vest date to exercise date             2-10
     Expected stock volatility                                   90%
     Expected dividend yield                                      0%
<TABLE>
A summary of the Company's LTIP and Executive LTIP stock option activity is as
follows:
<CAPTION>
                   Activity                  Number of      Weighted Average
                                               Shares        Exercise Price
     -----------------------------------     ----------     ----------------
     <S>                                     <C>            <C>
     Balance at May 31, 1999                       -
     Options granted                          7,011,802           0.51
     Option exercised                              -
     Options forfeited                             -
                                             ----------
     Balance at May 31, 2000                  7,011,802           0.51
     Options granted                          8,568,760           0.41
     Options exercised                       (2,816,229)          0.11
     Options forfeited                       (1,851,802)          1.78
                                             ----------
     Balance at May 31, 2001                 10,912,531           0.65
                                             ==========
     Exercisable options at May 31, 2001      8,695,028           0.63
                                             ==========     ================
</TABLE>
                                   - F 23 -
===============================================================================
<PAGE>

                                 Insynq, Inc.
                         (a development stage company)

                         NOTES TO FINANCIAL STATEMENTS
                                 May 31, 2001


NOTE M - STOCK OPTIONS - Continued
<TABLE>
The weighted average remaining contractual life, in years, and weighted average
exercise price of options outstanding as of May 31, 2001 were as follows:
<CAPTION>
                                        Weighted
                            Weighted     Average       Options     Weighted
  Range of                   Average    Remaining    Exercisable    Average
  Exercise      Options     Exercise   Contractual   at May 31,    Exercise
   Price      Outstanding    Price        Life          2001        Price
-----------   -----------   --------   -----------   -----------   --------
<S>           <C>           <C>        <C>           <C>           <C>
0.18 - 0.19      400,000      $ 0.19        9.95         50,000     $ 0.18
0.34 - 0.71    7,794,153        0.46        8.75      6,864,153       0.47
0.81 - 1.03    1,700,000        0.97        8.95      1,040,830       0.94
1.63 - 2.31    1,018,378        1.79        4.29        740,045       1.70
</TABLE>
The weighted average fair value of the options granted during the year ended
May 31, 2001 and 2000 were $0.66 and $0.39, respectively.

During the year ended May 31, 2001, the Company recorded $1,249,476 of
additional employee compensation expense for the difference between the
exercise price of stock options and the fair value of the underlying common
stock on the date of grant.  The unearned compensation of $381,666 has been
presented as a reduction of stockholders' equity in the accompanying financial
statements and is being amortized ratably over the vesting period of the
applicable options. The Company amortized an aggregate of $867,810 of
compensation for the year ended May 31, 2001.


NOTE N - WARRANTS

Warrants shares to purchase common stock outstanding as of May 31, 2001 totaled
12,752,112.   Warrant exercise prices range between $0.13 to $3.75 per share
of common stock and substantially all warrants will expire on or before
July 17, 2005.  Since May 31, 2001, the Company has set aside an additional
2,871,280 warrants in connection with the pending acquisition of a Canadian
company and has rescinded 2,145,000 of previously issued warrants to two
consulting groups.

During the year ended May 31, 2001, the Company recorded unearned services
totaling $344,051 for the fair value of warrants granted to consultants as a
reduction of stockholders' equity in the accompanying financial statements.
Such amount is being amortized ratably over the service period.  Warrants
issued by the Company are valued on the date of grant using the Black-Scholes
valuation model using the following assumptions: weighted average risk free
interest rate of 6.5%; terms ranging from three months to five years;
volatility of 90%; and, 0% dividend yield.

                                   - F 24 -
===============================================================================
<PAGE>

                                 Insynq, Inc.
                         (a development stage company)

                         NOTES TO FINANCIAL STATEMENTS
                                 May 31, 2001


NOTE O - INCOME TAXES

The Company utilizes the liability method of accounting for income taxes as set
forth in Statement of Financial Accounting Standards (SFAS) No. 109, Accounting
for Income Taxes.  Under this method, deferred tax assets and liabilities are
recognized based on the anticipated future tax effects arising from the
differences between the financial statement carrying amounts of assets and
liabilities and their respective tax bases of assets and liabilities using
enacted tax rates.
<TABLE>
The income tax provision reconciled to the tax computed at the statutory
federal rate is as follows for the year ended May 31:
<CAPTION>
                                                    2001             2000
                                                ------------     ------------
<S>                                             <C>              <C>
Tax benefit at federal statutory rate of 34%    $ (4,785,000)    $ (1,284,000)
Permanent differences                              1,015,000            4,000
                                                ------------     ------------
                                                  (3,770,000)      (1,280,000)
Increase in valuation allowance                    3,770,000        1,280,000
                                                ------------     ------------
                                                $       -        $       -
                                                ============     ============
</TABLE>
<TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of the assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.  Significant
components of deferred Federal income tax are as follows at May 31:
<CAPTION>
                                                    2001             2000
                                                ------------     ------------
<S>                                             <C>              <C>
Deferred tax asset
  Net operating loss carryforwards              $ 10,357,000     $  7,557,000
  Amortization                                        14,000            8,000
  Accrued vacation                                    22,000           20,000
  Allowance doubtful accounts                          8,000             -
  Deferred compensation                               36,000             -
  Employee stock options                              93,000             -
  Warrants issued to consultants                     840,000             -
                                                ------------     ------------
          Total deferred tax assets             $ 11,370,000     $  7,585,000
                                                ------------     ------------

Deferred tax liability
  Depreciation                                  $     70,000     $     55,000
                                                ------------     ------------
          Total deferred tax liabilities              70,000           55,000
                                                ------------     ------------

Net deferred tax assets                           11,300,000        7,530,000
Valuation allowance                              (11,300,000)      (7,530,000)
                                                ------------     ------------
                                                $       -        $       -
                                                ============     ============
</TABLE>
                                   - F 25 -
===============================================================================
<PAGE>

                                 Insynq, Inc.
                         (a development stage company)

                         NOTES TO FINANCIAL STATEMENTS
                                 May 31, 2001


NOTE O - INCOME TAXES - Continued

The Company has recorded a valuation allowance for the full amount of the
deferred tax assets due to the uncertainty  of future utilization of net
operating loss carryforwards and realization of other deferred tax assets.
At May 31, 2001, operating loss carryforwards of approximately $30,500,000,
expiring through 2021, are available to offset future taxable income.
Utilization of these carryforwards are significantly dependent on future
taxable income and any future tax benefit is further limited due to a change of
control in the Company's ownership as defined by the Internal Revenue Code,
Section 382.


NOTE P - RELATED PARTY TRANSACTIONS

During the year ended May 31, 2001, the Company sold $41,400 of services and
received $37,500 of consulting services from a party related to a corporate
officer, director and stockholder.


NOTE Q - OTHER DISCLOSURES
<TABLE>
The Company's non-cash investing and financing activities and supplemental cash
flow information were as follows for the year ended May 31:
<CAPTION>
                                                          2001         2000
                                                       ----------   ----------
<S>                                                    <C>          <C>
Conversion of debentures and accrued interest into
  common stock                                         $2,315,514   $     -
Notes payable and interest converted to common stock    1,938,550         -
Conversion of put options into common stock             1,071,785         -
Discount for warrants granted and beneficial
  conversion features on convertible debentures           900,000         -
Discount for warrants granted with short term
  notes payable and capital leases                        229,000      118,000
Accounts payable converted to common stock                154,557         -
Equipment purchased under capital leases                   15,669         -
Purchase of assets with common stock                         -             727
Cash paid for interest                                 $   17,411   $     -
</TABLE>
                                   - F 26 -
===============================================================================
<PAGE>

                                 Insynq, Inc.
                         (a development stage company)

                         NOTES TO FINANCIAL STATEMENTS
                                 May 31, 2001


NOTE Q - OTHER DISCLOSURES - Continued
<TABLE>
Selling, General and Administrative Expenses consist of the following for the
year ended May 31:
<CAPTION>
                                                          2001         2000
                                                       ----------   ----------
<S>                                                    <C>          <C>
Salaries                                               $2,861,649   $  618,977
Benefits                                                   67,663       61,774
Rent                                                      375,641      131,521
Consulting                                              3,561,058      850,411
Legal, accounting and professional                        854,283      793,081
Telephone and utilities                                   105,442       41,232
Taxes                                                     212,917       63,013
Supplies                                                   78,226       40,399
Travel and entertainment                                  158,927      140,677
Insurance                                                 117,563      104,484
Other                                                     420,707       29,574
                                                       ----------   ----------
Total:                                                 $8,814,076   $2,875,143
                                                       ----------   ----------

Non-cash compensation                                  $4,242,072   $1,116,666
Other                                                   4,572,004    1,856,222
                                                       ----------   ----------
Total:                                                 $8,814,076   $2,972,888
                                                       ==========   ==========
</TABLE>

NOTE R - SUBSEQUENT EVENTS

Financing Agreement

On June 29, 2001, the Company entered into a private financing transaction with
three investors under which the investors initially purchased $550,000
from a total of $1,200,000 12% convertible debentures.  The debentures are
convertible into shares of common stock at the lesser of (i) $0.18 or
(ii) the average of the lowest three trading prices in the twenty day trading
period immediately preceding the notice to convert, divided by two.  The common
stock carry attached warrants that allow the investor, under the terms of the
warrants, to purchase up to 2,400,000 shares of common stock at $0.04 per
share.  Terms of the debentures provide for full payment on or before
June 29, 2002 (maturity date), with accrued interest of 12% per annum.
Proceeds from this initial transaction, net of fees, were $465,000. The Company
anticipates receiving $650,000, less certain fees, upon successful registration
of certain shares of the common stock.  Pursuant to the agreement, the Company
may not, without consent, (i) engage in any future equity financing involving
the issuance of common stock for a period of six months from the date of
closing, and (ii) may  not engage in such transactions for a period of two
years without first giving the investors the opportunity to purchase shares on
a pro-rata basis.


                                   - F 27 -
===============================================================================
<PAGE>
<TABLE>
                               INDEX TO EXHIBITS

<CAPTION>
EXHIBIT
 NUMBER     DESCRIPTION
-------     -------------------------------------------------------------------
<S>         <C>
  2.1       Asset Purchase Agreement, dated as of February 18, 2000, by and
            between Xcel Management, Inc. and Insynq, Inc. (Incorporated by
            reference to Exhibit 2 to the Company's Current Report on Form 8-K,
            filed March 3, 2000).

  3.1       Certificate of Incorporation of Insynq, Inc. (Incorporated by
            reference to Exhibit 2 to the Company's Current Report on Form 8-K
            filed August 17, 2000).

  3.2       By-Laws of Insynq, Inc. (Incorporated by reference to Exhibit 3 to
            the Company's Current Report on Form 8-K filed August 17, 2000).

  4.1       Form of Specimen Common Stock Certificate. (Incorporated by
            reference to Exhibit 4.1 to the Company's Annual Report on
            Form 10-KSB filed September 13, 2000).

  4.2       Form of Warrant Agreement issued to Consulting & Strategy
            International, LLC on February 24, 2000, as amended by Amendment
            No. 1 dated June 9, 2000, Amendment No. 2 dated July 31, 2000,
            Amendment No. 3 dated August 31, 2000, Amendment No. 4 dated
            October 1, 2000, Amendment No. 5 dated October 28, 2000 and
            Amendment No. 6 dated December 1, 2000 (Incorporated by reference
            to Exhibit 4.2 to the Company's Registration Statement on
            Form SB-2 filed December 14, 2000).

  4.3       Amendment No. 7 dated February 1, 2001 and Amendment No. 8 dated
            February 27, 2001, to Warrant Agreement issued to Consulting &
            Strategy International, LLC on February 24, 2000 (Incorporated by
            reference to Exhibit 4.2 to the Company's Quarterly Report on
            Form 10-QSB filed April 20, 2001).

  4.4*      Letter Agreement dated January 31, 2001 between Consulting &
            Strategy International, LLC and Insynq, Inc.

  4.5       Form of Warrant Agreement issued to International Fluid Dynamics,
            Inc. on May 17, 2000. (Incorporated by reference to Exhibit 4.3 to
            the Company's Annual Report on Form 10-KSB filed
            September 13, 2000).

  4.6       Form of Registration and Repurchase Agreement issued to
            International Fluid Dynamics, Inc. on May 17, 2000, as amended.
            (Incorporated by reference to Exhibit 4.4 to the Company's Annual
            Report on Form 10-KSB filed September 13, 2000).

  4.7       Form of Warrant Agreement issued to Plazacorp Investors Limited on
            April 26, 2000. (Incorporated by reference to Exhibit 4.5 to the
            Company's Annual Report on Form 10-KSB filed September 13, 2000).

  4.8       Form of Registration and Repurchase Agreement issued to Plazacorp
            Investors Limited on April 26, 2000, as amended. (Incorporated by
            reference to Exhibit 4.6 to the Company's Annual Report on
            Form 10-KSB filed September 13, 2000).

  4.9       Form of Warrant Agreement issued to TCA Investments, Inc. on
            June 16, 2000, as amended by Amendment No. 1 dated August 31, 2000,
            Extension dated September 5, 2000, Amendment No. 2 dated
            September 14, 2000, Amendment No. 3 dated October 1, 2000,
            Amendment No. 4 dated October 28, 2000 and Amendment No. 5 dated
            December 1, 2000 (Incorporated by reference to Exhibit 4.7 to the
            Company's Registration Statement on Form SB-2 filed
            December 14, 2000).

  4.10      Amendment No. 6 dated February 28, 2001, to Warrant Agreement
            issued to TCA Investments, Inc. on June 16, 2000 (Incorporated by
            reference to Exhibit 4.7 to the Company's Quarterly Report on
            Form 10-QSB filed April 20, 2001).

  4.11      Form of Convertible Debenture issued to TCA Investments, Inc. on
            June 16, 2000, as amended. Form of Convertible Debenture issued to
            TCA Investments, Inc. on June 16, 2000, as amended by Amendment
            No. 1 dated August 31, 2000, Extension dated September 5, 2000,
            Amendment No. 2 dated September 14, 2000, Amendment No. 3 dated
            October 1, 2000 and Amendment No. 4 dated October 28, 2000.
            (Incorporated by reference to Exhibit to Exhibit 4.2 to the
            Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

  4.12      Form of Warrant Agreement issued to Garnier Holdings, Ltd. on
            July 17, 2000, as amended by Amendment No. 1 dated
            September 22, 2000, Amendment No. 2 dated October 1, 2000,
            Amendment No. 3 dated October 19, 2000, Amendment No. 4 dated
            October 28, 2000 and Amendment No. 5 dated December 1, 2000.
            (Incorporated by reference to Exhibit 4.9 to the Company's
            Registration Statement on Form SB-2 filed December 14, 2001)

  4.13      Amendment No. 6 dated February 27, 2001, to Warrant Agreement
            issued to Garnier Holdings, Ltd. on July 17, 2000 (Incorporated by
            reference to Exhibit 4.9 to the Company's Quarterly Report on
            Form 10-QSB filed April 20, 2001).

  4.14      Form of Promissory Note issued to Garnier Holdings, Ltd. on
            July 17, 2000, as amended by Extension No. 1 dated
            September 11, 2000 and Extension No. 2 dated October 1, 2000.
            (Incorporated by reference to Exhibit 4.10 to the Company's
            Quarterly Report on Form 10-QSB filed October 23, 2000).

  4.15      Form of Warrant Agreement issued to One Click Investments, LLC on
            August 4, 2000. (Incorporated by reference to Exhibit 4.11 to the
            Company's Annual Report on Form 10-KSB filed September 13, 2000).

  4.16      Form of Registration Rights Agreement issued to One Click
            Investments, LLC on August 4, 2000. (Incorporated by reference to
            Exhibit 4.12 to the Company's Annual Report on Form 10-KSB filed
            September 13, 2000).

  4.17      Form of Warrant Agreement issued to Series A & B warrant holders.
            (Incorporated by reference to Exhibit 4.13 to the Company's Annual
            Report on Form 10-KSB filed September 13, 2000).

  4.18      Form of Warrant Agreement issued to One Click Investments, LLC on
            September 20, 1999, as amended. (Incorporated by reference to
            Exhibit 4.14 to the Company's Annual Report on Form 10-KSB filed
            September 13, 2000).

  4.19      Form of Warrant Agreement issued to Hewlett-Packard on
            June 1, 1999. (Incorporated by reference to Exhibit 4.15 to the
            Company's Annual Report on Form 10-KSB filed September 13, 2000).

  4.20      Form of Registration Agreement issued to Hewlett-Packard on
            February 20, 2000.  (Incorporated by reference to Exhibit 4.16 to
            the Company's Amendment No. 1 to Annual Report on Form 10-KSB/A
            filed December 6, 2000).

  4.21      Form of Subscription Agreement between TCA Investments, Inc. and
            Insynq, Inc. dated June 16, 2000. (Incorporated by referenced to
            Exhibit 4.17 to the Company's Quarterly Report on Form 10-QSB filed
            October 23, 2000).

  4.22      Form of Subscription Agreement between TCA Investments, Inc. and
            Insynq, Inc. dated September 11, 2000. (Incorporated by reference
            to Exhibit 4.17 to the Company's Quarterly Report on Form 10-QSB
            filed October 23, 2000).

  4.23      Form of Warrant Agreement issued to TCA Investments, Inc. dated
            September 11, 2000, as amended by Amendment No. 1 dated
            December 1, 2000. (Incorporated by reference to Exhibit to
            Exhibit 4.19 to the Company's Registration Statement on Form SB-2
            filed December 14, 2000)

  4.24      Form of Convertible Debenture issued to TCA Investments, Inc. dated
            September 11, 2000, as amended by Amendment No. 1 dated
            October 6, 2000 and Amendment No. 2 dated October 19, 2000.
            (Incorporated by reference to Exhibit 4.20 to the Company's
            Quarterly Report on Form 10-QSB filed October 23, 2000).

  4.25      Form of Consent of Plazacorp Investors Limited to the Extension of
            the filing of the Registration Statement on Form SB-2 dated
            September 22, 2000. (Incorporated by reference to Exhibit 4.21 to
            the Company's Quarterly Report on Form 10-QSB filed
            October 23, 2000).

  4.26      Form of Consent of Plazacorp Investors Limited to the Extension of
            the filing of the Registration Statement on From SB-2 dated
            October 2, 2000. (Incorporated by reference to Exhibit 4.22 to the
            Company's Quarterly Report on Form 10-QSB filed October 23, 2000).

  4.27      Form of Consent of TCA Investments, Inc. to Extension of the filing
            of the Registration Statement on From SB-2 dated
            September 22, 2000. (Incorporated by reference to Exhibit 4.23 to
            the Company's Quarterly Report on Form 10-QSB filed
            October 23, 2000).

  4.28      Form of Consent of TCA Investments, Inc. to Extension of the filing
            of the Registration Statement on Form SB-2 dated October 2, 2000.
            (Incorporated by reference to Exhibit 4.24 to the Company's
            Quarterly Report on Form 10-QSB filed October 23, 2000).

  4.29      Form of Consent of International Fluid Dynamics, Inc. to Extension
            of the filing of the Registration Statement on Form SB-2 dated
            September 22, 2000. (Incorporated by reference to Exhibit 4.25 to
            the Company's Quarterly Report on Form 10-QSB filed
            October 23, 2000).

  4.30      Form of Consent of International Fluid Dynamics, Inc. to Extension
            of the filing of the Registration Statement on Form SB-2 dated
            October 2, 2000. (Incorporated by reference to Exhibit 4.26 to the
            Company's Quarterly Report on Form 10-QSB filed October 23, 2000).

  4.31      Registration Rights Agreement dated September 22, 2000 between
            Charles Benton and Insynq, Inc. (Incorporated by reference to
            Exhibit 4.27 to the Company's Quarterly Report on Form 10-QSB filed
            October 23, 2000).

  4.32      Form of Promissory Note issued to International Fluid Dynamics,
            Inc. on October 20, 2000. (Incorporated by reference to
            Exhibit 4.28 to the Company's Quarterly Report on Form 10-QSB filed
            October 23, 2000).

  4.33      Agreement dated November 1, 2000 between International Fluid
            Dynamics, Inc. and Insynq.  (Incorporated by reference to
            Exhibit 4.29 to the Company's Registration Statement on Form SB-2
            filed December 14, 2000)

  4.34      Agreement dated November 1, 2000 between Travin Partners, L.L.L.P.
            and Insynq.  (Incorporated by reference to Exhibit 4.30 to the
            Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

  4.35      Agreement dated November 1, 2000 between TCA Investments, Inc. and
            Insynq.  (Incorporated by reference to Exhibit 4.31 to the
            Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

  4.36      Agreement dated November 1, 2000 between Plazacorp Investors
            Limited and Insynq.  (Incorporated by reference to Exhibit 4.32 to
            the Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

  4.37      Agreement dated November 1, 2000 between Garnier Holdings, Ltd. and
            Insynq.  (Incorporated by reference to Exhibit 4.33 to the
            Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

  4.38      Agreement dated November 1, 2000 between International Fluid
            Dynamics, Inc. and Insynq.  (Incorporated by reference to
            Exhibit 4.34 to the Company's Registration Statement on Form SB-2
            filed December 14, 2000)

  4.39      Agreement dated November 1, 2000 between Timothy Horan and Insynq.
            (Incorporated by reference to Exhibit 4.35 to the Company's
            Registration Statement on Form SB-2 filed December 14, 2000)

  4.40      Agreement dated November 1, 2000 between Raymond Betz and Insynq.
            (Incorporated by reference to Exhibit 4.36 to the Company's
            Registration Statement on Form SB-2 filed December 14, 2000)

  4.41      Agreement dated November 1, 2000 between Travin Partners, L.L.L.P.
            and Insynq. (Incorporated by reference to Exhibit 4.37 to the
            Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

  4.42      Form of Warrant Agreement dated December 7, 2000 between Locke
            Liddell & Sapp LLP and Insynq. (Incorporated by reference to
            Exhibit 4.38 to the Company's Registration Statement on Form SB-2
            filed December 14, 2000)

  4.43      Lock-Up and Waiver Agreement dated October 17, 2000, as amended by
            Amendment No. 1 dated December 1, 2000, by Charles F. Benton.
            (Incorporated by reference to Exhibit 4.39 to the Company's
            Registration Statement on Form SB-2 filed December 14, 2000)

  4.44      Lock-Up and Waiver Agreement dated October 17, 2000 by
            John P. Gorst. (Incorporated by reference to Exhibit 4.40 to the
            Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

  4.45      Lock-Up and Waiver Agreement dated October 17, 2000 by
            M. Carroll Benton. (Incorporated by reference to Exhibit 4.41 to
            the Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

  4.46      Lock-Up and Waiver Agreement dated October 15, 2000 by Vijay
            Alimchandani. (Incorporated by reference to Exhibit 4.42 to the
            Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

  4.47      Lock-Up and Waiver Agreement dated October 16, 2000 by One Click
            Investments LLC. (Incorporated by reference to Exhibit 4.43 to the
            Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

  4.48      Promissory Note dated December 1, 2000 between One Click
            Investments, LLC and Insynq, Inc. (Incorporated by reference to
            Exhibit 4.44 to the Company's Quarterly Report on Form 10-QSB filed
            April 20, 2001)

  4.49      Agreement dated January 30, 2001 between One Click Investments, LLC
            and Insynq, Inc. (Incorporated by reference to Exhibit 4.45 to the
            Company's Quarterly Report on Form 10-QSB filed April 20, 2001)

  4.50      Registration Agreement dated January 30, 2001 between One Click
            Investments, LLC and Insynq, Inc. (Incorporated by reference to
            Exhibit 4.46 to the Company's Quarterly Report on Form 10-QSB filed
            April 20, 2001)

  4.51      Warrant Agreement dated February 20, 2001 between TCA Investments,
            Inc. and Insynq, Inc. (Incorporated by reference to Exhibit 4.47 to
            the Company's Quarterly Report on Form 10-QSB filed April 20, 2001)

  4.52      Registration Agreement dated February 20, 2001 between TCA
            Investments, Inc. and Insynq, Inc. (Incorporated by reference to
            Exhibit 4.48 to the Company's Quarterly Report on Form 10-QSB filed
            April 20, 2001)

  4.53*     Form of Warrant Agreement dated March 5, 2001 between Patrick
            Birkel and Insynq, Inc.

  4.54*     Warrant Agreement dated March 5, 2001 between Bransville Limited
            and Insynq, Inc.

  4.55*     Form of Warrant Agreement dated March 22, 2001 between William R.
            Collins and Insynq, Inc.

  4.56*     Registration Rights Agreement dated March 26, 2001 between Internet
            PR Group and Insynq, Inc.

  4.57*     Warrant Agreement dated March 25, 2001 between Bransville Limited
            and Insynq, Inc.

  4.58*     Form of Warrant Agreement dated April 25, 2001 between
            International Fluid Dynamics, Inc. and Insynq, Inc.

  4.59*     Form of Subscription Agreement dated April 25, 2001 between
            International Fluid Dynamics, Inc. and Insynq, Inc.

  4.60*     Form of Registration Agreement dated April 25, 2001 between
            International Fluid Dynamics, Inc. and Insynq, Inc.

  4.61*     Warrant Agreement dated April 1, 2001 between Barretto Pacific
            Corporation and Insynq, Inc.

  4.62*     Form of Warrant Agreement dated May 17, 2001 between Horizon
            Holdings I, LLC and Insynq, Inc.

  4.63*     Form of Registration Agreement dated May 17, 2001 between Horizon
            Holdings I, LLC and Insynq, Inc.

  4.64*     Securities Purchase Agreement dated June 29, 2001 between
            AJW Partners, LLC, New Millennium Capital Partners II, LLC,
            AJW/New Millennium Offshore, Ltd and Insynq. Inc.

  4.65*     Form of Stock Purchase Warrant dated June 29, 2001 between
            AJW Partners, LLC and Insynq, Inc

  4.66*     Form of Secured Convertible Debenture dated June 29, 2001 between
            AJW Partners, LLC and Insynq, Inc.

  4.67*     Guaranty and Pledge Agreement dated June 29, 2001 between
            M. Carroll Benton, AJW Partners, LLC, New Millennium Capital
            Partners II, LLC, and AJW/New Millennium Offshore, Ltd.

  4.68*     Registration Rights Agreement dated June 29, 2001 between
            AJW Partners, LLC, New Millennium Capital Partners II, LLC
            Millennium Capital Partners II, LLC and Insynq, Inc.

 10.1       Insynq, Inc. 2000 Executive Long Term Incentive Plan.
            (Incorporated by reference to Exhibit 10.1 to the Company's Annual
            Report on Form 10-KSB filed September 13, 2000).

 10.2       Insynq, Inc. 2000 Long Term Incentive Plan, as amended by Amendment
            No. 1 dated September 1, 2000. (Incorporated by reference to
            Exhibit 10.2 to the Company's Quarterly Report on Form 10-QSB filed
            October 23, 2000).

 10.3       Business Services Contract with Consulting & Strategy
            International, L.L.C. dated November 18, 1999, as amended by
            Amendment No. 1 dated August 31, 2000, Amendment No. 2 dated
            September 14, 2000, Amendment No. 3 dated October 1, 2000,
            Amendment No. 4 dated October 28, 2000, Amendment dated
            October 31, 2000, and Amendment No. 5 dated December 1, 2000
            (Incorporated by reference to Exhibit 10.3 to the Company's
            Registration Statement on Form SB-2 filed December 14, 2000).

 10.4       Amendment No. 6 dated February 6, 2002, to Business Services
            Contract with Consulting & Strategy International, L.L.C. dated
            November 18, 1999 (Incorporated by reference to Exhibit 10.3 to the
            Company's Quarterly Report on Form 10-QSB filed April 20, 2001).

 10.5       Independent Marketing Consultant Agreement with Vijay Alimchandani
            dated February 20, 2000, as amended by Amendment No. 1 dated
            June 30, 2000. (Incorporated by reference to Exhibit 10.4 to the
            Company's Quarterly Report on Form 10-QSB filed October 23, 2000).

 10.6       Financial Public Relations Consulting Agreement with One Click
            Investments, LLC dated September 20, 1999, as amended by Amendment
            No. 1 dated June 30, 2000 and Amendment No. 2 dated
            October 31, 2000.  (Incorporated by reference to Exhibit 10.5 to
            the Company's Registration Statement on Form SB-2 filed
            December 14, 2000).

 10.7       Amendment No. 3 dated January 30, 2001, to Financial Public
            Relations Consulting Agreement with One Click Investments, LLC
            dated September 20, 1999 (Incorporated by reference to Exhibit 10.5
            to the Company's Quarterly Report on Form 10-QSB filed
            April 20, 2001).

 10.8       Form of Registration Rights Agreement upon the issuance of shares
            to investors under the bridge financing dated December 14, 1999.
            (Incorporated by reference to Exhibit 10.6 to the Company's Annual
            Report on Form 10-KSB filed September 13, 2000).

 10.9       Form of Registration Rights Agreement upon the issuance of shares
            to investors under the bridge financing dated January 24, 2000.
            (Incorporated by reference to Exhibit 10.7 to the Company's Annual
            Report on Form 10-KSB filed September 13, 2000)

 10.10      Engagement Letter with Rosenblum Partners, LLC dated July 7, 2000.
            (Incorporated by reference to Exhibit 10.8 to the Company's Annual
            Report on Form 10-KSB filed September 13, 2000).

 10.11      Employment Agreement, dated as of February 20, 2000, between
            John P. Gorst and Xcel Management, Inc., as amended by Amendment
            No. 1 dated September 25, 2000. (Incorporated by reference to
            Exhibit 10.9 to the Company's Registration Statement on Form SB-2
            filed December 14, 2000).

 10.12      Amendment No. 2 to Employment Agreement dated January 30, 2001,
            between John P. Gorst and Xcel Management, Inc. (Incorporated by
            reference to Exhibit 10.9 to the Company's Quarterly Report on
            Form 10-QSB filed April 20, 2001).

 10.13      Employment Agreement, dated as of February 20, 2000, between
            M. Carroll Benton and Xcel Management, Inc., as amended by
            Amendment No. 1 dated September 27, 2000. (Incorporated by
            reference to Exhibit 10.10 the Company's Registration Statement on
            Form SB-2 filed December 14, 2000).

 10.14      Amendment No. 2 dated January 30, 2001, between M. Carroll Benton
            and Xcel Management, Inc. (Incorporated by reference to
            Exhibit 10.10 to the Company's Quarterly Report on Form 10-QSB
            filed April 20, 2001).

 10.15      Employment Agreement dated as of February 20, 2000, between
            James R. Leigh, III, and Xcel Management, Inc. (Incorporated by
            reference to Exhibit 10.11 to the Company's Annual Report on
            Form 10-KSB filed September 13, 2000).

 10.16      Employment Agreement, dated as of February 20, 2000, between
            DJ Johnson and Xcel Management, Inc. (Incorporated by reference to
            Exhibit 10.12 to the Company's Annual Report on Form 10-KSB filed
            September 13, 2000).

 10.17      Employment Agreement, dated as of February 20, 2000, between
            Joanie C. Mann and Xcel Management, Inc., as amended by Amendment
            No.1 dated September 25, 2000 and Amendment No. 2 dated
            September 25, 2000. (Incorporated by reference to Exhibit 10.13 the
            Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

 10.18      Employment Agreement, dated as of February 20, 2000, between
            Jim Zachman and Xcel Management, Inc., as amended by Amendment
            No. 1 dated September 16, 2000 and Amendment No. 2 dated
            September 27, 2000. (Incorporated by reference to Exhibit 10.14 the
            Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

 10.19      Employment Agreement, dated as of July 20, 1999, between
            Donald L. Manzano and Insynq, Inc.- Washington. (Incorporated by
            reference to Exhibit 10.15 to the Company's Annual Report on
            Form 10-KSB filed September 13, 2000).

 10.20      Employment Agreement, dated as of July 20, 1999, between
            Carey M. Holladay and Insynq, Inc.- Washington. (Incorporated by
            reference to Exhibit 10.16 to the Company's Annual Report on
            Form 10-KSB filed September 13, 2000).

 10.21      Employment Agreement, dated as of June 28 2000, between
            William G. Hargin and Xcel Management, Inc. (Incorporated by
            reference to Exhibit 10.17 to the Company's Annual Report on
            Form 10-KSB filed September 13, 2000).

 10.22      Employment Agreement, dated as of June 5, 2000, between
            Barbara D. Brown and Xcel Management, Inc., as amended by
            Addendum No. 1 dated November 29, 2000. (Incorporated by reference
            to Exhibit 10.18 the Company's Registration Statement on Form SB-2
            filed December 14, 2000)

 10.23      Employment Agreement, dated as of June 16, 2000, between
            Christopher Todd and Xcel Management, Inc. (Incorporated by
            reference to Exhibit 10.19 to the Company's Annual Report on
            Form 10-KSB filed September 13, 2000).

 10.24      Employment Agreement, dated as of September 1, 2000, between
            David Wolfe and Insynq, Inc., as amended by Amendment No. 1 dated
            September 27, 2000, Amendment No. 1 dated October 19, 2000,
            Amendment No. 2 dated November 29, 2000 and Addendum dated
            December 7, 2000. (Incorporated by reference to Exhibit 10.20 the
            Company's Registration Statement on Form SB-2 filed
            December 14, 2000)

 10.25      Lease Agreement dated January 3, 2000 between Howe/Horizon Holdings
            LLC and Insynq, Inc., for 1101 Broadway Plaza, Tacoma, Washington,
            as amended by Amendment No. 1 dated October 26, 2000. (Incorporated
            by reference to Exhibit 10.21 the Company's Registration Statement
            on Form SB-2 filed December 14, 2000)

 10.26      Sublease Agreement dated November 1, 1999 between Duane and
            Wendy Ashby, d/b/a Cargocare and Insynq Data Utilities for the
            property in the Seafirst Plaza Building in Tacoma, Washington, at
            the Northwest corner of South 9th and A Streets.  Incorporated by
            reference to Exhibit 10.22 to the Company's Annual Report on
            Form 10-KSB filed September 13, 2000)

 10.27*     Lease Termination Agreement dated April 1, 2001 between
            Duane and Wendy Ashby, d/b/a Cargocare and Insynq Data Utilities.

 10.28      Lease Agreement dated March 21, 2000 between Walaire, Inc. and
            Insynq, Inc., for 3017 Douglas Boulevard, Suite 220 and 240,
            Roseville, California. (Incorporated by reference to Exhibit 10.23
            to the Company's Annual Report on Form 10-KSB filed
            September 13, 2000).

 10.29      Master Licensing Agreement dated May 19, 2000 between Macola, Inc.
            and Insynq, Inc. (Incorporated by reference to Exhibit 10.24 to the
            Company's Annual Report on Form 10-KSB filed September 13, 2000).

 10.30      Citrix iLicense Agreement dated March 2, 2000 between Citrix and
            Insynq, Inc. (Incorporated by reference to Exhibit 10.25 to the
            Company's Annual Report on Form 10-KSB filed September 13, 2000).

 10.31      Citrix iBusiness Application Service Provider Agreement dated
            March 2, 2000 between Citrix and Insynq, Inc. (Incorporated by
            reference to Exhibit 10.26 to the Company's Annual Report on
            Form 10-KSB filed September 13, 2000).

 10.32      Master Licensing Agreement dated March 1, 2000 between Legacy
            Solutions and Insynq, Inc. (Incorporated by reference to
            Exhibit 10.27 to the Company's Annual Report on Form 10-KSB filed
            September 13, 2000).

 10.33      Master Licensing Agreement dated April 7, 2000 between Electronic
            Registry Systems, Inc. and Insynq, Inc. (Incorporated by reference
            to Exhibit 10.28 to the Company's Annual Report on Form 10-KSB
            filed September 13, 2000).

 10.34      Master Licensing Agreement dated March 22, 2000 between Viking
            Software Services, Inc. and Insynq, Inc. (Incorporated by reference
            to Exhibit 10.29 to the Company's Annual Report on Form 10-KSB
            filed September 13, 2000).

 10.35      Master Licensing Agreement dated June 1, 2000 between My Partner
            Online and Insynq, Inc. (Incorporated by reference to Exhibit 10.30
            to the Company's Annual Report on Form 10-KSB filed
            September 13, 2000).

 10.36      Master Licensing Agreement dated April 24, 2000 between Veracicom
            and Insynq, Inc. (Incorporated by reference to Exhibit 10.31 to the
            Company's Annual Report on Form 10-KSB filed September 13, 2000).

 10.37      Master Licensing Agreement dated August 21, 2000 between
            CastaLink.com, Inc. and Insynq, Inc. (Incorporated by reference to
            Exhibit 10.32 to the Company's Annual Report on Form 10-KSB filed
            September 13, 2000).

 10.38      Application Hosting Agreement dated May 12, 2000 between Remedy
            Corporation and Insynq, Inc. (Incorporated by reference to
            Exhibit 10.33 to the Company's Annual Report on Form 10-KSB filed
            September 13, 2000).

 10.39      Novell Internet Commercial Service Provider Agreement dated
            July 24, 2000 between Novell, Inc. and Insynq, Inc. (Incorporated
            by reference to Exhibit 10.34 to the Company's Annual Report on
            Form 10-KSB filed September 13, 2000).

 10.40      Agreement to Provide Collaborative Management Services dated
            July 15, 1999 between Horizon Holdings I, LLC, and Insynq, Inc.
            (Incorporated by reference to Exhibit 10.35 to the Company's Annual
            Report on Form 10-KSB filed September 13, 2000).

 10.41      Referral Partner Agreement dated July 29, 1999 between Global
            Crossing Telecommunications, Inc. and Insynq, Inc. (Incorporated by
            reference to Exhibit 10.36 to the Company's Annual Report on
            Form 10-KSB filed September 13, 2000).

 10.42      Application Hosting and Delivery Agreement dated August 18, 2000
            between Donor Management, Inc. and Insynq, Inc. (Incorporated by
            reference to Exhibit 10.37 to the Company's Quarterly Report on
            Form 10-QSB dated October 23, 2000).

 10.43      Application Service Provider Agreement dated August 21, 2000
            between Corel Corporation and Insynq, Inc. (Incorporated by
            reference to Exhibit 10.38 to the Company's Quarterly Report on
            Form 10-QSB dated October 23, 2000).

 10.44      Application Services Agreement dated September 6, 2000 between
            Microsoft and Insynq, Inc. (Incorporated by reference to
            Exhibit 10.39 to the Company's Quarterly Report on Form 10-QSB
            dated October 23, 2000).

 10.45      Consulting Agreement dated September 20, 2000 between
            David D. Selmon and Insynq, Inc. (Incorporated by reference to
            Exhibit 10.40 to the Company's Quarterly Report on Form 10-QSB
            filed October 23, 2000).

 10.46      Release Agreement dated September 22, 2000 with Charles Benton.
            (Incorporated by reference to Exhibit 10.41 to the Company's
            Quarterly Report on Form 10-QSB filed October 23, 2000).

 10.47      Release Agreement dated September 22, 2000 with Charles Benton.
            (Incorporated by reference to Exhibit 10.42 to the Company's
            Quarterly Report on Form 10-QSB filed October 23, 2000).

 10.48      Employment Agreement dated September 18, 2000 between
            Stephen C. Smith and Insynq, Inc. as amended by Amendment No. 1
            dated December 1, 2000. (Incorporated by reference to Exhibit 10.43
            to the Company's Quarterly Reported on Form 10-QSB filed
            October 23, 2000).

 10.49*     Amendment No. 2 dated July 20, 2001 to Employment Agreement between
            Stephen C. Smith and Insynq, Inc.

 10.50      Non-Exclusive Financial Advisory Agreement dated June 15, 2000
            between Sunstate Equity Trading, Inc. and Xcel Management, Inc., as
            amended by Amendment No. 1 dated September 22, 2000. Incorporated
            by reference to Exhibit 10.44 to the Company's Registration
            Statement on Form SB-2 filed December 14, 2000)

 10.51      Independent Consulting Agreement dated September 16, 2000 between
            Steven Tebo and Insynq, Inc. (Incorporated by reference to
            Exhibit 10.45 to the Company's Quarterly Report on Form 10-QSB
            dated October 23, 2000).

 10.52      Independent Consulting Agreement dated September 16, 2000 between
            Franklin C. Fisher and Insynq, Inc. (Incorporated by reference to
            Exhibit 10.46 to the Company's Quarterly Report on Form 10-QSB
            dated October 23, 2000).

 10.53      Independent Consulting Agreement dated October 31, 2000 between
            Charles F. Benton and Insynq, Inc. (Incorporated by reference to
            Exhibit 10.47 to the Company's Registration Statement on Form SB-2
            filed December 14, 2000)

 10.54      Independent Consulting Agreement dated November 28, 2000 between My
            Partner Online, Inc. and Insynq. Inc. (Incorporated by reference to
            Exhibit 10.48 to the Company's Registration Statement on Form SB-2
            filed December 14, 2000)

 10.55      Letter of Understanding dated November 11, 2000 and Agreement dated
            November 11, 2000 between Bridge 21, Inc. and Insynq, Inc.
            (Incorporated by reference to Exhibit 10.49 to the Company's
            Registration Statement on Form SB-2 filed December 14, 2000)

 10.56      Contract of Engagement dated September 27, 2000 between Cardinal
            Securities, L.L.C. and Insynq, Inc. (Incorporated by reference to
            Exhibit 10.50 to the Company's Registration Statement on Form SB-2
            filed December 14, 2000)

 10.57      Agreement dated November 30, 2000 between Kathleen McHenry,
            John P. Gorst and Insynq, Inc. (Incorporated by reference to
            Exhibit 10.51 to the Company's Registration Statement on Form SB-2
            filed December 14, 2000)

 10.58      Voting Agreement dated November 30, 2000 between Kathleen McHenry,
            Hagens Berman LLP, John P. Gorst and Insynq, Inc. (Incorporated by
            reference to Exhibit 10.52 to the Company's Registration Statement
            on Form SB-2 filed December 14, 2000).

 10.59      Registration Rights Agreement dated November 30, 2000 between
            Kathleen McHenry, Hagens Berman LLP and Insynq, Inc. (Incorporated
            by reference to Exhibit 10.53 to the Company's Registration
            Statement on Form SB-2 filed December 14, 2000).

 10.60      Application Service Provider Reseller Agreement dated
            October 27, 2000 between Wireless Knowledge, Inc. and Insynq, Inc.
            (Incorporated by reference to Exhibit 10.54 to the Company's
            Registration Statement on Form SB-2 filed December 14, 2000).

 10.61      Independent Consultant Agreement dated January 2, 2001 between One
            Click Investments, LLC and Eric Estoos and Insynq, Inc.
            (Incorporated by reference to Exhibit 10.55 to the Company's
            Quarterly Report on Form 10-QSB dated April 20, 2001).

 10.62      Independent Consultant Agreement dated January 2, 2001 between
            Michael duPont and Insynq, Inc. (Incorporated by reference to
            Exhibit 10.56 to the Company's Quarterly Report on Form 10-QSB
            dated April 20, 2001).

 10.63      Non-Exclusive Financial Advisory Agreement dated January 26, 2001
            between Morgan Brewer Securities, Inc. and Insynq, Inc.
            (Incorporated by reference to Exhibit 10.57 to the Company's
            Quarterly Report on Form 10-QSB dated April 20, 2001).

 10.64      Business Advisory and Consulting Services Agreement dated
            February 19, 2001 between Tarshish Capital Markets, LTD. and
            Insynq, Inc. (Incorporated by reference to Exhibit 10.58 to the
            Company's Quarterly Report on Form 10-QSB dated April 20, 2001).

 10.65*     Consulting Agreement dated March 22, 2001 between Metromedia
            Research Group LLC and Insynq, Inc., as amended dated
            April 9, 2001.

 10.66*     Registration Rights Agreement dated March 22, 2001 between
            Metromedia Research Group, LLC and Insynq, Inc.

 10.67*     Consulting Agreement dated March 23, 2002 between Internet PR Group
            and Insynq, Inc.

 10.68*     Letter Agreement dated April 1, 2001 between Barretto Pacific
            Corporation and Insynq, Inc.

 10.69*     Consulting Agreement dated April 1, 2001 between The N.I.R. Group,
            LLC and Insynq, Inc.

 10.70*     Consulting Agreement dated May 3, 2001 and Amendment dated
            May 30, 2001 between Eugene R. Zachman and Insynq, Inc.

 10.71*     Settlement Agreement dated May 17, 2001 between Howe/Horizon
            Holdings, LLC, Horizon Holdings I, LLC and Insynq, Inc.

 10.72*     Equipment Co-Location License Agreement dated May 16, 2001 between
            Horizon Holdings I, LLC and Insynq, Inc.

 10.73*     Lease Agreement dated May 10, 2001 between Howe/Horizon Holdings,
            LLC and Insynq, Inc.

 10.74*     Consulting Agreement dated May 17, 2001 and Amendment dated
            May 30, 2001 between James Zachman and Insynq, Inc.

 10.75*     Agreement to Provide Professional Service dated July 10, 2001
            between Central Software Services and Insynq, Inc.

 10.76*     Consulting Agreement dated May 3, 2001 between DiabloStocks, Inc.
            and Insynq, Inc.

 10.77*     Selling Agreement dated May 28, 2001 between Taconic Capital
            Partners, LP, Internet Solutions Partners, Inc, Salvani
            Investments, Inc. and Insynq, Inc.

 10.78*     Acquisition Purchase Agreement dated June 1, 2001 between Omnibus
            Subscriber Computing, Inc. and Insynq, Inc.

 10.79*     Settlement Agreement dated June 21, 2001 between One Click
            Investments, LLC and John P. Gorst.

 16.1       Letter on Change in Certifying Accountant (Incorporated by
            reference to Exhibit 1 to the Company's Current Report on
            Form 8- K/A filed May 23, 2000).

 23.1*      Consent of Grant Thornton, LLP for Financial Statements for the
            year ended May 31, 2001.

 23.2*      Consent of Brad G. Beckstead, CPA for Financial Statements for the
            year ended May 31, 2000.

 24.1*      Power of Attorney (included on the signature page of this Annual
            Report.

<FN>
*    Filed Herewith
</TABLE>