SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                  UNITED STATES
                                   FORM 10-KSB



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

FOR THE FISCAL YEAR ENDED MAY 31, 2005

                                       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)

                  NEVADA                         22-3894506
       (State or other jurisdiction of     (IRS Employer Identification No.)
       incorporation or organization)


   1127 BROADWAY PLAZA, SUITE #202
       TACOMA, WASHINGTON                                      98402-3519
 (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: None

                     COMMON STOCK, PAR VALUE $.001 PER SHARE
<PAGE>

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 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:  $1,157,075.

The aggregate market value of the Registrant's common stock, $.001 par value,
held by non-affiliates as of September 9, 2005 on the OTC Bulletin
Board, was: $603,090.64

As of September 9, 2005 there were 241,434,293 shares of the Registrant's common
stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE: No documents are incorporated by reference
into this Annual Report on Form 10-KSB.
<PAGE>

                                  INSYNQ, INC.

                                   FORM 10-KSB

                                TABLE OF CONTENTS

PART I.........................................................................4

   ITEM 1.  DESCRIPTION OF BUSINESS............................................4
   ITEM 2.  DESCRIPTION OF PROPERTY...........................................23
   ITEM 3.  LEGAL PROCEEDINGS.................................................23
   ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...............23

PART II.......................................................................24

   ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS..........24
   ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
            AND RESULTS OF OPERATIONS.........................................26
   ITEM 7.  FINANCIAL STATEMENTS..............................................38
   ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
            AND FINANCIAL DISCLOSURE..........................................38
   ITEM 8A. CONTROLS AND PROCEDURES...........................................38
   ITEM 8B  OTHER INFORMATION.................................................38

PART III......................................................................39

   ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
            COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT ................39
   ITEM 10. EXECUTIVE COMPENSATION............................................40
   ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT....41
   ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS....................42
   ITEM 13. EXHIBITS..........................................................43
   ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES............................60

SIGNATURES....................................................................61

INDEX TO FINANCIAL STATEMENTS................................................F-1
<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL

      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 Annual Report under the heading "Risk
Factors."

      We are primarily an application service provider ("ASP") and we have been
delivering out-sourced software application hosting and managed information
technology services through our IQ Data Utility Service since 1997. We host
software applications on our servers located at two data centers, 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. We currently have approximately 1,435 users,
which can freely access their software and data in real time from any Internet
enabled computer, anywhere in the world.

      As an ASP, 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 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, which allow
us to consistently deploy our customers operations across multiple locations and
to maintain those services through our centralized operations. Among other
things, our services enable our customers to:

      o     quickly expand their Internet presence as business opportunities
            arise in new geographies; and

      o     efficiently incorporate new technologies into their existing
            business operations as these technologies evolve.

      We believe 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. We believe this is 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 hosted software and access to
Internet-related services. We provide products and services to our customer
subscriber base that allows our customers to adopt "Web-based" computing that
serves as an alternative to both local area networks and traditional network
implementations. Generally, we market ourselves as an Internet utility company
that can provide technology solutions for its customers on a cost effective
basis.

      In May of 2005, we purchased from Aptus Corp. all the rights, title and
goodwill to a complete family of accounting software known as "Appgen Custom
Suite" and quoting software known as "QwikQuote". The Appgen Custom Suite
software is a collection of collaborative commerce modules. A mid-sized business
customer selects those modules it needs or wants to form a total
business-computing environment. Appgen Custom Suite is re-sold to the end user
through independent value added resellers (VAR's).QuikQuote is sold and
downloaded through our web site, www.qwikquote.com, or on selected Internet
e-Commerce sites. As part of the the transaction, we also purchased MyBooks
Professional, which is a collaborative accounting system for small to mid-sized
businesses and is designed to simplify the approach to accounting using


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jargon-free menus that make it easier to manage a user's business. This software
is available for purchase through our VAR's, our web site or on selected
Internet e-Commerce sites.

HISTORY

      On February 18, 2000, Insynq, Inc., a private company, merged with our
company, which was then named Xcel Management, Inc. ("Xcel"). The merger was
accompanied by a re-capitalization and was accounted for as a change in capital
structure. On August 3, 2000 Xcel completed a re-incorporation as a Delaware
corporation and changed its name to Insynq, Inc.

      On July 25, 2002, the Board of Directors approved a re-incorporation
merger of Insynq with its wholly owned subsidiary, Insynq, Inc., a Nevada
corporation. In exchange for every 100 shares of common stock held in Insynq -
Delaware shareholders received 1 share of common stock in Insynq - Nevada. The
re-incorporation, which was effective December 23, 2002, resulted in the
exchange of 59,013,393 common shares of the terminating entity, Insynq. -
Delaware, for 590,134 common shares of the surviving entity, Insynq. - Nevada.

      On July 16, 2004, the Board of Directors approved a 1 for 50 reverse split
of Insynq's authorized common stock. Accordingly, the date of record and the
effective date was August 2, 2004. Par value remains unchanged at $.001 per
share. The effect of the reverse split reduced the number of authorized shares
from 500,000,000 to 10,000,000 and reduced the number of outstanding and issued
shares of common stock from 445,384,987 shares to 8,907,254 shares. All
fractional shares were rounded up to the nearest whole share. Also, the Board of
Directors approved a plan to purchase the common stock held by shareholders with
a post-split converted number of shares totaling 9 or less at a market price of
$.04 per share. In addition, our Board of Directors approved an increase in the
authorized common stock from 10 million shares to 2 billion shares, which became
effective September 7, 2004.

      All shares of common stock and per share amounts in the Form 10KSB, and
the accompanying financial statements and notes to financial statements have
been retroactively restated to reflect this August 2, 2004 transaction.

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 efficiency of the Internet.

      As companies commit more and more or their resources into an Internet
infrastructure, the complexity of successfully deploying and maintaining
Internet business operations also 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.


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<PAGE>

      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. Corporate information technology departments have a resource
that they can depend on to deliver advanced technology solutions.

THE INDUSTRY

      An application service provider is defined as an entity that supplies
another company with hosted 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 to
maintain the system, a customer contracts with an application service provider
for hosting its software applications. Other ASP services may include system
administration, software upgrades, and day-to-day operations, such as backup,
recovery, virus protection and security. This arrangement enables customers to
focus on getting value from leased applications and free them of the need to
administer, maintain and upgrade them.

      There are many benefits available to organizations that utilize the
services of application service providers. We believe these benefits include a
solution to the scarcity of experienced information technology personnel, rapid
software application deployment, and a lower total cost of ownership. By
avoiding the time and cost of developing and implementing internal systems,
customers also save money that would otherwise be spent on continual
maintenance, updates and training, thereby raising the overall productivity of
their workforce. Finally, our customers are protected from technological
obsolescence and viruses, all the while benefiting from the most recent vendor
releases and upgrades.

THE TECHNOLOGY

      We believe that there are several key features about our technology, which
allow us to provide dependable and affordable services to our clients.

      In the process of developing the IQ Data Utility Service, we believe we
developed unique and valuable technological expertise. 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. We developed these new methodologies and produced
specialty hardware and software that would become essential to the configuration
and effective management of Internet-based networks and the outside deployment
of shared software applications. Our technology allows us to manage all hosted
application processing functions. The complete IQ Data Utility Service includes
managed network and application services which is then capable of spanning from
a customer's keyboard to one of our data centers with access anytime and
anywhere in the world with an internet portal.

      We lease two secured data centers located in the State of Washington, one
in the City of Everett and one in the City of Bellingham. These centrally
managed servers also house customers' data, provide storage and backup, file and
directory security, and anti-virus protection. These facilities house our server
equipment and routers, and have redundant power, bandwidth, and cooling.

      To support Microsoft Corporation's Windows-based applications, the IQ Data
Utility Service uses proprietary Citrix Systems, Inc. independent computer


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architecture software to increase end-user performance and reduce a customer's
total cost of owning and maintaining computer hardware and software.

      The ASP customer uses a web browser to run software products, anywhere at
anytime, without the need to download or install the software application. Our
goal is to be a reliable and secure on-demand computing platform for the small
office/home office ("SOHO") and small to medium enterprise ("SME") markets.

      We provide hosting for either leased applications or customer owned
software, rent computing services to our customers for a monthly fee, and
perform remote management, support and maintenance of our customers' servers
from our network operations center. By providing these services, we make it
possible for small and medium-sized 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 and secure
technology operations, which can grow or contract to accommodate changing
business needs, without undertaking the difficulty and expense associated with
acquiring, developing and maintaining the required in-house expertise and
infrastructure.

      Aside from being able to access sophisticated technologies on demand,
there are other advantages to small and medium sized businesses in using the
services of an ASP. These advantages include reducing the risk of computer
viruses, allowing for ongoing backup of user data and important information,
disaster recovery and security. Using an ASP also reduces software piracy, as
the software title is no longer downloaded or installed on the user's computer.

      Once connected to the IQ Data Utility Service, 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 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 to their service with us.
Customers may also provide private connections to our data centers.

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 gigabyte of data storage with each business subscription. For larger
customers, we tailor storage requirements to the customers' needs and price it
accordingly.

SECURITY - We believe our IQ Data Utility Service generally raises 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 prevents 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 centers, which are 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 centers generally occur in the form of indecipherable,
encrypted images.

REDUNDANCY - Our IQ Data Utility Service secures customer data on redundant disk
arrays with ready spare disk drives. We make a best effort to assure application


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redundancy, so that if one server fails, we can reroute customers to similar
servers, thereby minimizing customer downtime.

                               OUR STRATEGIC PLAN

MARKET DRIVERS

      Small to medium sized enterprises are growing and have limited budgets,
which rarely makes them the direct target of sophisticated professional service
providers who we consider our direct competition. We have defined and committed
ourselves to this niche market because we can provide the information technology
requirements for these businesses on a cost efficient and highly effective
basis.

KEY DIFFERENTIATORS

      We believe 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, professional services.
These businesses require the same level of reliable information technology
services as any other large enterprise, but generally do not have the financial
resources, nor able to afford the skilled technicians, to make the required
investment for an internet and intranet computer system. We enable these
customers to rent, on an as needed basis, their information technology needs
without having to commit large amounts capital, generally in the form of debt,
into a structure that would take years to recover its investment.

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 Internet,
professional trade publications and in-house sales staff.

      We will continue to invest in the development and integration of
additional products and services that address the evolving and competitive needs
of our customers. Our goal is to integrate additional product enhancements that
extend the capabilities of our services across a broad universe of existing and
potential customers. We believe that by continuing to expand our mix of products
and service offerings, we will be viewed by our customers as their single, best
resource for all of their information technology service requirements.

      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 quickly to the
ever-changing market conditions.

      In addition to internally generated growth, we intend to expand our
business through strategic acquisitions within the United States and possibly
abroad. We believe an acquisition will position ourselves to immediately
penetrate targeted geographical and/or industry specific markets, broaden our
offerings of products and services, add experienced technical staff, and open
new market entry points. To attain this goal, we are aggressively pursuing
opportunities to merge with and/or acquire


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compatible companies. We presently do not have any current plans to enter into
such an acquisition, merger, financing or other business combination.

SALES AND MARKETING

      Our sales and marketing efforts are focused on the small to medium size
enterprise and the small office home office market. Although specific definition
of these market segments vary somewhat, we view the high-end, small office home
office market to represent small offices with up to ten employees, and the small
to medium size enterprise market to represent companies that employ
approximately 11 to 500 people. We sell and market to these business segments
directly through our internal sales department, and utilizing referrals such as
software vendors and publishers, information technology consultants,
telecommunication carriers, other internet service providers, trade shows and
our own website.

      We have developed the e-Accounting products and services as a packaged
service offering. By targeting these small businesses we can deliver a
combination of software and marketing services designed specifically for the
small business market segments.

      The e-Accounting products and services include:

E-COLLABORATE AND E-WORKPLACE - - Proprietary document management and work flow
process software applications.

EFILESHARE -- A document storage service which allows our customers to create a
shared file system on the Internet, assign users and permissions, and allow
users, both inside and outside of the company, to interact and collaborate in
real-time. Automatic data backup is included.

CONSTANT CONTACT - A web-based email marketing service. Small and mid-sized
businesses build their email lists, create and send professional email
newsletters and promotions, and track results with this self-service solution.
No technical expertise is required.

BIZACTIONS - A weekly email communication system that keeps our customers
connected with their clients, prospects and referral sources. Customers may make
announcements and access online reports through this service.

BSYTECH - A provider of template or custom web sites for professional service
firms and businesses that want affordable websites.

J2 GLOBAL COMMUNICATIONS - A fax and voicemail service, third parties use the
fax number assigned to the customer who receives the fax, or a notification of a
voicemail message, by e-mail.

SOFTWARE PRODUCTS

APPGEN CUSTOM SUITE

      Our Appgen Custom Suite software is a collection of collaborative commerce
modules. A mid-sized business customer selects those modules it needs or wants
to form a total business-computing environment. These modules are designed
specifically for use by mid-sized enterprises of all types, and may be assembled
in any way that suits the needs of the business. The modules include general
ledger, accounts receivable, accounts payable, payroll processing, billing, bank
reconciliation, sales order processing, purchase order processing, inventory
control, job cost tracking, bill of materials, and others. The business
accounting modules are modifiable and grow with the customer's business. The
Appgen Custom Suite may be deployed on Unix, Windows, Mac OS X, and Linux
operating systems on a single computer over the Web or any other type of
networked configuration.

      A value added reseller, commonly know as a VAR, is a business that sells a
product made by another business after


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adding something of value such as another component, specialized software or
other peripheral hardware. Our marketing plan includes the re-introduction of
our Appgen software products to VARs who formerly sold these software products.
These resellers often develop their own applications around the Appgen Custom
Suite and open up entirely new vertical markets for themselves while integrating
the new packages or modules and customizations with the accounting software.
Other services they may offer include delivery and setup, training, technical
support, and custom programming. Aside from selling the Appgen Custom Suite
through existing channels and resellers, we are also considering direct sales
organizations.

      We categorize our resellers of the Appgen software as follows:

      Platinum Level - A Platinum Level VAR is a business authorized by us to
sell our Appgen Custom Suite and MyBooks Professional software products.
Platinum Level VARs generally target various vertical segmented markets, such as
automobile dealerships, the large retailer, the "chain retailer", the motor
transportation and distribution industry, staffing agencies or the lumber
industry. The Platinum VAR bundles the Appgen Custom Suite or MyBooks
Professional software, customized or un-customized, with other services or
products that it may provide to its customers. In order to customize the
software to meet a customer's requirements, the VAR will purchase a Developer's
Kit. We copy the application from the master copy of the software on to
installation media, such as a compact disk (CD) and ship it to the VAR for
installation at the customer site. We issue user licenses upon registration.
Support for the Appgen Custom Suite and MyBooks Professional software is also
included in the Platinum Level.

      A Platinum VAR may market the software under its brand name or under our
un-customized brand. The Platinum VAR, rather than staffing its own sales force,
may enter into agreements with other independent contractors who also have
expertise in the same vertical markets. These sub-contractors are our Gold or
Dealer Level VARs. Neither Insynq nor the Platinum Level VAR make any payments
to the Gold or Dealer Level VARs.

      For a fixed fee, the Platinum VAR is entitled to purchase from us, at a
discount, the Appgen Custom Suite and MyBooks Professional software applications
and user licenses for resale. In addition, the Platinum VAR receives a
commission from us if it enters into subcontracting agreements with Gold and
Dealer Level resellers. The negotiated commission is based on the retail value
of the licenses sold through the subcontractors. To date, none of our Platinum
VARs have entered into agreements with subcontractors.

      Gold Level - Unlike a Platinum Level VAR, a Gold Level VAR is not
authorized to enter into subcontracting agreements. For a fixed fee, the Gold
Level VAR is also entitled to purchase the software and end user licenses at a
discount, although the discount is lower than the discount we offer to our
Platinum Level VARs. Like the Platinum VAR, a Gold Level reseller may bundle the
Appgen Custom Suite or MyBooks Professional software, customized or
un-customized, with other services or products that it provides to its
customers. A Developer's Kit and support for the Appgen software is also
included in the Gold Level.

      Dealer Level - The only difference between a Dealer Level VAR and a Gold
Level VAR is the rate of discount we offer on purchases of our products and
licenses.

      MyBooks Professional ("MBP") Dealer - For a fixed fee, the MBP dealer is
entitled to purchase from us, at a discount, the MyBooks Professional entry
level accounting software. As with the Platinum VAR, the MBP dealer may bundle
the MyBooks Professional software, customized or un-customized, with other
services or products that it provides to its customers. A Development Kit and
support for the software is also available to the MBP dealer.

      Each potential VAR is free to choose its level of involvement (Platinum,
Gold, MBP or Dealer). The prices of our software and licenses are scaled, so
that the greater the level of involvement, the more advantageous the price.

QWIKQUOTE SOFTWARE

      Our QwikQuote Software is either single user or network version. This
software allows the user to generate customized sales quotations and assists
sales people by managing inventory or products. QwikQuote can also link to
popular contact manager applications, such as ACT!, Goldmine, Outlook, TeleMagic
and Maximizer, so that quotes can be synchronized and attached to the customer
contact record. It is vital for a sales force to be equipped with current and
accurate


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product and pricing information. QwikQuote provides an electronic means of
storing product information in the form of picture, video, database, and free
text that is instantly available when a customer asks a question.

      We sell our QwikQuote Sales software through our web site,
WWW.QWIKQUOTE.COM and selected e-Commerce web sites. The information on this web
site is not part of this prospectus. An interested potential customer, after
providing his name and contact information, may download a copy of the software
for testing. We then call the potential customer to determine if there are any
specific questions or requirements. The customer may then purchase the
downloaded software and have it registered for full use.

MYBOOKS PROFESSIONAL

      MyBooks Professional is a collaborative accounting system for small to
mid-sized businesses that is designed to simplify the approach to accounting
with jargon-free menus that make it easy to manage a user's business. A single
application interface for either a service-based or product-based company helps
grow the business by gaining control over information regarding sales,
customers, vendors, purchases, bank accounts, inventory, billing, payroll, and
financial statements, with complete sales order and purchase order subsystems
and a separate accountant's page that includes the functions of the underlying
general ledger system. MyBooks Professional is a true double entry, fully
auditable accounting system and is modifiable and scalable. The application can
accommodate one to ten simultaneous users and is installable on Unix, Apple Mac
OS X, Linux, and Microsoft Windows, requiring little or no technical assistance.
The software may be used by a single user on a single computer, over the Web, or
by multiple users in a network environment with various operating systems.

COMPETITION

ASP SERVICES

      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:

      o     providers of computer equipment;

      o     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

      o     providers of Internet based systems integration or professional
            services.

      Many of our competitors may have been in business longer than us, may have
significantly greater financial, technical, and other resources, or may have
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:

      o     the quality and reliability of services offered;
      o     the scope of supported applications and technology platforms;
      o     the ability to expand or contract the operational environments
            supported; the extent to which the services offered, provide a
            complete and cost effective solution;
      o     the engineering and technical expertise and development of
            automation software;
      o     the rapid deployment of services;
      o     the quality and timeliness of customer service and support; and
      o     the price.

SOFTWARE PRODUCTS

      To remain competitive, we must continually enhance and improve the
functionality and features of our software.


                                       11
<PAGE>

While Appgen's proprietary database structure is a high performance product, the
market's proven adoption of open database platforms serves as incentive to
develop our Appgen applications to be able to utilize this type of database
structure. We will accomplish this through a combination of outsourced
developers and programmers and employees, each with differing coding skills. We
intend to develop further Web-based software tools as the market demands.

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.

      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 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.

INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

      We regard our service marks, trademarks, domain names, and similar
intellectual property as critical to our success. Our domain names include,
INSYNQ.com, CPA-ASP.com, ON-Q.net, SIMPLENETWORKS.net, APPLICATIONVAULT.com,
APPGEN.com, QWIKQUOTE.com, MESSAGEIQ.com, OURACCOUNTING.com, OURBOOKEEPER.com,
and RAPIDNETWORKS.com, all of which are now owned by us.


                                       12
<PAGE>

      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.

      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 are not aware of any 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.

CUSTOMER SERVICE

      Our customer support service is comprised of customer support
representatives and is further supplemented by senior technical support
representatives and server technicians, who are all Microsoft and Citrix
certified engineers. Customer support is available via toll-free telephone lines
and email, and we offer personalized, one-on-one support for any aspect of the
IQ Data Utility Service.

EMPLOYEES

      We have sixteen employees, described as follows:

      o     management - 4
      o     accounting - 2
      o     development - 3
      o     engineering and technical - 2
      o     customer support - 2
      o     sales and marketing - 3

      We critically and continually evaluate our staffing requirements in
conjunction with our forecasted business plan and sales projections.

RISK FACTORS

      There are a number of factors that could cause actual results to differ
materially from those discussed in the forward-looking statements, including
those factors described below. Other factors not identified herein could also
have such an effect. Among the factors that could cause actual results to differ
materially from those discussed in the forward-looking statements are the
following:


                                       13
<PAGE>

RISKS RELATING TO OUR BUSINESS:

WE HAVE HISTORICALLY OPERATED AT A LOSS, HAVE EXPERIENCED NEGATIVE OPERATING
CASH FLOWS, AND ANTICIPATE THAT LOSSES WILL CONTINUE, AND IF LOSSES CONTINUE WE
MAY BE REQUIRED TO CEASE OR CURTAIL OUR OPERATIONS.

      We have reported a net loss and negative cash flows from operations every
year since we began doing business as Insynq, Inc. For the year ended May 31,
2005, we have incurred a net loss of $3,032,518. We expect to incur a net loss
and negative cash flows from operations in fiscal 2006. Our current business
plan forecasted these net losses and negative cash flows from operations for the
foreseeable future, as we will continue to incur significant operating expenses.
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 were 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 August 24, 2005, 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 achieve either of these.

WE HAVE TWO TAX LIENS FILED AGAINST US. IF WE FAIL TO ADDRESS THESE OBLIGATIONS
IN A TIMELY MANNER THESE TAX OBLIGATIONS, WE COULD EXPERIENCE A SEVERE NEGATIVE
IMPACT ON OUR BUSINESS OR OUR RESOURCES.

      On July 11, 2005, we entered into an installment payment plan with the
Internal Revenue Service ("IRS") to pay $5,000 per month for outstanding
penalties and interest that accrued over the years from the non-payment of our
payroll taxes in years 2000 and 2001. As of August 24, 2005, we owe
approximately $205,000 to the IRS, and the IRS has a lien on our assets until
such debt is fully paid.

         Additionally, there is a lien filed by the State of Utah for
approximately $28,000 for prior years' income taxes assessed to our predecessor
company. This amount has been disputed, amended returns to correct this
deficiency were filed, but as of the date of this report the state has not
responded to the amended returns, thereby, neither granting approval no denying
the amended returns.

      If we are unable to continue to pay on the workout agreement with the IRS,
they may foreclose on our assets and we may be forced to cease business.

WE ARE DELINQUENT IN THE PAYMENT OF CERTAIN TRADE PAYABLES IN THE AMOUNT OF
APPROXIMATELY $503,000 AS OF AUGUST 24, 2005. 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 August 24, 2005, we were late in the payment of certain creditor
trade payables in the amount of approximately $503,000. We have initiated
contact with many of our vendors and have negotiated a reduction in amounts owed
or were extended to more favorable terms. 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.

WE HAVE GRANTED A SECURITY INTEREST IN ALL OF OUR ASSETS TO FOUR INVESTORS IN
CONNECTION WITH THE CONVERTIBLE SECURITIES PURCHASE AGREEMENTS ENTERED IN JUNE
2001, JANUARY 2002, SEPTEMBER 2002, JUNE 2004, AND FEBRUARY 2005, AND, IF WE
WERE TO DEFAULT ON THE PAYMENT OF THE CONVERTIBLE SECURITIES, THE INVESTORS
WOULD BE ENTITLED TO TAKE POSSESSION OF ALL OF OUR ASSETS.

      In consideration of the receipt of the funding received by us in
connection with the issuance of the convertible securities under the Securities
Purchase Agreements entered into in June 2001, January 2002, September 2002,
June 2004 and


                                       14
<PAGE>

February 2005, AJW Offshore Ltd., AJW Partners, LLC, New Millennium Capital
Partners II, LLC and AJW Qualified Partners, LLC, ("Investors") a security
interest in essentially all of our assets. In the event that we were to default
on a payment of the securities, the Investors would be entitled to take
possession of all of our assets and, as a result our operations would cease.

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 as well as obtain credit from our vendors 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 or
credit from our vendors, we will be unable to execute our business plan and you
could lose your investment. Further, our current financing arrangements contain
restrictions in the timing and type of financing we may enter into. For example,
during the applicable lock-up period, we may not enter financing involving the
issuance of common stock at a discount to the market price, the issuance of
convertible securities that are convertible into an indeterminate number of
shares of common stock or the issuance of warrants. Also, we must provide our
current Investors with the ability to participate in any future financing. The
foregoing may impede our ability to raise funding.

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

      o     the cost to develop and maintain our on-line hosting software;
      o     the cost to develop and market our software products;
      o     the rate at which we expand our operations;
      o     the extent to which we develop and upgrade our technology;
      o     the occurrence, timing, size and success of acquisitions; and
      o     the response of competitors to our service offerings.

      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 a future business
relationship with these vendors, which could result in limiting our purchasing
abilities and credit facilities.


IF WE ARE UNABLE TO OBTAIN KEY SOFTWARE APPLICATIONS FROM CERTAIN VENDORS, WE
WILL BE UNABLE TO DELIVER OUR SERVICES, WHICH MAY RESULT IN THE TERMINATION OF
OUR OPERATIONS.

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

      As of August 24, 2005 we are not in compliance with the proper
registration and licensing of certain software applications and products
critical to support the customer base and our own internal operations.
Management has initiated negotiations with these software vendors in an effort
to purchase or lease/rent the licenses to meet the licensing requirements.
Should we not be able to reach a satisfactory agreement with these vendors, and
due to the vital and critical nature of these licenses to support our services,
sales and operations we may be forced to cease operations and/or to file
bankruptcy.

SOME OF OUR APPLICATION SERVICE PROVIDER SERVICE CONTRACTS GUARANTEE CERTAIN
SERVICE LEVELS, AND, IF WE FAIL TO MEET THESE SERVICE LEVELS, OUR APPLICATION
SERVICE PROVIDER CUSTOMERS ARE ENTITLED TO RECEIVE CERTAIN SERVICES FOR FREE AND
MAY BE ENTITLED TO CANCEL THEIR CONTRACT, WHICH SUCH CANCELLATIONS WOULD REDUCE
OUR REVENUE AS WELL AS DAMAGE OUR REPUTATION.

      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


                                       15
<PAGE>

damage our reputation with our customers and prospective customers.

WE DEPEND HEAVILY ON OUR MANAGEMENT TEAM AND THE LOSS OF ANY OR ALL OF THE
MEMBERS OF SUCH MANAGEMENT TEAM COULD MATERIALLY ADVERSELY AFFECT OUR BUSINESS,
RESULTS OF OPERATIONS AND OUR FINANCIAL CONDITION.

      Our success depends, to a significant extent, upon the efforts, the
abilities and the business experience of John P. Gorst, president, chairman of
the board and chief executive officer, as well as on these same attributes of
our other officers and management team. Loss of the services of any or all of
our 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.

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 CHANGES 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.

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, WHICH COULD
AFFECT OUR ABILITY TO COMPETE EFFECTIVELY AND OUR RESULTS OF OPERATIONS.

      Our services are highly dependent upon proprietary technology, which
allows us to upgrade and manage the customer's computing environment, both at
the data centers 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 CENTERS, 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


                                       16
<PAGE>

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 software hosting business strategy, including data backup and storage,
depends on the consistent performance of the data centers and those of third
parties. We offer offsite back-up storage of data for all customers. The current
data centers, 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 centers are 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 are located at two
facilities 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 centers, we could lose customers or fail to
attract new customers.

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, AND THE OCCURRENCE OF ANY BREACH OF SECURITY COULD RESULT IN THE
LOSS OF CUSTOMERS, DAMAGE TO OUR REPUTATION OR EXPOSURE TO LIABILITY.

      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.

THE HARDWARE AND SOFTWARE WE USE IS COMPLEX AND MAY CONTAIN DEFECTS AND THESE
DEFECTS COULD RESULT IN SERVICE INTERRUPTIONS, OR THE LOSS OF DATA, WHICH COULD
IMPAIR OUR REVENUE OR DELAY MARKET ACCEPTANCE OF OUR SERVICE.

      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.

GROSS MARGINS ON CERTAIN PRODUCTS OR LINES OF BUSINESS MAY DECLINE OVER TIME,
WHICH MAY RESULT IN A DECREASE TO OUR NET INCOME.

      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


                                       17
<PAGE>

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
THE PLANNED RESULTS OF OUR BUSINESS PLAN.

      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 may claim that we did not fulfill our obligations. In
the event it is determined that we are liable for damages to former employees,
consultants, and other third parties, the liability for these damages could
materially affect our ability to achieve the results of our business plan.

      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.

MANY COMPANIES USE NAMES SIMILAR IN SOUND OR SPELLING TO "INSYNQ". INTELLECTUAL
PROPERTY INFRINGEMENT CLAIMS AGAINST US, EVEN IF WITHOUT MERIT, COULD BE
EXPENSIVE TO DEFEND AND 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. 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.

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, 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 EXPEND OUR FINANCIAL RESOURCES
AND MATERIALLY ADVERSELY AFFECT OUR FINANCIAL CONDITION.


                                       18
<PAGE>

      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.

WE HAVE NOT INDEPENDENTLY VERIFIED THE RELIABILITY OF MARKET DATA CONTAINED
HEREIN AND SUCH DATA MAY BE INCOMPLETE AND/OR INACCURATE.

      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.

WE DO NOT HAVE DIRECTORS' AND OFFICERS' LIABILITY INSURANCE OR OTHER TYPES OF
CASUALTY OR LIABILITY INSURANCE COVERAGE ON OUR COMPANY, OUR EMPLOYEES AND OUR
ASSETS.

      We are financially and operationally exposed to unknown and unforeseen
casualties and risks because we lack insurance coverage on our key officers and
for catastrophic events. If a key person were to die, we would have to bear the
entire expense of finding an experienced replacement. This expense is not
budgeted. There is no assurance that a new person will be paid at the same rate
as the deceased party. It could be significantly greater than its predecessor.
Should the loss of a key person occur and without key person life insurance, the
financial burden could materially adversely affect the results of operations.

      We also operate without business liability and errors and omissions
insurance. If a catastrophic event or a negligent act occurred whereby a party
was harmed or injured, we may be held liable, in which case no insurance
coverage is in place for such protection. We do not have adequate assets to be
self-insured. Therefore, if an event occurred, such as a fire to our offices, we
will have to replace the damaged property from an unknown source of funds if we
wish to stay in business. Events such as these, will materially adversely affect
our operations and our ability to be competitive and retain our existing
customer base.

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 ADOPTS 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


                                       19
<PAGE>

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.

RISKS RELATING TO OUR CURRENT FINANCING ARRANGEMENTS:

WE ARE IN DEFAULT OF CERTAIN COVENANTS OF OUR SECURITIES PURCHASE AGREEMENTS.

      As of August 24, 2005 we owed a total of $5,002,359 for our convertible
debentures and convertible notes, including related accrued interest, issued
pursuant to the Securities Purchase Agreements entered into in June 2001,
January 2002, September 2002 and February 28, 2005. As of August 24, 2005,
warrants to purchase 5,558,000 shares of common stock have been granted to the
purchasers of our debentures and notes, and are unexercised.

      We are authorized to issue 2 billion shares of common stock. As of August
24, 2005, 14,012,027 shares of common stock were reserved for issuance upon
exercise of our outstanding warrants and options to parties other than those
issued in connection with the convertible securities. An additional
1,732,311,680 shares of common stock were reserved for issuance upon conversion
of the debentures, notes and exercise of the warrants. As of August 24, 2005,
there were 253,676,293 shares of common stock outstanding.

      The Investors have a first lien on all of our asset. So long as we remain
in default, the Investors may foreclose on our assets and we may be forced to
cease operations.

THE CONTINUOUSLY ADJUSTABLE CONVERSION PRICE FEATURE OF OUR CONVERTIBLE
DEBENTURES AND CONVERTIBLE NOTES PAYABLE COULD REQUIRE US TO ISSUE A
SUBSTANTIALLY GREATER NUMBER OF SHARES, WHICH WILL CAUSE DILUTION TO OUR EXITING
STOCKHOLDERS.

      Our obligation to convert our debentures and notes payable into shares of
common stock is essentially limitless. Each of our security agreements has a
variable conversion formula, which means that if the market price of our shares
declines, a greater number of shares will be issued for the same principal, as
if the stock price was higher.

      According to our Securities Purchase Agreements, if the convertible
debentures and convertible notes payable, plus related accrued interest were
converted, the required number of shares of our common stock necessary to
convert these debt securities would total approximately 6.5 billion shares,
based on the then market price on August 24, 2005, of $0.0028 per share. If we
were requested to convert the debt into common stock, we do not have adequate
authorized stock to meet the conversion requirements of these securities.

      The number of shares of common stock issuable upon conversion of our
convertible obligations will increase if the market price of our stock declines,
which will cause dilution to our existing stockholders. We intend to amend our
articles of incorporation to increase the amount of common stock we are
authorized to issued to 10 billion. However, there is no assurance that while
this action is being done, the Investors will not foreclcose.

THERE ARE A LARGE NUMBER OF SHARES UNDERLYING OUR CONVERTIBLE DEBENTURES,
CONVERTIBLE NOTES PAYABLE AND WARRANTS THAT MAY BE AVAILABLE FOR FUTURE SALE AND
THE SALE OF THESE SHARES MAY DEPRESS THE MARKET PRICE OF OUR COMMON STOCK.

      As of August 24, 2005, we had 253,676,293 shares of common stock issued
and outstanding. If our convertible securities plus the related accrued interest
were converted at today's market price, we would be obligated to issue
approximately 6.5 billion shares of common stock. Our authorized number of
shares is 2 billion shares, which is currently insufficient to meet this
redemption requirement for the holders of these convertible debt instruments.
The holders of our


                                       20
<PAGE>

convertible securities also hold an additional 5,558,000 warrants, each warrant
to purchase one share of common stock. As such, we do not have adequate
authorized shares of common stock to meet the current and future requirements of
the Investors by approximately 4.7 billion shares. In addition, the number of
shares of common stock issuable upon conversion of the outstanding convertible
debentures and the outstanding convertible notes payable may increase if the
market price of our stock declines. All of the shares, including all of the
shares issuable upon conversion of the debentures and the notes payable and upon
exercise of the warrants, may be sold without restriction. The sale of these
shares may adversely affect the market price of our common stock.

IF WE WERE REQUIRED, FOR ANY REASON, TO REPAY OUR CONVERTIBLE DEBENTURES AND
CONVERTIBLE NOTES, WE WOULD BE REQUIRED TO DEPLETE OUR WORKING CAPITAL, IF
AVAILABLE OR RAISE ADDITIONAL FUNDS. OUR FAILURE TO REPAY THE CONVERTIBLE
DEBENTURES AND CONVERTIBLE NOTES, IF REQUIRED, COULD RESULT IN LEGAL ACTION
AGAINST US, WHICH COULD REQUIRE THE SALE OF SUBSTANTIAL ASSETS.

      In any event of default as described in the convertible debentures and
convertible notes could require the early repayment of the principal balance due
to include interest. If we are unable to pay and the default is not cured within
the specified grace period the default interest rate is 15% on the outstanding
principal balance of the debentures and the notes. We anticipate that the full
amount of the debentures and the notes, together with accrued interest, will be
converted into shares of our common stock, in accordance with the terms of the
convertible debenture and the convertible notes. If we were requested to repay,
in cash, the convertible obligations, we would be required to use our limited
working capital and raise additional funds. If we were unable to repay the
obligations when required, the debenture and note holders could commence legal
action against us and foreclose on all of our assets to recover the amounts due.
Any such action would require us to curtail or cease operations.

RISKS RELATING TO OUR COMMON STOCK:

OUR STOCK COULD BE THE VICTIM OF SHORT SELLING AND, IF THIS OCCURS, THE MARKET
PRICE OF OUR STOCK COULD BE ADVERSELY AFFECTED AND, IN TURN, ADVERSELY EFFECT
OUR ABILITY RAISE ADDITIONAL CAPITAL THROUGH THE SALE OF OUR COMMON STOCK.

      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. If the trading price of our
common stock decreases, this may negatively impact our ability to raise
additional capital through the sale of our common stock.

IF WE FAIL TO REMAIN CURRENT ON OUR REPORTING REQUIREMENTS, WE COULD BE REMOVED
FROM THE OTC BULLETIN BOARD, WHICH WOULD LIMIT THE ABILITY OF BROKER-DEALERS TO
SELL OUR SECURITIES AND THE ABILITY OF STOCKHOLDERS TO SELL THEIR SECURITIES IN
THE SECONDARY MARKET.

      Companies trading on the OTC Bulletin Board, such as us, must be reporting
issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and
must be current in their reports under Section 13, in order to maintain price
quotation privileges on the OTC Bulletin Board. If we fail to remain current on
our reporting requirements, we could be removed from the OTC Bulletin Board. As
a result, the market liquidity for our securities could be severely adversely
affected by limiting the ability of broker-dealers to sell our securities and
the ability of stockholders to sell their securities in the secondary market.


                                       21
<PAGE>

OUR COMMON STOCK IS SUBJECT TO THE "PENNY STOCK" RULES OF THE SEC AND THE
TRADING MARKET IN OUR SECURITIES IS LIMITED, WHICH MAKES TRANSACTIONS IN OUR
STOCK CUMBERSOME AND MAY REDUCE THE VALUE OF AN INVESTMENT IN OUR STOCK.

      The Securities and Exchange Commission has adopted Rule 15g-9 which
establishes the definition of a "penny stock," for the purposes relevant to us,
as any equity security that has a market price of less than $5.00 per share or
with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require:

      o     that a broker or dealer approve a person's account for transactions
            in penny stocks; and the broker or dealer receive from the investor
            a written agreement to the transaction, setting forth the identity
            and quantity of the penny stock to be purchased.

      In order to approve a person's account for transactions in penny stocks,
the broker or dealer must:

      o     obtain financial information and investment experience objectives of
            the person; and make a reasonable determination that the
            transactions in penny stocks are suitable for that person and the
            person has sufficient knowledge and experience in financial matters
            to be capable of evaluating the risks of transactions in penny
            stocks.

      The broker or dealer must also deliver, prior to any transaction in a
penny stock, a disclosure schedule prescribed by the Commission relating to the
penny stock market, which, in highlight form:

      o     sets forth the basis on which the broker or dealer made the
            suitability determination; and

      o     that the broker or dealer received a signed, written agreement from
            the investor prior to the transaction.

      Generally, brokers may be less willing to execute transactions in
securities subject to the "penny stock" rules. This may make it more difficult
for investors to dispose of our common stock and cause a decline in the market
value of our stock.

      Disclosure also has to be made about the risks of investing in penny
stocks in both public offerings and in secondary trading and about the
commissions payable to both the broker-dealer and the registered representative,
current quotations for the securities and the rights and remedies available to
an investor in cases of fraud in penny stock transactions. Finally, monthly
statements have to be sent disclosing recent price information for the penny
stock held in the account and information on the limited market in penny stocks.

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

      Provisions of our certificate of incorporation and bylaws and Nevada 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:

      o     Our board of directors are 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;

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

      o     Limitations on who may call annual and special meetings of
            stockholders

      Our Board approved in its July 16, 2004 meeting, the authorization of
1,000,000 shares of Series A, Non-Participating Preferred Stock, par value at
$0.001 per share, with each share having 1,000 votes on all matters upon which
the shareholders are entitled to vote. Our Board then issued 165,000 shares of
this stock in equal amounts to its three corporate officers. As such, the three
corporate officers can control a majority of the votes necessary to approve any
proposal requiring stockholder consent.


                                       22
<PAGE>

ITEM 2.  DESCRIPTION OF PROPERTY

A.    Our principal executive offices are located at 1127 Broadway Plaza, Suite
      202, Tacoma, Washington, 98402-3519, and our telephone number is (253)
      284-2000. We lease approximately 4,000 square feet on a month-to-month
      basis. We pay a monthly fee of $2,240 for the use of these facilities,
      plus a pro-rata share of common utilities. These facilities consolidate
      all of our departments, such as, sales, customer support, engineering and
      administrative services.

B.    We also have a rental agreement for two data center facilities that house
      our server farms. These facilities are located in the cities of Everett
      and Bellingham, Washington with a renewable one-year term lease with an
      aggregate base monthly fee of $8,305.

C.    We rent an office facility in Haugppauge, New York for our software
      development and sales division. The monthly rent is $950. The term of this
      lease expires June 30, 2006.

      We believe these arrangements are adequate to support our future
operations.

ITEM 3.  LEGAL PROCEEDINGS

      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 alleged that we breached a
written employment contract and breached a written termination agreement. Mr.
Hargin alleged that under such contract and agreement, he was owed $114,858.39
plus 12% interest and options to purchase 1,500 fully vested shares of our
common stock exercisable at $34.00 per share. In August 2001, we entered into a
settlement and release agreement under the terms of which we were to pay Mr.
Hargin $17,500 and issue a non-qualified stock option for 2,000 shares of common
stock with an exercise price of $6.50 per share. As August 24, 2005, we have not
made the cash payment and the option remain unexercised.

      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 alleged that we breached a promise to pay for goods and
services rendered. PR Newswire alleged that under such promise it is owed
$20,760. In February 2002, PR Newswire obtained a default judgment against us in
the amount $16,500, plus reasonable attorney fees. As of August 24, 2005, the
amount of the judgment is unpaid.

      On September 6, 2001, we were served with a summons and complaint by its
former landlords, asserting: (a.) a breach of a settlement agreement entered
into in May 2001 to register 5,000 shares of common stock, valued at $80,000, in
partial settlement of its then existing lease, and, (b.) a default by us on two
new long-term lease obligations that if carried to term would aggregate
approximately $1,034,500 in lease payments. A Partial Summary Judgment was
entered against us on April 2, 2002 in the amount of $169,754. This judgment was
recognized in our financial statements as an expense in fiscal 2002. On March
25, 2005, we settled the unpaid portion of the Partial Summary Judgment award
for $95,000. On July 18, 2005, we were served by the same party with another
complaint for a material breach of contract. We believe we have meritorious to
the claim and intend to defend this matter vigorously.

      We are a party to an un-filed claim, received May 29, 2003, by RR
Donnelly, Inc. a former vendor. The claim alleges unpaid services rendered in
the amount of $145,265. We strongly deny that we owe such amount and intend to
vigorously contest this action.

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

      In July 2004 the Board of Directors authorized the issuance of 1,000,000
shares of Series "A" Non-Participating Preferred Stock, par value of $.001 per
share. The Board then issued 165,000 shares at par value to three of our
officers. At the same Board meeting, the Board approved a one for fifty reverse
split of the common stock and approved an amendment to our Articles of
Incorporation to increase the number of authorized shares of our common stock to
2,000,000,000 par value $0.001 per share. The action had been approved by the
written consent of the shareholders together entitled to vote a majority of the
aggregate votes at any stockholders meeting. An Information Statement was first
mailed or furnished to the stockholders of


                                       23
<PAGE>

record on or about August 18, 2004 and the amendment was effective on September
7, 2004.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET FOR COMMON STOCK

      Our common stock is quoted on the OTC Bulletin Board under the symbol
"INSN". Our common stock has been quoted on the OTCBB since November of 1997.

      For the periods indicated, the following table sets forth the high and low
bid prices per share of common stock. These prices represent inter-dealer
quotations without retail markup, markdown, or commission and may not
necessarily represent actual transactions. This table gives effect to our two
for one stock forward split that occurred on August 3, 2000, our one for one
hundred stock exchange that occurred on December 23, 2002, and, our one for
fifty reverse stock split that occurred on August 2, 2004.

                                             HIGH ($)          LOW ($)

        FISCAL 2003
        August 31, 2002                      100.00            40.00
        November 30, 2002                    150.00           150.00
        February 28, 2003                      3.50             2.50
        May 31, 2003                           5.00             2.50

        FISCAL 2004
        August 31, 2003                        1.00             1.00
        November 30, 2003                      0.60             0.50
        February 29, 2004                      0.40             0.35
        May 31, 2004                           0.15             0.10

        FISCAL 2005
        August 31, 2004                       0.028            0.025
        November 30, 2004                     0.008            0.004
        February 28, 2005                     0.005            0.005
        May 31, 2005                          0.002            0.002

        FISCAL 2006
        August 24, 2005                       0.003            0.003

HOLDERS OF OUR COMMON STOCK

      As of August 24, 2005, we had approximately 84 record holders of our
common stock. The number of record holders was determined from the records of
our transfer agent and does not include beneficial owners of common stock whose
shares are held in the names of various security brokers, dealers, and
registered clearing agencies. The transfer agent of our common stock is Colonial
Stock Transfer Company, Inc., 66 Exchange Place, Salt Lake City, Utah 84111.

DIVIDENDS

      We have never declared or paid any cash dividends on our common stock. We
do not anticipate paying any cash dividends to stockholders in the foreseeable
future. In addition, any future determination to pay cash dividends will be at
the discretion of the Board of Directors and will be dependent upon our
financial condition, results of operations, capital requirements, and such other
factors as the Board of Directors deem relevant.


                                       24
<PAGE>

RECENT SALES OF UNREGISTERED SECURITIES

      The following sets forth information regarding all sales of our
unregistered securities during the fiscal year ended May 31, 2005. 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 for 50 reverse split effective July 2004.

      From June 1, 2004 through May 31, 2005 we issued 33,800,017 shares of
common stock pursuant to 7 separate conversions of principal due on our
convertible debentures. Total principal redeemed on our convertible debentures
aggregated $30,507.

      On July 16, 2004, we issued 165,000 of Series A, Preferred Stock to three
of our officers at par value of $0.001 per share.

      On August 2, 2004, as a result of the reverse split of our common stock,
we made an adjustment for 919 fractional shares, and an adjustment for 1,365
shares of common stock for the buyback offer to those shareholders holding nine
shares or less.

      On October 4, 2004, we issued 40,000,000 shares of our common stock at
$0.015 per share for 1,500 "MyBooks" Licenses and a non-exclusive master license
application hosting agreement to host this application over the Internet. This
was a related party transaction with a company called Aptus Corp, which is
partially owned by two of our officers. However, in April 2005, this deal was
rescinded by mutual agreement, and the 40 million shares of common stock were
returned to us and we returned the 1,500 "MyBooks" licenses to Aptus Corp. This
was done in anticipation of an asset purchase agreement to be executed on April
30, 2005, in which we purchased all the intellectual property rights and
applications codes from Aptus Corp, which included the source code of MyBooks.

      On October 4, 2004, we entered into seven consulting agreements and under
which the terms of the agreements, in consideration of the services undertaken,
we issued 20,000,000 shares of common stock under the 2002 Directors, Officers
and Consultants Stock Option, Stock Warrant and Stock Award Plan at the fair
market value of $0.015 per share of common stock, and we granted 19,000,000
options with exercise prices of $0.005 per share of common stock. The options
were exercised on October 29, 2004

      On October 22, 2004, we issued 1,000,000 shares of common stock in
consideration of services at a market value of $0.015 per share.

      On January 10, 2005, we issued 15,000,000 shares of common stock in
consideration of services at a market value of $0.005 per share.

      On December 14, 2004, we cancelled 10,000,000 shares of common stock
issued to three consultants described above in the October 4, 2004 transactions.
Theses shares were cancelled due to contractual nonperformance, which
effectively reduced compensation by $150,000.

      From June 1, 2005 through August 24, 2005, we issued 98,644,011 shares of
common stock pursuant to 11 separate conversions of principal due on our
convertible debentures. Total principal redeemed on our convertible debentures
aggregated $71,349.

      On February 28, 2005, we entered into a fifth securities purchase
agreement with our four investors for: (i) the sale of $2,700,000 in four
secured convertible notes payable, (ii) payoff all obligations on a fourth
securities purchase agreement of $900,000 issued on June 25, 2004 with the same
investors, and (iii) grant 5,400,000 warrants to purchase common stock at an
exercise price of $0.007 per share., exercisable through February 28, 2010. We
also had granted 54,000 warrants under the fourth securities purchase agreement
at an exercise price of $0.05 per share, exercisable through June 25, 2011.


                                       25
<PAGE>

      The February 28, 2005 convertible notes payable bear interest at 8%,
mature three years from the date of issuance, and are convertible into our
common stock, at the investors' option, at the lower of:

      o     $0.0075, the fixed conversion price; and
      o     the average of the three lowest intraday trading prices for the
            common stock on a principal market for the 20 trading days
            immediately before but not including the day of conversion.

      The full principal amounts of the convertible notes are due upon default
under the terms of the agreements. The warrants are exercisable until five years
from the date of issuance at a purchase price of $0.007 per share. In addition,
the exercise price of the warrants will be adjusted in the event we issue common
stock at a price below market, with the exception of any securities issued as of
the date of this warrant. The conversion price of the notes and the exercise
price of the warrants may be adjusted in certain circumstances such as if we pay
a stock dividend, subdivide or combine outstanding shares of common stock into a
greater or lesser number of shares, or take such other actions as would
otherwise result in dilution of the selling stockholder's position. The selling
stockholders have contractually agreed to restrict their ability to convert
their convertible obligations or exercise their warrants and receive shares of
our common stock such that the number of shares of common stock held by them in
the aggregate and their affiliates after such conversion or exercise does not
exceed 4.99% of the then issued and outstanding shares of common stock.

      We have granted to our holders of secured convertible debentures and notes
payable a security interest in all of our assets.

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, including notes thereto, appearing in this Form
10-KSB.

      Some of the information in this Form 10-KSB contains forward-looking
statements that involve substantial risks and uncertainties. You can identify
these statements by forward-looking words such as "may", "will"', "believes",
"anticipates", "estimates", "expects", "continues"' and/or words of similar
import. Forward-looking statements are based upon our management's current
expectations and beliefs concerning future developments and their potential
effects upon us. There may be events in the future that we are not able to
accurately predict or over which we have no control. Our actual results could
differ materially from those anticipated for many reasons in these
forward-looking statements. Factors that could cause or contribute to the
differences include, but are not limited to, availability of financial resources
adequate for short-, medium- and long-term needs, demand for our products and
services and market acceptance, as well as those factors discussed and set forth
under "Risk Factors", "Business", Management's Discussion and Analysis of
Financial Condition and Results of Operations" and elsewhere in this report.

      We believe it is important to communicate our expectations, however, our
management disclaims any obligation to update any forward-looking statements
whether as a result of new information, future events or otherwise.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

GENERAL

      Our discussion and analysis of our financial condition and results of
operations as of for the year ended May 31, 2005, are based upon our audited
financial statements, which are prepared in conformity with accounting
principles generally accepted in the United States of America. As such, we are
required to make certain estimates, judgments and assumptions that management
believes are reasonable based upon the information available. We base these
estimates on our historical experience, future expectations and various other
assumptions that we believe to be reasonable under the circumstances, the
results of which form the basis for our judgments that may not be readily
apparent from other sources. These estimates and assumptions affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the dates of the financial statements and the reported amounts of
revenue and expenses during the reporting periods. These estimates and
assumptions relate to estimates of collectibility of accounts receivable, the
realization of goodwill, the expected term of a customer relationship, accruals
and other factors. We evaluate these estimates on an ongoing basis. Actual
results could differ from those estimates under different assumption or
conditions, and any differences could be material.


                                       26
<PAGE>

      The financial statements have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission (SEC) and, in the opinion
of management, includes all adjustments necessary for a fair statement of the
results of operations, financial position, and cash flows for each period
presented. Our financial statements reflect the results of operations, financial
position, changes in shareholders' deficit and cash flows.

      A summary of the significant accounting policies which we believe are the
most critical to aid in fully understanding and evaluating the accompanying
financial statements include the following:


REVENUE RECOGNITION

APPLICATION SERVICE PROVIDER

      Our principal source of revenue is generated from application hosting,
managed software and other similar and related types of services. Application
hosting and managed services revenues are generated through a variety of
contractual arrangements directly with customers. We sell our services directly
to customers through annual service subscriptions or month-to-month
subscriptions. Subscription arrangements include monthly subscriber fees, user
setup fees and a last month deposit. New subscription service fees are prorated
and invoiced during the first month of service. Ensuing subscription services
are invoiced at the beginning of each month for that month of service. User
setup fees received are recognized upon completion of a customer's deployment.
Any prepaid amount, regardless if it is non-refundable, is recorded as a
customer deposit and is generally applied to the last month's service fee. Sale
and promotional discounts are recorded as a reduction of revenues.

LICENSING FEES AND SALES OF SOFTWARE

      On May 1, 2005, our Company added another source of revenue. This new
source of revenue will be generated primarily from licensing fees billed to our
Company's value added reseller (VARS) and from the sales of software
applications.

      Sales of the Company's software products are recognized at the time of
sale to the end-user. The Company generally uses an e-commerce website to
procure payment by credit card, and provides the software by magnetic media
(disc) or allows the end-user to download it directly to their computer.

      The Company's standard agreement for the sale of its software products
limits its liability to the replacement of the magnetic media. The Company has
not set up an allowance for future product warranty because the Company expects
that any such amounts will be immaterial. Any future costs associated with
warranty will be charged to the period in which the obligation is incurred.
Discounts, if any, are recorded as a reduction of revenue at the time of sale.

      VARS enter into a licensing agreement that allows them to resell to an end
user either: (a.) a custom suite of enterprise accounting and management
software or (b.) a standard off-the-shelf accounting software application. VARS
sign an agreement with the Company for a period, generally one year, for a
predetermined fixed licensing fee. The licensing fee revenue is recognized
ratably over the term of agreement. Once an agreement is executed, the VARS are
then entitled to resell or license the Company's software under their
proprietary name. The VARS will purchase the Company's software (usually at
wholesale prices) and customize the software to the end users' specifications.
The Company recognizes revenue for the sale of its software to the VARS at the
time of sale.

FAIR VALUE OF FINANCIAL INSTRUMENTS

      Financial instruments consist principally of cash, accounts and related
party receivables, trade and related party payables, accrued liabilities, and
short and long-term debt obligations. The carrying amounts of such financial
instruments in the accompanying balance sheets approximate their fair values due
to their relatively short-term nature. It is our 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


                                       27
<PAGE>

States of America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures 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.

STOCK-BASED COMPENSATION

      We account for stock based employee compensation arrangements in
accordance with the provisions of Accounting Principles Board ("APB") Opinion
No. 25 - "Accounting for Stock Issued to Employees"' and the related
interpretations, and complies with the disclosure provisions of SFAS No. 148 - "
Accounting for Stock Based Compensation". Under APB No. 25, compensation expense
is based on the difference, if any, on the date the number of shares receivable
is determined, between the estimated fair value of our stock and the exercise
price of the options to purchase that stock.

      We apply the provisions of SFAS No. 123 for stock-based awards to those
entities other than our employees. Stock-based compensation expense for these
awards is calculated over 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 its net income or net loss.

      On February 11, 2005, two officers were each granted options to purchase
7,000,000 shares of common stock at an exercise price $0.0061 per share, the
market price of our Company's stock at the close of trading that day. The total
value of these grants was $85,400, based on the Black-Scholes pricing model. The
proforma impact for the year ended May 31, 2005 would have increased our
reported net loss of $3,032,518 to a proforma net loss of $3,117,918. Both the
reported and proforma net loss per share of common stock for the year ended May
31, 2005 was $0.05.

      There was no proforma impact for the year ended May 31, 2004.

LOSS PER COMMON SHARE

      We compute basic and diluted loss per share of common stock by dividing
the net loss by the weighted average number of common shares outstanding
available to common stockholders during the respective reporting period.
However, common stock equivalents have been excluded from the computation of
diluted loss per share of common stock for the years ended May 31, 2005 and
2004, respectively, because their effect would be anti-dilutive.

RECLASSIFICATIONS

      Certain reclassifications have been made to the previously reported
amounts to conform to our Company's current year presentation. Effective May 31,
2004, management elected to reclassify related party receivables totaling
$83,343 from current assets to stockholders' equity to conform with this year's
Balance Sheets. The effects of this reclassification reduced previously reported
current assets and total assets from $216,075 and $543,053, respectively, to
$132,732 and $459,710, respectively. The effect of this reclassification also
increased the working capital deficit as previously reported from $4,398,102 to
$4,481,445 and the total stockholders' deficit as previously reported from
$4,071,124 to $4,154,467.

      Also, as a result of reclassifying the related party receivables from
current assets to stockholders' deficit, management elected to reclassify this
asset on the Statements of Cash Flows. The effect of this reclassification
reduced previously reported net cash used in operating activities from $496,287
to $397,306, and, reduced cash flows from financing activities from $552,765 to
$453,784. There was no effect on previously reported net loss or net loss per
share of common stock for the year ended May 31, 2004.


                                       28
<PAGE>

RECENT AUTHORITATIVE ACCOUNTING PRONOUNCEMENTS

In December 2004, the FASB issued SFAS No. 123 (R), "Share-Based Payment". SFAS
No. 123 (R) revises SFAS No. 123, "Accounting for Stock-Based Compensation" and
supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees". SFAS
No. 123 (R) focuses primarily on the accounting for transactions in which an
entity obtains employee services in share-based payment transactions. SFAS No.
123 (R) requires companies to recognize in the statement of operations the cost
of employee services received in exchange for awards of equity instruments based
on the grant-date fair value of those awards (with limited exceptions). SFAS No.
123 (R) is effective as of the first interim or annual reporting period of the
first fiscal; year that begins after June 15, 2005 for non-small business
issuers and after December 15, 2005 for small business issuers.

Accordingly, the Company will adopt SFAS No. 123 (R) in its quarter ending
February 28, 2006. The Company is currently evaluating the provisions of SFAS
No. 123 (R) and has not yet determined the impact, if any, that SFAS NO 123 (R)
will have on its financial statement presentation or disclosures.

OVERVIEW

      On July 16, 2004, our Board of Directors approved a 50 for 1 reverse split
of our authorized common stock. Accordingly, the date of record and the
effective date was August 2, 2004. Par value remained unchanged at $.001 per
share. The effect of the reverse split reduced the number of authorized shares
from 500,000,000 to 10,000,000 and reduced the number of outstanding and issued
shares of common stock from 445,384,987 at August 2, 2004 shares to 8,907,700.
Upon the conversion, all resulting fractional shares were rounded up to nearest
whole share. In addition, we cancelled all of the shareholders holding nine or
less shares of post-split stock.

      For comparative purposes, all shares of common stock and per share amounts
in the Form 10-KSB, and the accompanying financial statements and notes to
financial statements have been retroactively restated to reflect this August 2,
2004 transaction.

      In addition, our Board approved in its July 16, 2004 meeting, the
authorization of 1,000,000 shares of its 10,000,000 shares of preferred stock to
be specifically designated as, "Series A Non-Participating Preferred Stock",
with a par value at $0.001 per share. Also, each share has 1,000 votes on all
matters upon which the shareholders are entitled to vote. Our Board then issued
165,000 shares of this stock in equal amounts to its three corporate officers.
As a result of the reverse split on August 2, 2004 and the July 16, 2004
issuance of the 165,000 shares of Series A, Non-Participating Preferred Stock,
our three corporate officers have the ability to control the outcome of any item
coming to a vote before the stockholders.

      Also at the July 16, 2004 Board Meeting, the Board of Directors adopted,
by unanimous consent, to approve the increase of the number of authorized shares
of common stock from 10 million to 2 billion shares. On August 2, 2004, we
received the written consent in lieu of a meeting of stockholders from our
stockholders who were entitled to vote a majority of the common stock and Series
A Preferred Stock, which approved the July 16, 2004 action of the Board of
Directors.

OUR BUSINESS

      Our Company has been operating since 1999, primarily as an application
service provider ("ASP"). On April 30, 2005 we purchased certain assets from
Aptus Corp., a related party, namely its intellectual property. We now own the
licensing rights, the code and the trademarks of intellectual property allowing
us to sell and license our own proprietary software applications to end users as
further explained below. Therefore, as of our year ended May 31, 2005, our
Company now has two principal revenue sources:

(I.)  the hosting of software applications and related services commonly
      referred to ASP's, and,

(II.) the licensing and the sales of our proprietary software applications.

      The following discussion more fully describes these complimentary services
and products:

      I. An ASP offers the infrastructure, servers and data center(s) and the
      technical expertise to host software


                                       29
<PAGE>

      business solutions distributed over Internet ready computers. The hosted
      customer uses a web browser to run software products, anywhere at anytime,
      without the need to download or install a software application. We manage
      and host software applications and data, Web hosting services, Web-based
      local and wide area networks, and access to Internet marketing assistance
      and other related equipment and services. These products and services are
      offered as components or as an integrated whole, either sold directly or
      on a fee or a subscription basis.

            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. We provide
      products and services to our customer subscriber base, which allows our
      customers to adopt "web-based" computing that serves as an alternative to
      both traditional local wide area networks and traditional client-server
      implementations. Generally, we market ourselves as an Internet utility
      company that can provide all of the computer software, connectivity and
      internet-access needs for its customers on a cost effective basis.

            Our complete IQ Delivery System and Internet Utility Service include
      managed network and application services, which can span from a customer's
      keyboard to the data center. The service can also include internet-access
      provided by us or by a user selected telecommunications partner/provider.
      The final pieces of the system are the two secured data centers, which are
      located in Everett and Bellingham, Washington. These facilities, with
      redundant power, bandwidth and cooling, house our servers, routers and
      other critical equipment.

      II. As of May 1, 2005, we sell a proprietary family of accounting and
      management software applications known as "Appgen Custom Suite" and
      "MyBooks Professional" and a financial quoting software application known
      as "QwikQuote". We primarily promote the sale of our Appgen software
      through value added resellers, commonly referred to as VARs. A VAR will
      participate in one of four reseller programs. Each reseller program offers
      an incremental level of benefits, and the fees for each program is
      structured accordingly. A VAR is a business that sells a product made by
      another business after adding something of value, such as another
      component, specialized software or other peripheral hardware. These
      resellers often develop their own applications around the Appgen Custom
      Suite and open up entirely new vertical markets for themselves while
      integrating the new packages or modules and customizations with the
      accounting software. MyBooks Professional is, essentially, "canned
      software", designed to accommodate the accounting and financial reporting
      needs of a small to medium sized business.

            We sell our QwikQuote financial software, through our website and
      through a web-based, on-line e-commerce site. QwikQuote is a sales
      quotation and product management software product designed to assist a
      company's sales force in calculating and recalculating pricing
      arrangements, products' margins and commissions and interact with leading
      contact management software, quickly and accurately.

RESULTS OF OPERATIONS

      We reported a net loss of $3,032,518 and $873,829 for the years ended May
31, 2005 and 2004, respectively. The current fiscal year's net loss increased
$2,158,689 over the prior year's net loss primarily because of:

      a.    The recognition of an unamortized discount of $488,331 to interest
            expense due to an early call of our $900,000 convertible notes
            payable, and
      b.    The recording of a call premium of $281,488 for paying off the
            $900,000 convertible notes prior to maturity. The premium was
            calculated at 130% of the principal and accrued interest, and
      c.    An increase in interest expense of $449,000, and
      d.    The decrease in revenues of $73,000, and
      e.    The net decrease in total costs and expenses of $883,130 due
            primarily to a reduction of professional and consulting expenses of
            $1,060,000. We also incurred overall higher non-professional and
            consulting operating and overhead costs due to increased salaries,
            rents and outside contractor charges which offset the reduction
            discussed by approximately $179,000, and
      f.    The decrease in the recognized gain from the settlement of debts and
            obligations by over $1,750,000 from the prior year.

      In fiscal 2004 we settled over $2.7 million of debt for $704,000 in stock
and cash. Had we not settled these debts, we very possibly would have reported a
net loss of approximately $2.9 million for fiscal 2004, a number more in line
with what we are currently reporting for fiscal 2005.


                                       30
<PAGE>

      For the year ended May 31, 2005, net revenues decreased approximately
$73,115 or 5.9% over the same period one year ago. Although we are reporting a
revenue decrease for fiscal 2005, which can be directly attributable to the loss
of a few enterprise customers, our seat count for fiscal year 2005 increased
10.9% over the same fiscal period one year ago. Regardless of our efforts to
increase the number of seats for fiscal 2005 over fiscal 2004, we were not able
to generate new revenues equal to the loss of our customers who had cancelled.
Those few enterprise customers who had cancelled generated disproportionately
higher revenues per seat, and, generally without discounts, than the pricing
structure of the new seats gained. In addition, in order to attract new
customers, we granted to a larger number of customers, more than the planned
amount of discounts for this current year. We believe, however, our customer
base is finding immediate and long-term advantages to the "host on demand"
concept, both administratively and financially, because it allows them to be
able to have immediate access to their corporate computing needs anytime and
anywhere in the world for a reasonable fee.

      We only had one month of reported revenues (May 2005) from the licensing
and sales of our software applications which totaled approximately $24,600.

      We have intensified our marketing and sales efforts via the Internet,
enhanced and improved our website, and now offer even more professional
products, such as the Appgen Custom Suite, MyBooks Professional and QwikQuote
applications. Management believes it will grow the revenues of our core business
principally through web-based contacts and the addition of our VARs and selected
e-commerce sites selling our products.

      In order to provide competitive pricing to our customers, and to encourage
new customers to use our service and products, we have offered short-term
discounts and, for limited periods, free product usage through various
promotional offerings. Discounted offerings will continue into fiscal 2006 as
part of our promotional efforts to be recognized in our industry as competitive,
and gaining more share of the market. Discounts and promotional adjustments for
the years ended May 31, 2005 and 2004 were $103,951 and $92,311, respectively,
or 9.2% and 7.0% of gross revenues. Since we grew the number of seats by 10.9%
over the same fiscal period one year ago, management expected our dollar volume
discounts to also increase proportionately.

      In the beginning of our existence, we had to demonstrate and educate
consumers of the real value and simplicity of operations, whereby encouraging
signups by offering discounts on selected products and services. As a business
practice, we do not advocate, nor promote the use of long-term discounts to
attract potential customers and maintain positive relationships with existing
customers. Discounts have been offered and will continue to be offered if it
means we will attract and keep a valued and credit worthy customer. There are
many criteria to meet before we can justify discounting our pricing structure
for a customer. We will, however, consider pricing adjustments, similar to a
discount, to a customer, if the business model and pricing structure means a
mutually long-term, profitable business relationship whereby we both benefit.

      We believe, due to our marketing, our improved website and our links to
other notable partner websites, we have increased consumer understanding and
awareness of our "host on demand" technology and our software products. Our main
priorities relating to the generation of new customers and revenues are:

      o     Increase market awareness of our products and services through our
            strategic marketing plan,
      o     Increase the number of seats and applications per customer,
      o     Increase the number of VAR's and software installations to
            end-users,
      o     Continue to accomplish technological economies of scale, and
      o     Continue to streamline and maximize efficiencies in our system
            implementation model.

      As a result of these efforts, we should be able to sustain a reasonable
and controlled growth rate of new customers. Even though we have experienced a
decrease in revenue this fiscal period over our prior fiscal year, our seat
count is favorably up and new customers are continually added. The decline in
fiscal 2005 revenues, as compared to prior periods revenues, should not be
considered necessarily indicative or interpolated as the trend to forecast our
future revenues and results of operations. This is the first year in the history
of our Company that we have not increased revenues.

COSTS AND EXPENSES

DIRECT COSTS OF REVENUES


                                       31
<PAGE>

      During the year ended May 31, 2005, we incurred direct costs of services
totaling $798,627 or 69.0% of revenues as compared to $822,497 or 66.9% of
revenues for the same period one year ago.

      The net decrease, or approximately $23,870, resulted primarily from:

      o     A decrease in depreciation expense of $88,300. This change is due to
            the fact that the estimated economic useful lives of most equipment
            have expired.
      o     A decrease in technical and customer service salaries and burden of
            approximately $65,130. Compared to the same period one year ago, we
            were down effectively one and one-half full-time equivalent
            employees.
      o     A decrease in our co-location costs of approximately $25,200. This
            decrease is a result of consolidating our co-location expenses with
            only one provider for all of 2005, whereas in 2004, we had two
            providers, which substantially increased our overhead expenses.
      o     A decrease in commission expense of $14,150. The sales commission
            program was suspended from April 1, 2004 through November 30, 2004
            in order to preserve working capital.
      o     An increase in the use of outside/independent contractors of
            approximately $38,000.
      o     An increase of in licensing costs of $38,400. Licensing increased
            over 2004 because of the net increase number (1,625) of billed seats
            we are currently hosting.
      o     An increase of $85,800 in purchase of personal computers, printers,
            software and project costs. This increase is due to expensing
            unsold, prepaid licenses that expired in fiscal 2005, and the other
            costs associated with the completion of special project.
      o     An overall net increase in all other direct expenses was
            approximately $6,710

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

      Selling, general and administrative expenses were $1,899,098 and
$2,755,151 for the years ended May 31, 2005 and 2004, respectively. The expenses
were allocated between non-cash and other compensation. Non-cash compensation is
generally representative of the fair value of common stock, options and warrants
issued to certain non-employees for services rendered and the amortization of
unearned compensation.

      A net decrease of approximately $856,000, or 31.1%, of expenses in this
category occurred between fiscal 2005 and 2004, and can be quantified as
follows:

      o     Professional, accounting and consulting fees decreased by
            approximately $1,179,000. Primarily the change occurred in the
            elimination and reduction of a significant portion of our
            independent business consulting and advisory relationships, of
            which, compensation for these services was generally recognized in
            the form of common stock.
      o     Legal fees increased approximately $119,000. This increase in legal
            fees can be correlated directly to the execution of two security
            purchase agreements (SPA's) during this current fiscal year, of
            which these fees aggregated approximately $81,700.
      o     Officer compensation decreased by approximately $72,000. This
            reduction is a result of amending each key officer's compensation
            agreement whereby the base salaries were reduced over the prior
            year's base. This modification was made effective in February 2004
            and the agreements will expire in February 2007.
      o     Bad debts increased by approximately $158,000. Of significance to
            this change is the decision by our management to increase the
            allowance for doubtful accounts of certain related party receivables
            this fiscal period by $74,000 and increase the allowance for
            doubtful trade accounts receivable by $10,000.
      o     Marketing, advertising and sales expenses increased an overall
            $49,000. This increase can be directly related to the elimination of
            a program whereby certain marketing and sales staff costs were
            shared under a related party agreement.
      o     A net increase of approximately $68,000 represents all other
            expenses classified within this category.

      Under the circumstances, we believe our costs are under control, as
planned, and, within proximate range of management's forecasts.


                                       32
<PAGE>

      Non-cash compensation for the fiscal years ended May 31, 2005 and 2004 was
$439,134 and $1,665,736, respectively. Of significance, to these amounts is the
fact that this compensation is generally in the form of common stock and the
cost for these services rendered does not affect our working capital.

      In October 2004, we entered into seven consulting agreements with
independent financial and business advisors, in which the consultants will
provide business expertise, advice and negotiations in strategic corporate
planning, private financing, mergers and acquisitions, and such other business
areas as deemed necessary by our management. Under the terms of the agreements,
the consultants received 21,000,000 shares of common stock from the 2002
Directors, Officers, and Consultants Stock Option Plan. The stock was valued at
the closing market price of $0.015 per share on the date of the execution of the
agreements. The total value of the services was $315,000.

      In conjunction with the consulting agreements, four advisors were granted
19 million options to purchase common stock at an exercise price of $.005 per
share, with an exercise period until November 2, 2004. The options were valued
using the Black-Scholes pricing model resulting in a total value of
approximately $215,800, which was recorded as unearned compensation and was to
be amortized over one year, the term of each respective consulting agreement.
The options were exercised on October 4, 2004, and, in conjunction with the
exercise, the Company issued 19,000,000 shares of common stock and received four
promissory notes for a total of $95,000. The notes were unsecured, did not bear
interest and were due on February 28, 2005.

      In December 2004, we agreed to accept the return of 10 million shares of
common stock related to three consulting agreements because of contractual
nonperformance. The Company's effective date of canceling the issuance of this
stock was December 14, 2004. The stock was returned to us and subsequently
cancelled in fiscal 2006. Accordingly, we reversed $123,750 of the unamortized
portion of the original $150,000 of unearned compensation associated with
consultants, and reduced: (a.) the outstanding number of shares of common stock
by 10 million shares, (b.) common stock by $10,000, and (c.) paid in capital by
$140,000.

      On February 10, 2005, we received proceeds of $20,000 in full
consideration of the consultants' $95,000 notes receivable. As a result of this
less than expected consideration, we considered the consultants' services
substantially completed on the date of the cash receipt and wrote off the
remaining $75,000 to bad debts. An unamortized discount of $144,900 was charged
to interest and $101,250, the unamortized portion of unearned compensation, was
charged to consulting expense.

      In January 2005, the Company entered into an agreement with an independent
consultant. Under the terms of the agreement, the consultant received 15,000,000
shares of common stock from the Company's 2002 Directors, Officers, and
Consultants Stock Option Plan. The stock was valued at the closing market price
of $0.005 per share on the date of the execution of the agreement. The total
value of the services was $75,000; (a.) $75,000 was recorded as unearned
compensation in the stockholders' equity section and is being ratably amortized
over six months, the term of the agreement, and (b.) $12,500 was deemed earned
in our third quarter ended February 28, 2005.

      The primary components of our interest expense are:

                                                   For the years ended May 31,
                                                --------------------------------
                                                    2005               2004
                                                --------------     -------------

            Amortization of discounts on
              convertible securities            $      969,107     $     184,085
            Interest on convertible                    441,104           273,367
              securities
            Early call premium on
              convertible notes payoff                 281,488                --
            Interest on other obligations
              and notes payable                         75,526            92,216
                                                --------------     -------------
                                                $    1,767,225     $     549,668
      Total                                     ==============     =============
            Other Interest                      $      798,118     $     184,085
            Non-cash interest                          969,107           365,583
                                                --------------     -------------
                                                $    1,767,225     $     549,668
      Total                                     ==============     =============


                                       33
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

      Our financial statements as of and for the year ended May 31, 2005 have
been prepared on a going concern basis, which contemplates the realization of
assets and the settlement of liabilities and commitments in the normal course of
business. For the year ended May 31, 2005, we had a net loss of $3,032,518 and
negative cash flows from operations of $1,599,206. Also at May 31, 2005, we had
a working capital deficit of $3,680,744 and a stockholders' deficit of
$3,284,247. Our working capital deficit at May 31, 2005 and as of August 24,
2005 may not enable us to meet certain financial objectives as presently
structured.

      We had a cash balance of $703,028 at May 31, 2005 and a cash balance at
August 24, 2005 of approximately $254,000. We finance our operations and capital
requirements primarily through private debt and equity offerings. On June 25,
2004 and February 28, 2005, we borrowed $900,000 and $2,700,000, respectively,
in the form of convertible notes payable, from the same four entities that are
also the holders of our convertible debentures. In August 2004, we used $340,000
of these funds to settle our tax deficiency with the Internal Revenue Service,
negotiated an abatement of certain penalties and executed a long-term workout
for the unabated accrued penalties and interest. We paid off the $900,000 loan,
plus the related accrued interest, $38,292, and a 130% call premium, $281,488,
with the net proceeds derived from the issuance of the February 28, 2005
$2,700,000 convertible notes payable. On March 24, 2005, we paid $95,000 in the
full and complete settlement of an April 2002 Summary Court Judgment in which it
was determined that we were in breach of a long-term real estate lease
agreement.

      As of May 31, 2005, we classified all our convertible security debts as
current liabilities because of non-compliance with the underlying terms,
conditions and covenants governing these debt instruments. We consider
non-compliance with any major term of a debt instrument to be in violation of
the agreement, therefore, the debt automatically becomes a current liability.
Our balance sheet at May 31,2005 reports current liabilities of $4,442,983;
however, this amount is net of an unamortized discount of $2,472,534. Total
current debts actually aggregate $6,915,571. Unless we are able to pay a
significant portion of our debt from operational profits or from equity
financing, our negative working capital is expected to increase significantly in
fiscal 2006 in part, due to $900,000 of discount amortization on the convertible
notes payable, accrued interest on debt obligations and other unpaid fiscal 2006
obligations.

      On October 4, 2004, the Board of Directors authorized the issuance of
40,000,000 shares of common stock to Aptus Corp., a Company partially owned by
two of our officers, for the purchase of 1,500 licenses, held for resale, of
"MyBooks Professional", a business accounting software application. In addition,
Aptus granted to us the exclusive right to host this internet-based accounting
software program. The stock was valued at $600,000 and was based on the market
price ($0.015 per share) of our common stock at the close of business on October
4, 2004. However, in April 2005, by mutual agreement between Insynq and Aptus,
we agreed to purchase certain assets from Aptus, namely, all its trademarks and
intellectual property, which included the licensing rights and code of "MyBooks
Professional". Therefore, the October deal was rescinded. We returned the 1,500
licenses and Aptus returned the certificate of 40 million shares of Insynq's
common stock and the licensing agreement was voided. The 40 million shares
issued to Aptus Corp. were cancelled by our stock transfer agent in fiscal 2006.
There was no impact on our financial statements as of and for the year ended May
31, 2005 from the October 2004 deal because we did not sell any "MyBooks
Professional" licenses. Consideration for the intellectual property we acquired
was comprised of $311,083, the amount Aptus owed us on April 30, 2005, plus the
assumption of certain obligations of Aptus.

      In June 2005, we have entered into a five-year hosting and management
services agreement with Gotaplay Interactive, Inc. ("Gotaplay"), a related
party, whereby we will supply business technology, IT management and
communications infrastructure and other services as needed. At May 31, 2005, we
have advanced approximately $183,960 to this related party and as of August 24,
2005 we are owed approximately $266,000 in support of the ongoing development
and integration their services. Our relationship stems from the fact that two of
our officers, John P. Gorst and M. Carroll Benton, are also officers, directors
and stockholders of Gotaplay.

      CONVERTIBLE DEBENTURES

      Between June 2001 and March 2003, the Company sold to four investor groups
a total $2,050,000 in the form of three private financing transactions for 12%
secured convertible debentures. At various times, we have been in default


                                       34
<PAGE>

on these instruments and, accordingly, have classified the balances due on these
debentures as a current liability. However, on June 25, 2004, we were able to
negotiate an extension of the past due maturity dates for an additional two
years, until June 25, 2006. However, because of our non-compliance with certain
provisions of these securities, we have classified the entire balance of
$1,300,045 as a current liability on our balance sheets. As of May 31, 2005, we
have accrued interest of approximately $924,300 due the holders of these
debentures. The total due the holders of these debentures at May 31, 2005 is
$2,224,345.

      Between June 1, 2005 and August 24, 2005 we issued approximately
127,500,000 shares of common stock to our investors and reduced the principal
balance due on our convertible debentures by $88,730. At August 24, 2005 we owe
on our convertible debentures $1,211,315.

      Amended terms of all three private financing transactions are essentially
the same: the debentures are convertible into shares of common stock at the
lesser of (i) $15.00 per share and (ii) the average of the lowest three intraday
trading prices in the twenty-day trading period immediately preceding the notice
to convert, discounted by 60%. Interest accrues at 12% and default rate of
interest is 15%.

      We granted 104,400 warrants to purchase common stock to the investors in
conjunction with each convertible debenture transaction. Investors may exercise
each warrant at $12.50 per share and the warrants carry an expiration date of
June 25, 2009.

      CONVERTIBLE NOTES PAYABLE

      On February 28, 2005, we entered into a $2,700,000 Securities Purchase
Agreement with four investor groups, who are also holders of our convertible
debentures. Under terms of the agreement, we:

(a.)  issued four 8% callable secured convertible notes that aggregated
      $2,700,000, and,

(b.)  granted 5,400,000 warrants with an exercise price of $0.007 and are
      exercisable from time to time until February 28, 2010.

      The notes are due three years from the date of issuance, bear interest at
8% per annum, payable quarterly in cash. No interest will be charged in any
month in which the reported intraday trading price is greater than 125% of the
initial market price ($0.005) or $0.0063 for each trading day of that month. The
notes or portions of these notes are immediately convertible into shares of our
common stock during the term. The conversion price is equal to the lesser of:
(a.) $0.0075, the fixed conversion price, and, (b.) the average of the lowest
three intraday trading prices during the twenty days immediately prior to the
conversion date discounted by 60%.

      We also recorded a $2.7 million dollar discount on the convertible notes
payable, an amount equal to the fair value of the warrants, as determined by
applying the Black-Scholes pricing model, and the intrinsic value of the
beneficial conversion feature, which is the difference between the conversion
price and the fair market value of the common stock on the date of issuance. The
amount attributable to the beneficial conversion feature and the warrants was
recorded as a discount on the debt and accretes over a thirty -six month period
as interest expense in accordance with paragraph 19 of Emerging Issues Task
Force ("EITF") No. 00-27.

      In the event of default under the terms of these Notes, the investors have
the right to redeem the Notes at 130% of the outstanding principal balance, plus
accrued and unpaid interest, plus default interest and other penalty payments
that may be due. The default interest is at 15% per annum, if any amounts due
under the Notes are not paid when due. At the option of the investors, such
redemption payments may be made in shares of common stock. If certain conditions
are satisfied, we may elect to prepay the Notes before the scheduled maturity at
a premium. The premium is 150% of the outstanding principal balance plus accrued
and unpaid interest, plus default interest and other penalty payments due,
depending on when the prepayments occur.

      As a condition of the above financing agreement, we paid off the principal
balance of four 12% callable secured convertible notes totaling $900,000 issued
on June 25, 2004, also to the same four investors. In addition to the $900,000
principal balance paid, we paid accrued interest of $38,292 and a call premium
of $281,488.

      At the date of issuance, we had recorded a discount on the $900,000
convertible notes payable which totaled


                                       35
<PAGE>

$741,640, an amount equal to the fair value of the warrants (as discussed
below), determined by applying the Black-Scholes pricing model, and the
intrinsic value of the beneficial conversion feature and the warrants, which is
the difference between the conversion price and the fair market value of the
common stock on the date of issuance. The amount attributable to the beneficial
conversion feature was recorded as a discount on the debt and accreted over a
twenty-four month period as interest expense in accordance with EITF No. 00-27.
We charged the remaining unamortized discount of $488,331 as interest expense in
February 2005. For the May 31, 2005, we recognized $741,640 as interest expense
from the amortization of this discount.

      In conjunction with the issuance of the $900,000 convertible notes
payable, we granted the note holders a total of 54,000 warrants to purchase
common stock at an exercise price of $0.05 per share, exercisable through June
25, 2011.

      The conversion price of the convertible securities and the exercise price
of the warrants may be adjusted in certain circumstances such as if we pay a
stock dividend, subdivide or combine outstanding shares of common stock into a
greater or lesser number of shares, or take such other actions as would
otherwise result in dilution of the investor's position. We have also granted
the above holders of our convertible securities a security interest in all our
assets. If we should default under any of the terms of our convertible
securities, the outstanding principal balance on the convertible debentures and
convertible notes is due, plus the accrued interest. The fair market values of
our warrants are estimated on the grant date using the Black-Scholes option
pricing method as required under SFAS 123. As of May 31, 2005, a total of
5,558,000 warrants have been granted to the holders of our convertible
securities, and, as of the date of this report, these warrants are unexercised.

      We have granted a security interest in all assets to the investors of the
convertible securities.

      As of August 24, 2005, we are not in compliance with the proper
registration and licensing of certain software applications and products
critical to support the customer base and our own internal operations.
Management has initiated negotiations with these software vendors in an effort
to purchase or lease/rent the licenses to meet the licensing requirements.

      In August 2004, we paid $340,000 to settle the entire payroll tax
deficiency pertaining to four Federal Tax Lien periods spanning the years 2000
and 2001. Upon receipt of the funds, the Internal Revenue Service (IRS) abated
$111,558 of certain penalties and executed a Conditional Commitment to Withdraw
Notice of Federal Tax Lien(s). On July 11, 2005 we entered into an installment
agreement with the IRS to pay the remaining obligation, made up of unabated
penalties and accrued interest, approximating $215,000. Terms require us to pay
no less than $5,000 per month, including interest, over the next 50 months or
until the balance is zero. The IRS has a lien on Company assets. Since the
execution of this installment agreement, we have made two payments against this
obligation.

      A lien for approximately $28,000 was filed several years ago by the State
of Utah for prior years' income taxes assessed to the predecessor company of
Insynq, Inc. The assessment was disputed and we filed amended returns to correct
this deficiency. As of the date of this report, the State has not responded to
the amended returns, thereby, neither granting approval nor denying the filing
of the amended returns. This obligation is recorded under accrued liabilities
(business taxes) in the accompanying financial statements.

      We have two employment agreements, one each with our two key officers. The
agreements are in the second year of a three-year extension and will terminate
in February 2007. Each agreement currently calls for a second year annual base
compensation of $150,000 and $225,000. The final year base salaries are $160,000
and $275,000, respectively. Each agreement contains: (a.) a bonus incentive
clause for performance, and, (b.) the right to exercise vested stock options at
a predetermined price, generally granted at market value, which range between
$90.00 and $1,000.00 per share. Both agreements contain a severance clause that
stipulates if the executive's contract is not renewed, a severance payment equal
to twice the annual salary at the date of termination will be paid within sixty
days, plus provide other certain benefits.

      A third officer has an annually renewable contract stipulating a salary
base of $96,800 per year and was automatically renewed on the anniversary date,
February 20, 2005, for one year.

      On July 18, 2005, the Company was served with a complaint for a material
breach of contract. The complaint was filed by our former landlords for the
breach of a long-term lease for office space. This claim did not specify an
amount for damages. We deny the allegations under this claim and believe this
claim is without merit and intend to continuously and vigorously defend against
it. We have not recognized an expense for this claim in the May 31, 2005
financial statements.


                                       36
<PAGE>

      In another related matter with the same landlord, on March 25, 2005, we
satisfied an April 9, 2002 partial summary judgment with a cash payment of
$95,000 and received a full release by the Court on this claim. In fiscal 2002,
we recorded approximately $124,000 as a liability resulting from the judgment
and subsequently recorded on March 25, 2005 a $29,000 gain, the difference
between our cash payment and our accrued liability, on this settlement.

      We are also subject to other legal proceedings and business disputes
involving ordinary and routine claims. The ultimate legal and financial
liability with respect to such matters cannot be estimated with certainty and
requires the use of estimates in recording liabilities for potential litigation
settlements. Estimates for losses from litigation are made after consultation
with outside counsel. If estimates of potential losses increase or the related
facts and circumstances change in the future, we may be required to record
either more or less litigation related expense.

      Pursuant to the asset purchase agreement with a related party dated April
30, 2005, whereby we acquired certain intellectual property, we assumed certain
other obligations. The following describes these obligations:

      o     Consulting Agreement - A $5,000 per month consulting agreement
            existed at the time of sale (April 30, 2005) between the related
            party (seller) to Insynq (Company) and the original seller of the
            intellectual property to the related party. We agreed to honor the
            remaining term of the monthly consulting agreement in exchange for
            the original consultants' expertise and guidance. This agreement
            terminates on or before May 2006. We also assumed a $5,000
            obligation due to this consultant at closing on April 30, 2005; and,
            this amount was included in the purchase price.

      o     Distribution Agreement - At the time of sale, a distribution
            agreement existed between the same original selling party, as
            discussed above, and the related party. We assumed the
            responsibility for fulfilling the terms of this agreement as a part
            of the asset purchase agreement. This agreement stipulates that 5.5%
            of gross cash receipts from the sales of certain software products
            will be paid each quarter to the original selling party. This
            agreement is in perpetuity. There is, however, a buyout provision
            whereby at any time the obligator may completely satisfy the terms
            underlying this agreement for $1,250,000. We assumed approximately
            $14,000 related to this obligation at closing on April 30, 2005 and
            this amount was included in the purchase price.

      Our continuation as a going concern is dependent on our ability to grow
revenues, obtain additional financing, and, generate sufficient cash flow from
operations to meet our obligations on a timely basis. Our ability to raise
capital in the future will be difficult because our securities purchase
agreements with our investors prohibit us from entering into any financial
arrangement, which would involve the issuance of common stock for a period of
two years without offering a right of first refusal to the debenture investors.
Moreover, our ability to raise capital would also be difficult because our
convertible securities have floating conversion features which, when converted,
would cause purchasers of our common stock to experience a substantial dilution
of their investment.

      We currently have no material commitments for capital requirements. If we
were 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.

      We have developed a brand of business solutions called e-Accounting, which
has been designed to assist the accounting professional manage and expand their
business. Our e-Accounting Center portal is located at WWW.CPAASP.COM. It
includes resources for marketing, promotion, professional education, and web
design, as well as, step-by-step tips for transforming a traditional accounting
business into an e-Accounting practice. In addition, we host many popular
accounting software applications, such as QuickBooks, in our secure data centers
for accounting professional firms throughout the country. By centrally hosting
the application and data in our data centers, we give the professional secure
central access remotely to their customers' data. This gives the accounting
professional the ability to manage more customers with fewer staff, thereby, we
believe, generating greater profitability for their accounting or bookkeeping
firm. We now also offer a comprehensive and customizable family of accounting
and management software that will meet then needs of most enterprises.


                                       37
<PAGE>

      We also intend to target regional Internet service providers and
telecommunication companies and create similar product offerings for them. We
would gain access to their customer base to sell our products and services, and
depending on their relative size, our services could then be private labeled and
re-sold through their own sales infrastructure.

      Other services include business functions such as e-commerce, sales force
automation, customer support, human resource and financial management, messaging
and collaboration, and professional services automation. We believe that
technology outsourcing, focused on these business fundamentals, will be the
primary adopters of application service providers 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 complement our current services already being delivered
to those markets. There can be no assurances, however, that we will
substantially increase our monthly recurring revenues.

      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. Our ability to raise capital in the future will be difficult because our
securities purchase agreements prohibit us from entering into any financial
arrangement which would involve the issuance of common stock for a period of two
years without offering a right of first refusal to the holders of our
securities. 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. 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.


ITEM 7.  FINANCIAL STATEMENTS

The information required by this item is included in pages F-1 through F-24
attached hereto and incorporated by reference. The index to the financial
statements can be found on page F-1.

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

      For the years ended May 31, 2005 and May 31, 2004, there have been no
disagreements between Weinberg & Co., P.A. and us on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures. Weinberg & Co., P.A.'s report on our financial statements for the
fiscal years ended May 31, 2005 and May 31, 2004, indicated that substantial
doubt existed regarding our ability to continue as a going concern.

ITEM 8A. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

      As of May 31, 2005, we carried out an evaluation, under the supervision
and with the participation of our management, including our Chief Executive
Officer and President, our Chief Administrative Officer and Secretary and our
Chief Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures pursuant to Rule 13a-15 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Based upon this
evaluation, our Chief Executive Officer and our Chief Financial Officer
concluded that, as of the Evaluation Date, our disclosure controls and
procedures were effective under Rule 13a-15.

CHANGES IN INTERNAL CONTROLS

      There were no significant changes in our internal controls or in other
factors that could significantly affect those controls since the most recent
evaluation of such controls.

ITEM 8B  OTHER INFORMATION


                                       38
<PAGE>

         None.
                                    PART III

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

         DIRECTORS AND EXECUTIVE OFFICERS

      The names of our directors and executive officers, their principal
occupations, and the year in which each of our directors and executive officers
initially joined the board of directors are set forth below.


      NAME                      AGE       POSITION
      ------------------        ---       --------------------------------------
      John P. Gorst             36        Chairman of the Board, Chief Executive
                                          Officer, President and Director

      M. Carroll Benton         61        Chief Administrative Officer,
                                          Secretary, Treasurer and Director
                                          Principal Finance and Accounting
                                          Officer

      Joanie C. Mann            44        Executive Vice President

JOHN P. GORST has served as our Chairman of the Board, Chief Executive Officer
and Director since February 2000, and served as our President since April 2001.
Mr. Gorst, a co-founder of Insynq-WA, was with Insynq-WA from 1998 until its
acquisition by Xcel Management, Inc. in 2000. Mr. Gorst has over thirteen years
experience in founding entrepreneurial technology ventures, specifically in the
development of software and data services for businesses. The prior experience
of Mr. Gorst includes serving as a co-founder of Microcomputer Training
Professionals, Inc., a training/IS consulting business in conjunction with Nynex
Business Centers of New York, from 1989 to 1991; Vice President and General
Manager of Business Development for Relational Technology Professionals, Inc.
from 1991 to 1993; and as Vice President and General Manager of Interactive
Information Systems Corp. from 1996 to 1998.

M. CARROLL BENTON has served as our Chief Administrative Officer, Secretary,
Treasurer and Director since February 2000 and currently serves as our Principal
Fincance Officer and Principal Accounting Officer. Ms. Benton was a co-founder
of Insynq-WA and has been with us since its inception. Ms. Benton has worked
with banking systems and higher education institutions where she assisted in
information systems development and deployment strategies. She managed a 13
state insurance brokerage firm and has been a consultant to the small-to
medium-sized business markets via accounting system design, support, and
business practice analysis. Carroll also taught undergraduate accounting courses
at several Puget Sound colleges and universities. Formerly with a local CPA
firm, she brings us over 33 years of business and financial expertise.

JOANIE C. MANN has served as our Executive Vice President since February 2001,
and served as our vice president of operations from July 2000 to February 2001.
She brings over 21 years of experience in multi-user system design and
implementation, voice and data networking integrations. Ms. Mann also has
extensive experience in business process automation and a strong background in
business accounting principles. Previous positions held include founder of
Com-Pacific Resources, Inc., a network integration firm whose business
operations were sold to Communications World International, for whom she worked
from 1984 to 1993, manager of the Seattle-based computer telephony and data
integration division of Commworld from 1994 to 1996, and IS Management
Consultant for Interactive Information Systems from 1998 to 1999.

      There are no family relationships among any of our directors or executive
officers. See "Certain Relationships and Related Transactions" for a description
of transactions between our directors, executive officers and/or their
affiliates.

      As of the date of this report, we do not have any committees of our board
of directors.


                                       39
<PAGE>

SECTION 16(A) BENEFICIAL OWNERSHIP COMPLIANCE

      Section 16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers, and persons who own more than ten percent of
the Company's Common Stock, to file with the SEC the initial reports of
ownership and reports of changes in ownership of common stock. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.

      Based solely upon a review of Forms 3, 4 and 5, and amendments thereto,
furnished to us during fiscal year 2004, our officers and directors have filed
the required Forms, but not on a timely basis as required by Section 16(a) of
the Securities Exchange Act of 1934.

ITEM 10. EXECUTIVE COMPENSATION.

EXECUTIVE COMPENSATION

      The following table summarizes the compensation earned by or paid to our
Chief Executive Officer and the other most highly compensated executive officers
whose total salary and bonuses exceeded $100,000 for services rendered in all
capacities during the fiscal year ended May 31, 2005. We refer to these
individuals as our named executive officers.


<TABLE>
<CAPTION>

                                                    ANNUAL COMPENSATION                   LONG-TERM AWARDS
                                                                                              SECURITIES
NAME AND PRINCIPAL                                                    OTHER ANNUAL        UNDERLYING OPTIONS         ALL OTHER
-------------------                                                   -------------       -------------------        ---------
POSITION                   YEAR   SALARY PAID ($)    BONUS ($)       COMPENSATION ($)             (#)             COMPENSATION ($)
--------                   ----   ---------------    ---------       ----------------             ---             ----------------

<S>                        <C>        <C>           <C>              <C>                  <C>                     <C>
John P. Gorst              2005       $391,400           --                 --                7,000,000(2)                   --
     President, Chief
   Executive Officer       2004       $211,173           --                 --                       --                      --
                           2003       $135,361           --                 --                    4,000(2)                   --


M. Carroll Benton          2005       $159,800           --                 --                7,000,000(2)                   --
     Secretary and
   Treasurer Chief
   Administrative Officer  2004       $109,700           --                 --                       --                      --
                           2003       $ 84,901           --                 --                    4,000(2)                   --


Joanie C. Mann             2005       $112,000           --                 --                       --                      --
    Exeutive Vice
    President              2004       $108,400           --                 --                       --                      --
                           2003         98,660           --                 --                       --                      --
</TABLE>

----------
(1)   The compensation described in this table does not include medical, group
      life insurance or other benefits received by the named executive officer
      that are available generally to all of our salaried employees, and may not
      include certain perquisites and other personal benefits received by the
      named executive officer that do not exceed the lesser of $50,000 or ten
      percent (10%) of any such officer's salary and bonus disclosed in the
      table.
(2)   Represents options for common stock granted under our 2002 Directors,
      Officers and Consultants Stock Option, Stock Warrant and Stock Award Plan
      (2002SP).

LONG TERM INCENTIVE AWARDS


                                       40
<PAGE>

      We awarded 14 million options to our executive officers during fiscal 2005
under our 2002 Directors, Officers and Consultants Stock Option, Stock Warrant
and Stock Award Plan. We did not award options or SARS from our other two
incentive plans this fiscal year.

OPTION GRANTS IN LAST FISCAL YEAR

      We did not award options to our executive officers during fiscal 2004
under any of our three incentive plans.

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES

      On February 11, 2005, we awarded our two executive officers, John P. Gorst
and M. Carroll Benton, 7 million options to purchase our common stock at an
exercise price of $0.0061 per share. The exercise period will expire ten years
from the date of grant. These options were granted under our 2002 Directors,
Officers and Consultants Stock Option, Stock Warrant and Stock Award Plan.

      We did not award options to our executive officers during fiscal 2004
under any of our three incentive plans.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AGREEMENTS

      In March 2000, we entered into executive employment agreements with each
of our key officers, John P. Gorst and M. Carroll Benton. Our board of directors
approved the principal terms of the executive agreements on February 21, 2000,
and on January 30, 2001 and May 23, 2003, approved amendments to each
executive's agreement. We are in the second l year of the three-year extension,
whereby the agreements for our executive officers will terminate in February
2007. If these agreements are not renewed, an automatic renewal term exists for
an additional three years, unless that is, terminated by either party at least
30 days prior to the end of the initial term and provides for termination
benefits due to non-renewal of employment agreement. Both agreements contain a
severance clause that stipulates if the executive's contract is not renewed, a
severance payment equal to twice the annual salary at the date of termination
will be paid within sixty days, plus certain other benefits. Each agreement also
contains a bonus incentive clause for performance and the right to exercise
vested stock options at a predetermined price, generally granted at market
value.

      Mr. Gorst's second year of his extended agreement provides for an annual
salary of $225,000, the payment of payroll taxes with regard to sales of stock
up to $15,000 and a cash bonus of $30,000 and an option for 10,000 shares of
common stock at the end of fiscal year 2006 if our earnings before interest,
taxes, depreciation and amortization is (before bonus) $250,000 (EBIDTA)or more.
Since we did not achieve the EBITDA benchmarks for fiscals 2004 and 2005, no
bonus incentives have been recognized, nor awarded to Mr. Gorst. Mr. Gorst's
final year base pay is $275,000, with the same incentives as year two, except
the EBITDA is reset to $350,000 or more.

      Ms. Benton is in her second year of her extended agreement which provides
for an annual salary of $150,000, a cash bonus of $18,000 and an option for
6,000 shares of common stock at the end of fiscal year 2006 if our earnings
before interest, taxes, depreciation and amortization is (before bonus) $250,000
(EBITDA) or more. Since the Company did not achieve the EBITDA benchmark for
fiscals 2004 and 2005, no bonus incentives have been recognized, nor awarded to
Ms. Benton. Ms. Benton's final year base pay is $160,000, with the same
incentives as year two, except the EBITDA is reset to $350,000 or more.

      All other provisions of the original employment agreement remain the same.

      Ms. Joanie C. Mann, our executive vice-president, has an automatically
renewable agreement on the anniversary date of her initial agreement, February
20th. Ms. Mann is under a year-to-year renewable agreement and is compensated at
$96,800 annually.

      We may enter into other employment agreements from time to time with other
executives and key employees.

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


                                       41
<PAGE>

      The following table sets forth certain information regarding beneficial
ownership of our common stock as of August 24, 2005:

      o     by each person who is known by us to beneficially own more than 5%
            of our common stock;

      o     by each of our officers and directors; and

      o     by all of our officers and directors as a group.

<TABLE>
<CAPTION>

NAME                                                                                  NUMBER        PERCENT
   <S>                                                                               <C>                <C>
   John P. Gorst (1)                                                                 103,775             *
   M. Carroll Benton (2)                                                              83,365             *
   Joanie C. Mann (3)                                                                 10,898             *
                                                                              -----------------------------
All executive officers and directors as a group (3 persons) (4)(5)                   198,038             *
                                                                              =============================
</TABLE>

----------
*     Less then 1%
(1)   This includes (a) 230 shares of common stock held by Kathleen McHenry, (b)
      70 shares of common stock held by Hagens Berman LLP, (c) 320 shares of
      common stock held by Cellini Investments, Ltd to which Mr. Gorst holds a
      voting proxy and as to which Mr. Gorst disclaims beneficial ownership.
      Also includes 4,859 shares of common stock issuable upon the exercise of
      outstanding stock options that are presently exercisable or will become
      exercisable within 60 days of August 24, 2005.
(2)   Includes 4,621 shares of common stock issuable upon the exercise of
      outstanding stock options that are presently exercisable or will become
      exercisable within 60 days of August 24, 2005.
(3)   Includes 109 shares of common stock issuable upon exercise of outstanding
      stock options that are presently exercisable or will be come exercisable
      within 60 days of August 24, 2005.
(4)   Includes 10,590 shares of common stock issuable upon exercise of
      outstanding stock options held by our executive officers that are
      presently exercisable or will become exercisable within 60 days of August
      24, 2005.
(5)   Adjusted for the two-for-one stock split effected on August 3, 2000, a one
      for one hundred stock split effected December 23, 2002, and one for fifty
      reverse split on August 2, 2004. On October 16, 2002, pursuant to an
      exchange agreement, each of the officers and directors converted a
      majority of their shares of common stock into shares of our Series A
      Convertible Preferred Stock. On December 23, 2002, we entered into an
      Agreement of Plan of Merger, whereby we reincorporated in the state of
      Nevada and each of the Series A Convertible Preferred stock holders
      received ten shares of common stock of Nevada for each share of Series A
      Convertible Preferred Stock outstanding. Furthermore, each shareholder of
      common stock received one share of common stock of Insynq Nevada for each
      100 shares of Insynq Delaware outstanding.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      As of May 31, 2005, the Company is due $286,050 from four business
entities that are directly related to one or more officers/stockholders of the
Company. The following discusses the activities and balances due:

      o     Two of the businesses were related to M. Carroll Benton, a corporate
            officer, stockholder and director. Insynq provides these two
            businesses monthly application hosting services, and other
            management services to include co-sharing of selected expenses for
            promotional materials, marketing, advertising and seminars. At May
            31, 2005, the balance due from these two companies aggregated
            $100,311, and an allowance for past due collections of $99,000 was
            also set up on these accounts.

            During the years ended May 31, 2005 and 2004, we billed these
            related businesses a total of $58,300 and $137,702,


                                       42
<PAGE>

            respectively. In fiscal 2004, inclusive of the total related entity
            billings, approximately $50,745 was billed under mutual short-term
            agreement to co-share certain marketing and advertising expenses
            incurred by Insynq.

      o     The third business, Aptus Corp. ("Aptus") is partially owned by two
            of our officers, John P. Gorst and M. Carroll Benton, and four other
            stockholders of Insynq. We have advanced money to and paid certain
            expenses on behalf of this business over the past two fiscal years
            aggregating $379,641 and we have received reimbursements totaling
            $68,558. On April 30, 2005, we purchased the intellectual property
            of Aptus for the net amount due us, $311,083, plus the assumptions
            of certain accrued liabilities. The amount due us was credited
            toward the purchase price of the intellectual property. Subsequent
            to the April 30, 2005 closing, , cash transactions between Insynq
            and Aptus totaled $1,779.

      o     The fourth business relationship is also with a company partially
            owned and operated by the same two officers as noted above. This
            company is called Gotaplay Interactive, Inc. ("Gotaplay"). As of May
            31, 2005, we have advanced in the form of cash, paid expenses and
            administrative and operation support a total of $194,567 and have
            received reimbursements totaling $10,607. The balance due us,
            $183,960, does not bear interest and is unsecured. As of August 24,
            2005, Insynq continues to provide operational and financial support
            and it is estimated that Gotaplay owes us approximately $266,000.

            In conjunction with this relationship, we entered into a 5 year
            agreement to provide integration, software and Internet technology,
            voice over IP, and equipment rental. The value of this 5 year
            agreement is approximately $540,000 over the term of the agreement.
            June 2005, we entered into a five-year agreement with Gotaplay
            whereby we will supply their technology and communications
            infrastructure.


ITEM 13. EXHIBITS

(a)   Exhibits

EXHIBIT
NUMBER                                 DESCRIPTION
-------  -----------------------------------------------------------------------

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      Certificate of Incorporation of Insynq, Inc. as amended by Amendment
         No. 1 dated November 21, 2001. Incorporated by reference to Exhibit 3.1
         to the Company's Amended Quarterly Report Form 10-QBS/A filed February
         25, 2002).

3.3      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).


                                       43
<PAGE>

4.4      Letter Agreement dated January 31, 2001 between Consulting & Strategy
         International, LLC and Insynq, Inc. (Incorporated by reference to
         Exhibit 4.4 to the Company's Annual Report on Form 10-KSB filed July
         31, 2001).

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 Form10-QSB filed April
         20, 2001).

4.11     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 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 Form10-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).


                                       44
<PAGE>

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).


                                       45
<PAGE>

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. (Incorporated by reference to Exhibit 4.53 to the
         Company's Annual Report on Form 10-KSB filed July 31, 2001)


                                       46
<PAGE>

4.54     Warrant Agreement dated March 5, 2001 between Bransville Limited and
         Insynq, Inc. (Incorporated by reference to Exhibit 4.54 to the
         Company's Annual Report on Form 10-KSB filed July 31, 2001)

4.55     Form of Warrant Agreement dated March 22, 2001 between William R.
         Collins and Insynq, Inc. (Incorporated by reference to Exhibit 4.55 to
         the Company's Annual Report on Form 10-KSB filed July 31, 2001)

4.56     Registration Rights Agreement dated March 26, 2001 between Internet PR
         Group and Insynq, Inc. (Incorporated by reference to Exhibit 4.56 to
         the Company's Annual Report on Form 10-KSB filed July 31, 2001)

4.57     Warrant Agreement dated March 25, 2001 between Bransville Limited and
         Insynq, Inc. (Incorporated by reference to Exhibit 4.57 to the
         Company's Annual Report on Form 10-KSB filed July 31, 2001)

4.58     Form of Warrant Agreement dated April 25, 2001 between International
         Fluid Dynamics, Inc. and Insynq, Inc. (Incorporated by reference to
         Exhibit 4.58 to the Company's Annual Report on Form 10-KSB filed July
         31, 2001)

4.59     Form of Subscription Agreement dated April 25, 2001 between
         International Fluid Dynamics, Inc. and Insynq, Inc. (Incorporated by
         reference to Exhibit 4.59 to the Company's Annual Report on Form 10-KSB
         filed July 31, 2001)

4.60     Form of Registration Agreement dated April 25, 2001 between
         International Fluid Dynamics, Inc. and Insynq, Inc. (Incorporated by
         reference to Exhibit 4.60 to the Company's Annual Report on Form 10-KSB
         filed July 31, 2001)

4.61     Warrant Agreement dated April 1, 2001 between Barretto Pacific
         Corporation and Insynq, Inc. (Incorporated by reference to Exhibit 4.61
         to the Company's Annual Report on Form 10-KSB filed July 31, 2001)

4.62     Form of Warrant Agreement dated May 17, 2001 between Horizon Holdings
         I, LLC and Insynq, Inc. (Incorporated by reference to Exhibit 4.62 to
         the Company's Annual Report on Form 10-KSB filed July 31, 2001)

4.63     Form of Registration Agreement dated May 17, 2001 between Horizon
         Holdings I, LLC and Insynq, Inc. (Incorporated by reference to Exhibit
         4.63 to the Company's Annual Report on Form 10-KSB filed July 31, 2001)

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. (Incorporated by reference to Exhibit
         4.64 to the Company's Annual Report on Form 10-KSB filed July 31, 2001)

4.65     Form of Stock Purchase Warrant dated June 29, 2001 between AJW
         Partners, LLC and Insynq, Inc. (Incorporated by reference to Exhibit
         4.65 to the Company's Annual Report on Form 10-KSB filed July 31, 2001)

4.66     Form of Secured Convertible Debenture dated June 29, 2001 between AJW
         Partners, LLC and Insynq, Inc. (Incorporated by reference to Exhibit
         4.66 to the Company's Annual Report on Form 10-KSB filed July 31, 2001)

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. (Incorporated by reference to Exhibit
         4.67 to the Company's Annual Report on Form 10-KSB filed July 31, 2001)

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. (Incorporated by reference to Exhibit
         4.68 to the Company's Annual Report on Form 10-KSB filed July 31, 2001)

4.69     Form of Securities Purchase Agreement dated January 24, 2002 between
         AJW Partners, LLC, New Millennium Capital Partners II, LLC, AJW/New
         Millennium Offshore, LTD and Pegasus Capital Partners, LLC and Insynq,
         Inc. (Incorporated by reference to Exhibit 4.1 to the Company's Amended
         Quarterly Report on Form 10-QSB/Q filed February 25, 2002)

4.70     Form of Stock Purchase Warrant dated January 24, 2002 between AJW
         Partners, LLC, New Millennium Capital Partners II, LLC, AJW/New
         Millennium Offshore, LTD and Pegasus Capital Partners, LLC and Insynq,
         Inc. (Incorporated by reference to Exhibit 4.2 to the Company's Amended
         Quarterly Report on Form 10-QSB/A filed February 25, 2002)


                                       47
<PAGE>

4.71     Form of Secured Convertible Debenture dated January 24, 2002 AJW
         Partners, LLC, New Millennium Capital Partners II, LLC, AJW/New
         Millennium Offshore, LTD and Pegasus Capital Partners, LLC and Insynq,
         Inc. (Incorporated by reference to Exhibit 4.3 to the Company's Amended
         Quarterly Report on Form 10-QSB/A filed February 25, 2002)

4.72     Form of Registration Rights Agreement dated January 24, 2002 between
         AJW Partners, LLC, New Millennium Capital Partners II, LLC, AJW/New
         Millennium Offshore, LTD and Pegasus Capital Partners, LLC and Insynq,
         Inc. (Incorporated by reference to Exhibit 4.4 to the Company's Amended
         Quarterly Report on Form 10-QSB/A filed February 25, 2002)

4.73     Amendment No. 1 to Securities Purchase Agreement dated April 8, 2002
         between AJW Partners, LLC, New Millennium Capital Partners II, LLC,
         AJW/New Millennium Offshore, LTD and Pegasus Capital Partners, LLC and
         Insynq, Inc. (Incorporated by reference to Exhibit 4.73 to the
         Company's Amended Registration Statement on Form SB2/A filed April 11,
         2002)

4.74     Amendment No. 2 to Securities Purchases Agreement dated May 14, 2002
         between AJW Partners, LLC, New Millennium Capital Partners II, LLC,
         AJW/New Millennium Offshore, LTD and Pegasus Capital Partners, LLC and
         Insynq, Inc. (Incorporated by reference to Exhibit 4.74 to the
         Company's registration statement on Form SB-2 filed June 11, 2002).

4.75     Form of Stock Purchase Warrant dated September 27, 2002 between AJW
         Partners, LLC, New Millennium Capital Partners II, LLC and Insynq, Inc.
         (Incorporated by reference to Exhibit 4.1 to the Company's Form 10-QSB
         for the quarter ending August 31, 2002)

4.76     Form of Secured Convertible Debenture dated September 27, 2002 AJW
         Partners, LLC, New Millennium Capital Partners II, LLC and Insynq, Inc.
         (Incorporated by reference to Exhibit 4.2 to the Company's Form 10-QSB
         for the quarter ending August 31, 2002)

4.77     Form of Securities Purchase Agreement dated September 27, 2002 between
         AJW Partners, LLC, New Millennium Capital Partners II, LLC, and Insynq,
         Inc. (Incorporated by reference to Exhibit 4.3 to the Company's Form
         10-QSB for the quarter ending August 31, 2002)

4.78     Form of Registration Rights Agreement dated September 27, 2002 between
         AJW Partners, LLC, New Millennium Capital Partners II, LLC, and Insynq,
         Inc. (Incorporated by reference to Exhibit 4.4 to the Company's Form
         10-QSB for the quarter ending August 31, 2002)

4.79     Stock Purchase Warrant dated November 5, 2002 between AJW Offshore, Ltd
         and Insynq, Inc. (Incorporated by reference to Exhibit 4.1 to the
         Company's Form 10-QSB for the quarter ending November 30, 2002)

4.80     Stock Purchase Warrant dated November 5, 2002 between AJW Qualified
         Partners, LLC and Insynq, Inc. (Incorporated by reference to Exhibit
         4.2 to the Company's Form 10-QSB for the quarter ending November 30,
         2002)

4.81     Secured Convertible Debenture dated November 5, 2002 between AJW
         Offshore, Ltd. and Insynq, Inc. (Incorporated by reference to Exhibit
         4.3 to the Company's Form 10-QSB for the quarter ending November 30,
         2002)

4.82     Secured Convertible Debenture dated November 5, 2002 between AJW
         Qualified Partners, LLC and Insynq, Inc. (Incorporated by reference to
         Exhibit 4.4 to the Company's Form 10-QSB for the quarter ending
         November 30, 2002)

4.83     Stock Purchase Warrant dated December 6, 2002 between AJW Offshore, Ltd
         and Insynq, Inc. (Incorporated by reference to Exhibit 4.4 to the
         Company's Form 10-QSB for the quarter ending November 30, 2002)

4.84     Stock Purchase Warrant dated December 6, 2002 between AJW Qualified
         Partners, LLC and Insynq, Inc. (Incorporated by reference to Exhibit
         4.5 to the Company's Form 10-QSB for the quarter ending November 30,
         2002)

4.85     Stock Purchase Warrant dated December 6, 2002 between AJW Partners, LLC
         and Insynq, Inc. (Incorporated by reference to Exhibit 4.6 to the
         Company's Form 10-QSB for the quarter ending November 30, 2002)


                                       48
<PAGE>

4.86     Secured Convertible Debenture dated December 6, 2002 between AJW
         Qualified Partners, LLC and Insynq, Inc. (Incorporated by reference to
         Exhibit 4.7 to the Company's Form 10-QSB for the quarter ending
         November 30, 2002)

4.87     Secured Convertible Debenture dated December 6, 2002 between AJW
         Offshore, Ltd. and Insynq, Inc. (Incorporated by reference to Exhibit
         4.8 to the Company's Form 10-QSB for the quarter ending November 30,
         2002)

4.88     Secured Convertible Debenture dated December 6, 2002 between AJW
         Partners, LLC and Insynq, Inc. (Incorporated by reference to Exhibit
         4.9 to the Company's Form 10-QSB for the quarter ending November 30,
         2002)

4.89     Stock Purchase Warrant dated January 29, 2003 between AJW Offshore, Ltd
         and Insynq, Inc. (Incorporated by reference to Exhibit 4.89 to the
         Company's Registration Statement on Form SB-2 filed March 18, 2003)

4.90     Stock Purchase Warrant dated January 29, 2003 between AJW Qualified
         Partners, LLC and Insynq, Inc. (Incorporated by reference to Exhibit
         4.90 to the Company's Registration Statement on Form SB-2 filed March
         18, 2003)

4.91     Stock Purchase Warrant dated January 29, 2003 between AJW Partners, LLC
         and Insynq, Inc. (Incorporated by reference to Exhibit 4.91 to the
         Company's Registration Statement on Form SB-2 filed March 18, 2003)

4.92     Secured Convertible Debenture dated January 29, 2003 between AJW
         Qualified Partners, LLC and Insynq, Inc. (Incorporated by reference to
         Exhibit 4.92 to the Company's Registration Statement on Form SB-2 filed
         March 18, 2003)

4.93     Secured Convertible Debenture dated January 29, 2003 between AJW
         Offshore, Ltd. and Insynq, Inc. (Incorporated by reference to Exhibit
         4.93 to the Company's Registration Statement on Form SB-2 filed March
         18, 2003)

4.94     Secured Convertible Debenture dated January 29, 2003 between AJW
         Partners, LLC and Insynq, Inc. (Incorporated by reference to Exhibit
         4.94 to the Company's Registration Statement on Form SB-2 filed March
         18, 2003) 4.95 Letter Agreement dated March 6, 2003 amending the
         debentures and warrants issued in connection with the June 2001 and
         January 2002 Securities Purchase Agreement between Insynq, Inc. and AJW
         Partners, LLC, New Millennium Partners II, LLC, AJW Offshore, Ltd and
         AJW Qualified Partners, LLC(Incorporated by reference to Exhibit 4.95
         to the Company's Registration Statement on Form SB-2 filed March 18,
         2003)

4.96     Letter Agreement dated March 6, 2003 amending the debentures and
         warrants issued in connection with the September 2002 Securities
         Purchase Agreement between Insynq, Inc. and AJW Partners, LLC, New
         Millennium Partners II, LLC, AJW Offshore, Ltd and AJW Qualified
         Partners, LLC (Incorporated by reference to Exhibit 4.96 to the
         Company's Registration Statement on Form SB-2 filed March 18, 2003)

4.97     Amendment No. 1 to Securities Purchase Agreement dated May 21, 2003 by
         and among Insynq, Inc. and AJW Partners, LLC, New Millennium Partners
         II, LLC and AJW Offshore, Ltd. (Incorporated by reference to Exhibit
         4.97 to the Company's Registration Statement on Form SB-2/A filed May
         23, 2003)

4.98     Amendment No. 2 to Securities Purchase Agreement dated May 21, 2003 by
         and among Insynq, Inc. and AJW Partners, LLC, New Millennium Partners
         II, LLC, AJW Offshore, Ltd. and AJW Qualified Partners, LLC
         (Incorporated by reference to Exhibit 4.98 to the Company's
         Registration Statement on Form SB-2/A filed May 23, 2003)

4.99     Secured Convertible Debenture dated March 18, 2002 between AJW
         Partners, LLC and Insynq. Inc. (Incorporated by reference to Exhibit
         4.15 to the Company's Quarterly Report on Form 10-QSB filed April 18,
         2003)

4.100    Secured Convertible Debenture dated March 18, 2002 between AJW
         Qualified Partners, LLC and Insynq. Inc. (Incorporated by reference to
         Exhibit 4.16 to the Company's Quarterly Report on Form 10-QSB filed
         April 18, 2003)

4.101    Secured Convertible Debenture dated March 18, 2002 between AJW
         Offshore, Ltd. and Insynq. Inc. (Incorporated by reference to Exhibit
         4.17 to the Company's Quarterly Report on Form 10-QSB filed April 18,
         2003)


                                       49
<PAGE>

4.102    Secured Convertible Debenture dated March 18, 2002 between New
         Millennium Partners II, LLC and Insynq. Inc. (Incorporated by reference
         to Exhibit 4.18 to the Company's Quarterly Report on Form 10-QSB filed
         April 18, 2003)

4.103    Stock Purchase Warrant dated March 18, 2002 between AJW Partners, LLC
         and Insynq. Inc. (Incorporated by reference to Exhibit 4.19 to the
         Company's Quarterly Report on Form 10-QSB filed April 18, 2003)

4.104    Stock Purchase Warrant dated March 18, 2002 between AJW Qualified
         Partners, LLC and Insynq. Inc. (Incorporated by reference to Exhibit
         4.20 to the Company's Quarterly Report on Form 10-QSB filed April 18,
         2003)

4.105    Stock Purchase Warrant dated March 18, 2002 between AJW Offshore, Ltd
         and Insynq. Inc. (Incorporated by reference to Exhibit 4.21 to the
         Company's Quarterly Report on Form 10-QSB filed April 18, 2003)

4.106    Stock Purchase Warrant dated March 18, 2002 between New Millennium II
         Partners, LLC and Insynq. Inc. (Incorporated by reference to Exhibit
         4.22 to the Company's Quarterly Report on Form 10-QSB filed April 18,
         2003)

4.107    Secured Convertible Debenture dated March 31, 2003 between New
         Millennium Capital Partners II, LLC and Insynq, Inc. (Incorporated by
         reference to Exhibit 4.23 to the Company's Quarterly Report on Form
         10-QSB filed April 18, 2003)

4.108    Secured Convertible Debenture dated March 31, 2003 between AJW
         Qualified Partners, LLC and Insynq, Inc. (Incorporated by reference to
         Exhibit 4.24 to the Company's Quarterly Report on Form 10-QSB filed
         April 18, 2003)

4.109    Secured Convertible Debenture dated March 31, 2003 between New
         Millennium Capital Partners II, LLC and Insynq, Inc. (Incorporated by
         reference to Exhibit 4.25 to the Company's Quarterly Report on Form
         10-QSB filed April 18, 2003)

4.110    Secured Convertible Debenture dated March 31, 2003 between AJW
         Qualified Partners, LLC and Insynq, Inc. (Incorporated by reference to
         Exhibit 4.26 to the Company's Quarterly Report on Form 10-QSB filed
         April 18, 2003)

4.111    Secured Convertible Debenture dated March 31, 2003 between New
         Millennium Capital Partners II, LLC and Insynq, Inc. (Incorporated by
         reference to Exhibit 4.23 to the Company's Quarterly Report on Form
         10-QSB filed April 18, 2003)

4.112    Form of Stock Purchase Warrant dated October 4, 2004 between Jon
         Pearman, Harvey Levin, Ted Davis, Lisa Fincher and Insynq, Inc.
         (Incorporated by reference to Exhibit 4.1 to the Company's Quarterly
         Report of Form 10QSB filed October 15, 2004)

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 Executive Long Term Incentive Plan, as amended by
         Amendment No 1 dated August 14, 2001. (Incorporated by reference to
         Exhibit 10.7 to the Company's Amended Quarterly Report on Form 10-QSB/A
         filed February 25, 2002)

10.3     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).

10.4     Insynq, Inc. 2000 Long Term Incentive Plan as amended by Amendment No 3
         dated November 21, 2001. (Incorporated by reference to Exhibit 10.6 to
         the Company's Amended Quarterly Report on Form 10-QSB/A filed February
         25, 2002)

10.5     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).

10.6     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).


                                       50
<PAGE>

10.7     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).

10.8     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).

10.9     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).

10.10    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).

10.11    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)

10.12    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).

10.13    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).

10.14    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 Form10-QSB filed
         April 20, 2001).

10.15    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).

10.16    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).

10.17    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).

10.18    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).

10.19    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)

10.20    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)

10.21    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).

10.22    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).


                                       51
<PAGE>

10.23    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).

10.24    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)

10.25    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).

10.26    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)

10.27    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)

10.28.   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)

10.29    Lease Termination Agreement dated April 1, 2001 between Duane and Wendy
         Ashby, d/b/a Cargocare and Insynq Data Utilities. (Incorporated by
         reference to Exhibit 10.27 to the Company's Annual Report on Form
         10-KSB filed July 31, 2001).

10.30    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).

10.31    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).

10.32    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).

10.33    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).

10.34    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).

10.35    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).

10.36    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).

10.37    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).

10.38    Amendment B to Master Licensing Agreement dated November 1, 2001
         between My Partner Online and Insynq, Inc. (Incorporated by reference
         to Exhibit 10.5 to the Company's Quarterly Report on Form 10-QSB filed
         January 16, 2002)

10.39    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).


                                       52
<PAGE>

10.40    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).

10.41    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).

10.42    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).

10.43    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).

10.44    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).

10.45    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).

10.46    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).

10.47    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).

10.48    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).

10.49    Amendment No. 1 to Consulting Agreement dated September 12, 2001
         between David D. Selmon and Insynq, Inc. (Incorporated by reference to
         Exhibit 10.3 to the Company's Quarterly Report on Form 10-QSB filed
         January 16, 2002).

10.50    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).

10.51    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).

10.52    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).

10.53    Amendment No. 2 dated July 20, 2001 to Employment Agreement between
         Stephen C. Smith and Insynq, Inc. (Incorporated by reference to Exhibit
         10.49 to the Company's Annual Report on Form 10-KSB filed July 31,
         2001).

10.54    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).

10.55    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).

10.56    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).


                                       53
<PAGE>

10.57    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).

10.58    Amendment No. 1 to Consulting Agreement dated November 1, 2001 between
         Charles F. Benton and Insynq, Inc. (Incorporated by reference to
         Exhibit 10.4 to the Company's Quarterly Report on Form 10-QSB filed
         January 16, 2002).

10.59    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).

10.60    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).

10.61    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).

10.62    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).

10.63    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).

10.64    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).

10.65    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).

10.66    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).

10.67    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).

10.68    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).

10.69    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).

10.70    Consulting Agreement dated March 22, 2001 between Metromedia Research
         Group LLC and Insynq, Inc., as amended dated April 9, 2001.
         (Incorporated by reference to Exhibit 10.65 to the Company's Annual
         Report on Form 10-KSB filed July 31, 2001).

10.71    Registration Rights Agreement dated March 22, 2001 between Metromedia
         Research Group, LLC and Insynq, Inc. (Incorporated by reference to
         Exhibit 10.66 to the Company's Annual Report on Form 10-KSB filed July
         31, 2001).

10.72    Consulting Agreement dated March 23, 2002 between Internet PR Group and
         Insynq, Inc. (Incorporated by reference to Exhibit 10.67 to the
         Company's Annual Report on Form 10-KSB filed July 31, 2001).

10.73    Letter Agreement dated April 1, 2001 between Barretto Pacific
         Corporation and Insynq, Inc. (Incorporated by reference to Exhibit
         10.68 to the Company's Annual Report on Form 10-KSB filed July 31,
         2001).


                                       54
<PAGE>

10.74    Consulting Agreement dated April 1, 2001 between consultant and Insynq,
         Inc. (Incorporated by reference to Exhibit 10.69 to the Company's
         Annual Report on Form 10-KSB filed July 31, 2001).

10.75    Consulting Agreement dated May 3, 2001 and Amendment dated May 30, 2001
         between Eugene R. Zachman and Insynq, Inc. (Incorporated by reference
         to Exhibit 10.70 to the Company's Annual Report on Form 10-KSB filed
         July 31, 2001).

10.76    Settlement Agreement dated May 17, 2001 between Howe/Horizon Holdings,
         LLC, Horizon Holdings I, LLC and Insynq, Inc. (Incorporated by
         reference to Exhibit 10.71 to the Company's Annual Report on Form
         10-KSB filed July 31, 2001).

10.77    Equipment Co-Location License Agreement dated May 16, 2001 between
         Horizon Holdings I, LLC and Insynq, Inc. (Incorporated by reference to
         Exhibit 10.72 to the Company's Annual Report on Form 10-KSB filed July
         31, 2001).

10.78    Lease Agreement dated May 10, 2001 between Howe/Horizon Holdings, LLC
         and Insynq, Inc. (Incorporated by reference to Exhibit 10.73 to the
         Company's Annual Report on Form 10-KSB filed July 31, 2001).

10.79    Consulting Agreement dated May 17, 2001 and Amendment dated May 30,
         2001 between James Zachman and Insynq, Inc. (Incorporated by reference
         to Exhibit 10.74 to the Company's Annual Report on Form 10-KSB filed
         July 31, 2001).

10.80    Agreement to Provide Professional Service dated July 10, 2001 between
         Central Software Services and Insynq, Inc. (Incorporated by reference
         to Exhibit 10.75 to the Company's Annual Report on Form 10-KSB filed
         July 31, 2001).

10.81    Consulting Agreement dated May 3, 2001 between DiabloStocks, Inc. and
         Insynq, Inc. (Incorporated by reference to Exhibit 10.76 to the
         Company's Annual Report on Form 10-KSB filed July 31, 2001).

10.82    Selling Agreement dated May 28, 2001 between Taconic Capital Partners,
         LP, Internet Solutions Partners, Inc, Salvani Investments, Inc. and
         Insynq, Inc. (Incorporated by reference to Exhibit 10.77 to the
         Company's Annual Report on Form 10-KSB filed July 31, 2001).

10.83    Acquisition Purchase Agreement dated June 1, 2001 between Omnibus
         Subscriber Computing, Inc. and Insynq, Inc. (Incorporated by reference
         to Exhibit 10.78 to the Company's Annual Report on Form 10-KSB filed
         July 31, 2001).

10.84    Settlement Agreement dated June 21, 2001 between One Click Investments,
         LLC and John P. Gorst. (Incorporated by reference to Exhibit 10.79 to
         the Company's Annual Report on Form 10-KSB filed July 31, 2001).

10.85    Settlement Agreement dated February 15, 2002 between One Click
         Investments, LLC and Insynq, Inc. (Incorporated by reference to Exhibit
         10.11 to the Company's Amended Quarterly Report on Form 10-QSB/A filed
         February 25, 2002)

10.86    Lease Agreement dated July 6, 2001 between Simon-Marten, LLC and
         Insynq, Inc. for 1127 Broadway Plaza, Suite 10, Tacoma, Washington,
         98402. (Incorporated by reference to Exhibit 10.80 to the Company's
         Amended Registration Statement on Form SB2/A filed September 19, 2001)

10.87    Settlement Agreement dated September 6, 2001 between Martin E. Darrah
         and Insynq, Inc. (Incorporated by reference to Exhibit 10.81 to the
         Company's Registration Statement on Form SB-2 filed September 19,
         2001.)

10.88    Consulting Agreement dated September 1, 2001 between consultant and
         Insynq, Inc. (Incorporated by reference to Exhibit 10.2 to the
         Company's Quarterly Report on Form 10-QSB filed January 16, 2002)

10.89    Consulting Agreement dated January 1, 2002 between consultant and
         Insynq, Inc. (Incorporated by reference to Exhibit 10.8 to the
         Company's Amended Quarterly Report on Form 10-QSB/A filed February 25,
         2002)

10.90    Services Agreement dated December 20, 2001 between Qwest Business
         Resources, Inc. and Insynq, Inc. (Incorporated by reference to Exhibit
         10.9 to the Company's Amended Quarterly Report on From 10-QSB/A filed
         February 25, 2002)

10.91    Employment Agreement dated December 1, 2001 between Donald M. Kaplan
         and Insynq, Inc. (Incorporated by reference to Exhibit 10.10 to the
         Company's Amended Quarterly Report on Form 10-QSB/A filed February 25,
         2002)


                                       55
<PAGE>

10.92    Acquisition Purchase Agreement dated June 1, 2001 between Omnibus
         Subscriber Computing, Inc. and Insynq, Inc. (Incorporated by reference
         to Exhibit 10.92 to the Company's Registration Statement on From SB-2
         filed June 11, 2002).

10.93    Managed Services Agreement dated December 1, 2001 between Omnibus
         Canada Corporation and Insynq, Inc. (Incorporated by reference to
         Exhibit 10.93 to the Company's Registration Statement on From SB-2
         filed June 11, 2002).

10.94    Amendment No. 1 to Managed Services Agreement dated December 2, 2001
         between Omnibus Canada Corporation and Insynq, Inc (Incorporated by
         reference to Exhibit 10.94 to the Company's Registration Statement on
         From SB-2 filed June 11, 2002).

10.95    Insynq, Inc. 2002 Director, Officers and Consultants Stock Option,
         Stock Warrant and Stock Award Plan (Incorporated by reference to the
         Company's Information Statement on Form 14-C filed December 10, 2002).

10.96    Exchange Agreement dated October 16, 2002 between Kelly D. Miller and
         Insynq, Inc. (Incorporated by reference to Exhibit 10.96 to the
         Company's Registration Statement on Form SB-2 filed March 18, 2003).

10.97    Exchange Agreement dated October 16, 2002 between Delores Hall and
         Insynq, Inc. (Incorporated by reference to Exhibit 10.97 to the
         Company's Registration Statement on Form SB-2 filed March 18, 2003).

10.98    Exchange Agreement dated October 16, 2002 between William D. Schmechel
         and Insynq, Inc. (Incorporated by reference to Exhibit 10.98 to the
         Company's Registration Statement on Form SB-2 filed March 18, 2003).

10.99    Exchange Agreement dated October 16, 2002 between Robert A. Harville
         and Insynq, Inc. (Incorporated by reference to Exhibit 10.99 to the
         Company's Registration Statement on Form SB-2 filed March 18, 2003).

10.100   Exchange Agreement dated October 16, 2002 between Mark Rezansoff and
         Insynq, Inc. (Incorporated by reference to Exhibit 10.100 to the
         Company's Registration Statement on Form SB-2 filed March 18, 2003).

10.101   Exchange Agreement dated October 16, 2002 between Joanie C. Mann and
         Insynq, Inc. (Incorporated by reference to Exhibit 10.101 to the
         Company's Registration Statement on Form SB-2 filed March 18, 2003).

10.102   Exchange Agreement dated October 16, 2002 between David D. Selmon and
         Insynq, Inc. (Incorporated by reference to Exhibit 10.102 to the
         Company's Registration Statement on Form SB-2 filed March 18, 2003).

10.103   Exchange Agreement dated October 16, 2002 between International Fluid
         Dynamics and Insynq, Inc. (Incorporated by reference to Exhibit 10.103
         to the Company's Registration Statement on Form SB-2 filed March 18,
         2003).

10.104   Exchange Agreement dated October 16, 2002 between M. Carroll Benton and
         Insynq, Inc. (Incorporated by reference to Exhibit 10.104 to the
         Company's Registration Statement on Form SB-2 filed March 18, 2003).

10.105   Exchange agreement dated October 16, 2002 between John P. Gorst and
         Insynq, Inc. (Incorporated by reference to Exhibit 10.105 to the
         Company's Registration Statement on Form SB-2 filed March 18, 2003).

10.106   Business Advisory and Consulting Services Agreement dated December 18,
         2002 between Stanton, Walker & Company and Insynq, Inc. (Incorporated
         by reference to Exhibit 10.1 to the Company's Quarterly Report on Form
         10-QSB filed April 18, 2003).

10.107   Independent Consulting Agreement dated February 1, 2003 between One
         Click Investments, LLC and Insynq, Inc. (Incorporated by reference to
         Exhibit 10.2 to the Company's Quarterly Report on Form 10-QSB filed
         April 18, 2003).

10.108   Consulting Agreement dated March 1, 2003 between San Diego Torrey Hills
         Capital and Insynq, Inc. (Incorporated by reference to Exhibit 10.3 to
         the Company's Quarterly Report on Form 10-QSB filed April 18, 2003).

10.109   Consulting Agreement dated July 15, 2003 between San Diego Torrey Hills
         Capital and Insynq, Inc. (Incorporated by reference to Exhibit 10.109
         to the Company's Annual Report on Form 10-KSB filed September 15, 2003)

10.110   2003 Consulting Services Agreement dated August 8, 2003 between James
         A. Reskin and Insynq, Inc. (Incorporated by reference to Exhibit 4.1 to
         the Company's Registration Statement of Form S-8 filed August 8, 2003)


                                       56
<PAGE>

10.111   2003 Consulting Services Agreement dated August 8, 2003 between Harvey
         Levin and Insynq, Inc. (Incorporated by reference to Exhibit 4.2 to the
         Company's Registration Statement on Form S-8 filed August 8, 2003)

10.112   2003 Consulting Services Agreement dated August 8, 2003 between D.
         Scott Elliott and Insynq, Inc. (Incorporated by reference to Exhibit
         4.3 to the Company's Registration Statement on Form S-8 filed August 8,
         2003

10.113   Consulting Agreement dated December 1, 2003 between Harvey Levin and
         Insynq, Inc. (Incorporated by reference to Exhibit 10.1 to the
         Company's Quarterly Report on Form 10-QSB filed April 14, 2004)

10.114   Consulting Agreement dated December 1, 2003 between D. Scott Elliott
         and Insynq, Inc. (Incorporated by reference to Exhibit 10.2 to the
         Company's Quarterly Report on Form 10-QSB filed April 14, 2004)

10.115   Consulting Agreement dated December 1, 2003 between James A. Reskin and
         Insynq, Inc. (Incorporated by reference to Exhibit 10.3 to the
         Company's Quarterly Report on Form 10QSB filed April 14, 2004)

10.116*  Promissory Note and Security Agreement dated September 2, 2003 between
         James A Reskin and Insynq, Inc. (Incorporated by reference to Exhibit
         10.116 to the Company's Annual Report of form 10KSB filed September 14,
         2004)

10117*   Promissory Note and Security Agreement dated September 2, 2003 between
         Harvey Levin and Insynq, Inc. (Incorporated by reference to Exhibit
         10.117 to the Company's Annual Report of form 10KSB filed September 14,
         2004)

10.118*  Consulting Services Agreement dated September 2, 2003 between D. Scott
         Elliott and Insynq, Inc. (Incorporated by reference to Exhibit 10.118
         to the Company's Annual Report of form 10KSB filed September 14, 2004)

10.119*  Consulting Services Agreement dated September 2, 2003 between Harvey
         Levin and Insynq, Inc. (Incorporated by reference to Exhibit 10.119 to
         the Company's Annual Report of form 10KSB filed September 14, 2004)

10.120*  Consulting Services Agreement dated September 2, 2003 between James A.
         Reskin and Insynq. Inc. (Incorporated by reference to Exhibit 10.120 to
         the Company's Annual Report of form 10KSB filed September 14, 2004)

10.121   Form of Consulting Agreement dated October 4, 2004 between Jon Pearman,
         Harvey Levin, Ted Davis, Lisa Fincher, D. Scott Elliott and Richard
         Russotto and Insynq, Inc. (Incorporated by reference to Exhibit 10.1 to
         the Company's Quarterly Report on form 10QSB filed October 15, 2004)

10.122   Master Licensing Agreement October 4, 2004 between Aptus Corp. and
         Insynq, Inc. (Incorporated by reference to Exhibit 10.2 to the
         Company's Quarterly Report on form 10QSB filed October 15, 2004)

10.123   Master Licensing Agreement Amendment #1 dated October 20, 2004 between
         Aptus Corp and Insynq Inc. (Incorporated by reference to Exhibit 10.1
         to the Company's Quarterly Report on Form 10QSB filed January 19, 2005)

10.124   Consulting Agreement dated October 4, 2004 between Insynq, Inc. and Jon
         Pearman. Incorporated by reference to Exhibit 10.1 to the Company's
         Quarterly Report on form 10QSB filed April 15, 2005)

10.125   Note Payable dated October 4, 2004 between Insynq, Inc. and Jon
         Pearman. Incorporated by reference to Exhibit 10.2 to the Company's
         Quarterly Report on form 10QSB filed April 15, 2005)

10.126   Cancellation Letter dated December 14, 2004 between Insynq, Inc. and
         Jon Pearman. (Incorporated by reference to Exhibit 10.3 to the
         Company's Quarterly Report on form 10QSB filed April 15, 2005)

10.127   Schedule C to Consulting Agreement dated October 4, 2004 between
         Insynq, Inc. and Jon Pearman. (Incorporated by reference to Exhibit
         10.3a to the Company's Quarterly Report on form 10QSB filed April 15,
         2005)

10.128   Consulting Agreement dated October 4, 2004 between Insynq, Inc. and
         Harvey Levin. (Incorporated by reference to Exhibit 10.4 to the
         Company's Quarterly Report on form 10QSB filed April 15, 2005)


                                       57
<PAGE>

10.129   Note Payable dated October 4, 2004 between Insynq, Inc. and Harvey
         Levin. (Incorporated by reference to Exhibit 10.5 to the Company's
         Quarterly Report on form 10QSB filed April 15, 2005)

10.130   Cancellation Letter dated December 14, 2004 between Insynq, Inc. and
         Harvey Levin. (Incorporated by reference to Exhibit 10.6 to the
         Company's Quarterly Report on form 10QSB filed April 15, 2005)

10.131   Schedule C to consulting Agreement dated October 4, 2004 between
         Insynq, Inc. and Harvey Levin. (Incorporated by reference to Exhibit
         10.6a to the Company's Quarterly Report on form 10QSB filed April 15,
         2005)

10.132   Consulting Agreement dated October 4, 2004 between Insynq, Inc. and
         Lisa Fincher. (Incorporated by reference to Exhibit 10.7 to the
         Company's Quarterly Report on form 10QSB filed April 15, 2005)

10.133   Note Payable dated October 4, 2004 between Insynq, Inc. and Lisa
         Fincher. (Incorporated by reference to Exhibit 10.8 to the Company's
         Quarterly Report on form 10QSB filed April 15, 2005)

10.134   Cancellation Letter dated December 14, 2004 between Insynq, Inc. and
         Lisa Fincher. (Incorporated by reference to Exhibit 10.9 to the
         Company's Quarterly Report on form 10QSB filed April 15, 2005)

10.135   Schedule C to Consulting Agreement dated October 4, 2004 between
         Insynq, Inc. and Lisa Fincher. (Incorporated by reference to Exhibit
         10.9a to the Company's Quarterly Report on form 10QSB filed April 15,
         2005)

10.136   Consulting Agreement dated October 4, 2004 between Insynq, Inc. and
         Richard Russotto. (Incorporated by reference to Exhibit 10.10 to the
         Company's Quarterly Report on form 10QSB filed April 15, 2005)

10.137   Cancellation Letter dated December 14, 2004 between Insynq, Inc. and
         Richard Russotto. Consulting Agreement dated October 4, 2004 between
         Insynq, Inc. and Richard Russotto. (Incorporated by reference to
         Exhibit 10.12 to the Company's Quarterly Report on form 10QSB filed
         April 15, 2005)

10.138   Consulting Agreement dated October 4, 2004 between Insynq, Inc. and D.
         Scott Elliott. (Incorporated by reference to Exhibit 10.13 to the
         Company's Quarterly Report on form 10QSB filed April 15, 2005)

10.139   Cancellation Letter dated December 14, 2004 between Insynq, Inc. and D.
         Scott Elliott. (Incorporated by reference to Exhibit 10.14 to the
         Company's Quarterly Report on form 10QSB filed April 15, 2005)

10.140   Consulting Agreement date October 4, 2004 between Insynq, Inc. and Ted
         Davis. (Incorporated by reference to Exhibit 10.15 to the Company's
         Quarterly Report on form 10QSB filed April 15, 2005)

10.141   Note Payable dated October 4, 2004 between Insynq, Inc. and Ted Davis.
         (Incorporated by reference to Exhibit 10.16 to the Company's Quarterly
         Report on form 10QSB filed April 15, 2005)

10.142   Cancellation Letter dated December 14, 2004 between Insynq, Inc. and
         Ted Davis. (Incorporated by reference to Exhibit 10.17 to the Company's
         Quarterly Report on form 10QSB filed April 15, 2005)

10.143   Schedule C to Consulting Agreement dated October 4, 2004 between
         Insynq, Inc. and Ted Davis. (Incorporated by reference to Exhibit 10.18
         to the Company's Quarterly Report on form 10QSB filed April 15, 2005)

10.144   Consulting Agreement dated January 10, 2005 between Insynq, Inc. and
         Cliff Mastricola. (Incorporated by reference to Exhibit 10.19 to the
         Company's Quarterly Report on form 10QSB filed April 15, 2005)

10.145   Securities Purchase Agreement dated February 28, 2005 between Insynq,
         Inc. and AJW Partners, LLC., AJW Offshore, Ltd., AJW Qualified
         Partners, LLC. and New Millennium Capital Partners II, LLC.
         (Incorporated by reference to Exhibit 10.20 to the Company's Quarterly
         Report on form 10QSB filed April 15, 2005)


                                       58
<PAGE>

10.146   Security Agreement dated February 28, 2005 between Insynq, Inc. and AJW
         Partners, LLC., AJW Offshore, Ltd., AJW Qualified Partners, LLC. and
         New Millennium Capital Partners II, LLC. (Incorporated by reference to
         Exhibit 10.21 to the Company's Quarterly Report on form 10QSB filed
         April 15, 2005)

10.147   Intellectual Property Security Agreement dated February 28, 2005
         between Insynq, Inc. and AJW Partners, LLC., AJW Offshore, Ltd., AJW
         Qualified Partners, LLC. and New Millennium Capital Partners II, LLC.
         (Incorporated by reference to Exhibit 10.22 to the Company's Quarterly
         Report on form 10QSB filed April 15, 2005)

10.148   Guaranty and Pledge Agreement dated February 28, 2005 between Insynq,
         Inc. and AJW Partners, LLC., AJW Offshore, Ltd., AJW Qualified
         Partners, LLC. and New Millennium Capital Partners II, LLC.
         (Incorporated by reference to Exhibit 10.23 to the Company's Quarterly
         Report on form 10QSB filed April 15, 2005)

10.149   Callable Secured Convertible Note dated February 28, 2005 between
         Insynq, Inc. and AJW Offshore, Ltd. (Incorporated by reference to
         Exhibit 10.24 to the Company's Quarterly Report on form 10QSB filed
         April 15, 2005)

10.150   Callable Secured Convertible Note dated February 28, 2005 between
         Insynq, Inc. and AJW Partners, LLC. (Incorporated by reference to
         Exhibit 10.25 to the Company's Quarterly Report on form 10QSB filed
         April 15, 2005)

10.151   Callable Secured Convertible Note dated February 28, 2005 between
         Insynq, Inc. and AJW Qualified Partners, LLC. (Incorporated by
         reference to Exhibit 10.26 to the Company's Quarterly Report on form
         10QSB filed April 15, 2005)

10.152   Callable Secured Convertible Note dated February 28, 2005 between
         Insynq, Inc. and New Millennium Capital Partners II, LLC. (Incorporated
         by reference to Exhibit 10.27 to the Company's Quarterly Report on form
         10QSB filed April 15, 2005)

10.153   (Incorporated by reference to Exhibit 10.24 to the Company's Quarterly
         Report on form 10QSB filed April 15, 2005) (Incorporated by reference
         to Exhibit 10.28 to the Company's Quarterly Report on form 10QSB filed
         April 15, 2005)

10.154   Registration Rights Agreement dated February 28, 2005 between Insynq,
         Inc. and AJW Partners, LLC., AJW Offshore, Ltd., AJW Qualified
         Partners, LLC. and New Millennium Capital Partners II, LLC.
         (Incorporated by reference to Exhibit 10.29 to the Company's Quarterly
         Report on form 10QSB filed April 15, 2005)

10.155*  Asset Purchase Agreement dated April 30, 2005 between Insynq, Inc. and
         Aptus Corp.

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).16Letter on Change in Certifying Accountant (Incorporated by
         reference to Exhibit 1 to the Company's Current Report on Form 8-K
         filed July 25, 2002.)

31.1*    Certification of the Chief Executive Officer of Insynq, Inc. pursuant
         to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2     Certification of the Principal Financial Officer of Insynq, Inc.
         pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*    Certification of the Chief Executive Officer of Insynq, Inc. pursuant
         to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*    Certification of the Principal Financial Officer of Insynq, Inc.
         pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


----------
* Filed Herewith


                                       59
<PAGE>

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

AUDIT FEE

         The aggregate fees billed for each of the last two fiscal years for
profession services rendered by the principal accountant for our audit of annual
financial statements and review of financial statements included in our Form
10-KSB and 10-QSB or services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements for those fiscal
years were:

         2004              $52,593
         2003              $81,103

ALL OTHER FEES

         The aggregate fees billed in each of the last two fiscal years for the
products and services provided by the principal accountant, other than the
services reported in paragraph (1) were:

         2004              $ 6,096
         2003              $ 4,348

                                       60
<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:  September 12, 2005


      SIGNATURES                      TITLE                          DATE
----------------------  -----------------------------------   ------------------

/S/ JOHN P. GORST       Chief Executive Officer, President,   September 12, 2005
-----------------       Chief Operations Officer and
John P. Gorst           Director (Principal Executive
                        Officer)

/S/ M. CARROLL BENTON   Chief Administrative Officer,         September 12, 2005
---------------------   Secretary and Treasurer and Director
M. Carroll Benton       Principal Accounting Officer and
                        Principal Financial Officer


                                       61
<PAGE>

                          INDEX TO FINANCIAL STATEMENTS


 Audited Financial Statements as of and for the Years Ended May 31, 2005
 and 2004


     Index to Financial Statements                                F-1

     Report of Independent Registered Public Accounting Firm      F-2

     Balance Sheets                                               F-3

     Statements of Operations                                     F-4

     Statements of Stockholders' Deficit                          F-5

     Statements of Cash Flows                                     F-7

     Notes to Financial Statements                                F-8


                                      F-1
<PAGE>
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors
Insynq, Inc.


We have audited the accompanying balance sheets of Insynq, Inc. (the "Company")
as of May 31, 2005 and 2004 and the related statements of operations,
stockholders' deficit, and cash flows for the years 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 audits.

We conducted our audits in accordance with auditing standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatements. 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
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Insynq, Inc. as of May 31, 2005
and 2004 and the results of its operations and its cash flows for the years then
ended 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 discussed in Note 3 to the
financial statements, the Company has a net loss of $3,032,518 and a negative
cash flow from operations of $1,599,206 for the year ended May 31, 2005 and has
a working capital deficit of $3,680,744 and a stockholders' deficit of
$3,284,247 at May 31, 2005. These matters raise substantial doubt about the
Company's ability to continue as a going concern. Management's plan in regards
to these matters is also described in Note 3. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.


WEINBERG & COMPANY, P.A.

Boca Raton, Florida
August 24, 2005

                                      F-2
<page>

                                  Insynq, Inc.
                                 Balance Sheets

<TABLE>
<CAPTION>

                                                                       May 31, 2005         May 31, 2004
                                                                       ------------         ------------
<S>                                                                    <C>                  <C>
                                    Assets

Current assets
    Cash ......................................................        $    703,028         $     80,359
    Accounts receivable, net of allowance for doubtful accounts
      of $35,000 and $25,000 at May 31, 2005 and 2004,
       respectively ...........................................              59,211               52,373
                                                                       ------------         ------------
                    Total current assets ......................             762,239              132,732
                                                                       ------------         ------------
Equipment, net ................................................              33,146              115,263
                                                                       ------------         ------------

Other assets
    Intellectual property, net ................................             323,001                 --
    Deposits and prepaid expenses .............................              40,350                8,943
    Prepaid licenses ..........................................                --                202,772
                                                                       ------------         ------------
           Total other assets .................................             363,351              211,715
                                                                       ------------         ------------
           Total assets .......................................           1,158,736         $    459,710
                                                                       ============         ============

                      Liabilities and Stockholders' Deficit

Current liabilities
    Accounts payable ..........................................        $    598,177         $    583,073
    Accrued liabilities .......................................           2,152,900            2,538,519
    Convertible debentures ....................................           1,300,045            1,330,551
    Convertible notes payable, net of unamortized discount of
    $2,472,534 at May 31, 2005 ................................             227,466                   --
    Notes payable .............................................             121,234              125,836
    Customer deposits and other obligations ...................              43,161               36,198
                                                                       ------------         ------------
           Total current liabilities ..........................           4,442,983            4,614,177
                                                                       ------------         ------------

Commitments and contingencies

Stockholders' deficit
    Preferred stock, $0.001 par value, 10,000,000 shares
    authorized, 165,000 of Series A and -0- shares issued
       and outstanding at May 31, 2005 and 2004, respectively .                 165                   --
    Class A common stock, $0.001 par value, 10,000,000 shares
       authorized, -0- shares issued and outstanding at May
       31, 2005 and 2004, respectively ........................                  --                   --
    Common stock, $0.001 par value, 2 billion shares
       authorized, 87,707,271 and 8,907,271 shares issued and
       outstanding at May 31, 2005 and 2004, respectively .....              87,707                8,908
    Additional paid-in capital ................................          26,265,708           22,321,560
    Related party receivables, net of allowance for doubtful
    accounts of $99,000 and $25,000 at May 31, 2005 and 2004, .            (187,050)             (83,343)
    respectively
    Unearned compensation .....................................             (16,667)                  --
    Accumulated deficit .......................................         (29,434,110)         (26,401,592)
                                                                       ------------         ------------
           Total stockholders' deficit ........................          (3,284,247)          (4,154,467)
                                                                       ------------         ------------
           Total liabilities and stockholders' deficit ........        $  1,158,736         $    459,710
                                                                       ============         ============

</TABLE>

The accompanying notes are an integral part of these financial statements.


                                       F-3
<PAGE>

                                  Insynq, Inc.
                            Statements of Operations

<TABLE>
<CAPTION>
                                                          For the Years Ended May 31,
                                                       ---------------------------------
                                                           2005                 2004
                                                       ------------         ------------
<S>                                                    <C>                  <C>
Revenues
     Unrelated parties                                 $  1,098,772         $  1,092,518
     Related parties                                         58,303              137,672
                                                       ------------         ------------
Total revenues                                            1,157,075            1,230,190
                                                       ------------         ------------

Costs and expenses
   Direct cost of revenues                                  798,627              822,497
   Selling, general and administrative:
      Non-cash compensation                                 439,133            1,665,736
      Other                                               1,459,965            1,089,415
                                                       ------------         ------------
Total costs and expenses                                  2,697,725            3,577,648
                                                       ------------         ------------

Loss from operations                                     (1,540,650)          (2,347,458)
                                                       ------------         ------------

Other income (expense)
   Gain on forgiveness and settlements of debts             257,568            2,011,867
   Interest expense:
      Non-cash                                             (969,107)            (184,085)
      Other                                                (798,118)            (365,583)
   Other income                                              29,319               11,430
   Loss from disposal of assets                             (11,530)                  --
                                                       ------------         ------------
Total other income (expense)                             (1,491,868)           1,473,629
                                                       ------------         ------------
Net loss                                               $ (3,032,518)        $   (873,829)
                                                       ============         ============
Net loss per share:
   Basic and diluted                                   $      (0.05)        $      (0.17)
                                                       ============         ============
Weighted average common shares outstanding:
   Basic and diluted                                     59,950,622            5,130,632
                                                       ============         ============
</TABLE>

The accompanying notes are an integral part of these financial statements.


                                       F-4
<PAGE>

                                  Insynq, Inc.
                       Statements of Stockholders' Deficit
                    For the Years Ended May 31, 2005 and 2004

<TABLE>
<CAPTION>
                                                                                                    Additional
                                     Preferred Stock                  Common  Stock                  Paid-In
                                    Shares     Amount          Shares                Amount           Capital
                                   ---------- -------------------------------------------------------------------
<S>                                    <C>    <C>            <C>            <C>                <C>
Balance at May 31, 2003 ........        --    $   --            440,667     $       441        $ 18,829,108

Issuance of common stock in
conjunction with the exercise of
options and record stockholders'
notes receivable ...............        --        --          1,268,518           1,268             594,843

Issuance of common stock for
non-employee compensation and
record unearned compensation ...        --        --          1,938,113           1,938           1,272,406

Issuance of common stock for
trade debt .....................        --        --             80,000              80              41,720

Issuance of common stock in
conjunction with conversion of
debentures .....................        --        --          3,895,618           3,896             639,503

Issuance of common stock for
settlement of related party debt
and accrued interest ...........        --        --          1,300,000           1,300             648,700

Satisfaction of officers' notes
receivable and accrued interest
receivable in exchange for
common stock ...................        --        --            (15,216)            (15)           (106,500)

Issuance of options for
non-employee compensation and
record unearned compensation ...        --        --               --              --               391,392

Amortization of unearned
compensation ...................        --        --               --              --                  --

Amount due from related party
receivables, net of $25,000
allowance for doubtful
collections ....................        --        --               --              --                  --

Principal received on
stockholders' notes receivable .        --        --               --              --                10,388

Accrue interest on officers'
notes receivable ...............        --        --               --              --                  --

Net loss for the year ended May
31, 2004 .......................        --        --               --              --                  --

                                      -----    -------       -----------     -----------        ------------
Balance at May 31, 2004 ........        --     $    --         8,907,700     $     8,908        $ 22,321,560
</TABLE>

The accompanying notes are an integral part of these financial statements.


                                       F-5
<PAGE>

(Continued from table above. First column repeated)

<TABLE>
<CAPTION>

                                           Officers'
                                             and            Related                                                Total
                                         Stockholders'        Party            Unearned          Accumulated     Stockholders'
                                          Receivables     Receivables        Compensation         Deficit         Deficit
                                       ------------------------------------------------------------------------------------
<S>                                   <C>               <C>                      <C>           <C>              <C>
Balance at May 31, 2003 ........      $   (105,475)     $      --                $   --        $(25,527,763)    $(6,803,689)

Issuance of common stock in
conjunction with the exercise of
options and record stockholders'
notes receivable ...............         (596,111)             --                    --               --            --

Issuance of common stock for
non-employee compensation and
record unearned compensation ...             --                --              (1,054,916)            --            219,428

Issuance of common stock for
trade debt .....................             --                --                    --               --             41,800

Issuance of common stock in
conjunction with conversion of
debentures .....................             --                --                    --               --            643,399


Issuance of common stock for
settlement of related party debt
and accrued interest ...........             --                --                    --            --               650,000

Satisfaction of officers' notes
receivable and accrued interest
receivable in exchange for
common stock ...................          106,515              --                    --            --               --

Issuance of options for
non-employee compensation and
record unearned compensation ...             --                --                (391,392)         --               --

Amortization of unearned
compensation ...................             --                --               1,446,308          --             1,446,308

Amount due from related party
receivables, net of $25,000
allowance for doubtful
collections ....................             --             (83,343)                 --            --               (83,343)

Principal received on
stockholders' notes receivable .          596,111              --                    --            --               606,499

Accrue interest on officers'
notes receivable ...............           (1,040)             --                    --            --                (1,040)

Net loss for the year ended May
31, 2004 .......................             --                --                    --            (873,829)       (873,829)

                                        ----------------------------------------------------------------------------------
Balance at May 31, 2004 ........           $  --        $   (83,343)            $    --        $(26,401,592)    $(4,154,467)
</TABLE>

The accompanying notes are an integral part of these financial statements.


                                       F-5
<PAGE>

Continued

<TABLE>
<CAPTION>
                                                                                                        Additional
                                             Preferred  Stock                  Common  Stock             Paid-In
                                          Shares          Amount        Shares               Amount       Capital
                                   --------------------------------------------------------------------------------
<S>                                      <C>              <C>             <C>                <C>          <C>
Reduction of common stock
resulting from effects of
fractional shares due to reverse
stock split .....................            --              --              (446)              (1)               1

Discount on convertible notes
payable issued with warrants and
beneficial conversion features ..            --              --              --               --          3,441,640

Issuance of Series A,
non-participating preferred stock         165,000             165            --               --               --

Issuance of common stock in
conjunction with the conversion
of debentures ...................            --              --        33,800,017           33,800           (3,293)

Issuance of common stock and
options for non-employee
compensation ....................            --              --        36,000,000           36,000          569,800

Cancellation of shares of common
stock due to contractual
non-performance .................            --              --       (10,000,000)        (140,000)

Issuance of common stock for
acquisition of licenses .........            --              --        40,000,000           40,000          560,000

Cancellation of shares of common
stock due to return of unsold
licenses ........................            --              --       (40,000,000)        (560,000)

Issuance of common stock in
conjunction with the exercise of
options and related notes
receivables .....................            --              --        19,000,000           19,000           76,000

Principal received on
stockholders' notes .............            --              --              --               --               --

Write off uncollectible portion
of notes receivable .............            --              --              --               --               --

Services and cash advances to
related parties, net of
additional $74,000 allowance for
doubtful collections ............            --              --              --               --               --

Purchase assets from related
party ...........................            --              --              --               --               --

Amortization of unearned
compensation ....................            --              --              --               --               --

Net loss for the year ended May
31, 2005 ........................            --              --              --               --               --
                                      -----------     -----------     -----------      -----------      -----------
Balance at May 31, 2005 .........         165,000     $       165      87,707,721      $    87,707       26,265,708
                                      ===========     ===========     ===========      ===========      ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.


                                       F-6
<page>

(Continued from table above. First column repeated)

<TABLE>
<CAPTION>

                                          Officers'
                                             and             Related                                             Total
                                         Stockholders'        Party           Unearned         Accumulated    Stockholders'
                                         Receivables       Receivables      Compensation         Deficit        Deficit
                                         ---------------------------------------------------------------------------------
<C>                                         <C>               <C>             <c>                 <C>           <C>
Reduction of common stock
resulting from effects of
fractional shares due to reverse
stock split .....................             --                --                --                --                --

Discount on convertible notes
payable issued with warrants and
beneficial conversion features ..             --                --                --                --           3,441,640

Issuance of Series A,
non-participating preferred stock             --                --                --                --                 165

Issuance of common stock in
conjunction with the conversion
of debentures ...................             --                --                --                --              30,507

Issuance of common stock and
options for non-employee
compensation ....................             --                --            (590,800)             --              15,000

Cancellation of shares of common
stock due to contractual
non-performance .................             --                --             150,000              --                --

Issuance of common stock for
acquisition of licenses .........             --                --                --                --             600,000

Cancellation of shares of common
stock due to return of unsold
licenses ........................             --                --                --                --            (600,000)

Issuance of common stock in
conjunction with the exercise of
options and related notes
receivables .....................          (95,000)             --                --                --                --

Principal received on
stockholders' notes .............           20,000              --                --                --              20,000

Write off uncollectible portion
of notes receivable .............           75,000              --                --                --              75,000

Services and cash advances to
related parties, net of
additional $74,000 allowance for
doubtful collections ............             --            (414,790)             --                --            (414,790)

Purchase assets from related
party ...........................             --             311,083              --                --             311,083

Amortization of unearned
compensation ....................             --                --             424,133              --             424,133

Net loss for the year ended May
31, 2005 ........................             --                --                --          (3,032,518)       (3,032,518)
                                      ------------      ------------      ------------      ------------      ------------
Balance at May 31, 2005 .........     $       --        $   (187,050)     $    (16,667)     $(29,434,110)     $ (3,284,247)
                                      ============      ============      ============      ============      ============
</TABLE>

The accompany notes are an integral part of these financial statements.


                                       F-6
<page>

                                  Insynq, Inc.
                            Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                         For the Years Ended May 31,
                                                                                       -------------------------------
                                                                                          2005                2004
                                                                                       -----------         -----------
<S>                                                                                            <C>                 <C>
Cash flows from operating activities
    Net loss                                                                           $(3,032,518)        $  (873,829)
    Adjustments to reconcile net loss to net cash used in operating activities:
        Depreciation and amortization                                                       75,967             158,877
        Bad debts                                                                          201,168              53,674
        Amortization of unearned compensation                                              424,133           1,446,308
        Issuance of stock, options and warrants for services to non-employees               15,000             219,428
        Amortization of discounts related to convertible debentures                        969,106             184,085
        Gain on forgiveness and settlement of debts                                       (257,568)         (2,011,867)
        Loss on disposal of assets                                                          11,530                  --
        Asset impairment                                                                        --              19,500
        Capitalized interest on notes receivable                                                --              (7,253)
           Changes in operating assets and liabilities:
            Accounts receivable                                                            (59,005)            (28,583)
            Deposits and prepaid expenses                                                  (26,856)               (180)
            Prepaid licenses                                                               202,772                  --
            Accounts payable                                                                69,369              (6,248)
            Accrued liabilities                                                           (200,786)            462,109
            Customer deposits and other liabilities                                          8,482             (13,327)
                                                                                       -----------         -----------
               Net cash used in operating activities                                    (1,599,206)           (397,306)
                                                                                       -----------         -----------

Cash flows from investing activities
     Purchase of equipment                                                                      --             (29,178)
                                                                                       -----------         -----------
               Net cash used in investing activities                                            --             (29,178)
                                                                                       -----------         -----------

Cash flows from financing activities
    Proceeds from convertible notes payable                                              3,600,000                  --
    Payment on convertible notes payable                                                  (900,000)                 --
    Additional funds advanced to related parties                                          (488,789)            (98,981)
    Principal received on stockholders' notes receivable                                    20,000             596,111
    Deposit refund                                                                             657               1,292
    Proceeds from issuance of preferred stock                                                  165                  --
    Payments on capital lease obligations                                                   (1,519)            (43,558)
    Increase in deposits on credit cards                                                    (4,038)             (3,502)
    Payments on bank note payable                                                           (4,601)            (14,291)
    Additional funds from stockholders' notes receivable                                        --              10,388
    Proceeds from bank note payable                                                             --               6,325
                                                                                       -----------         -----------
               Net cash provided by financing activities                                 2,221,875             453,784
                                                                                       -----------         -----------

Net increase in cash                                                                       622,669              27,300

Cash at beginning of the year                                                               80,359              53,059
                                                                                       -----------         -----------
Cash at end of the year                                                                $   703,028         $    80,359
                                                                                       ===========         ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.


                                       F-7
<PAGE>
                                Insynq, Inc.
                          Notes To Financial Statements
                                  May 31, 2005

Note 1 - Business and Background

BUSINESS

Insynq, Inc. (the Company) is a Nevada corporation headquartered in Tacoma,
Washington USA. The Company is primarily an application hosting and managed
software service provider that provides server-based computing access and
services to customers who have decided to outsource all or part of their
information technology requirements. Customers pay a monthly fee for their
services and connect to the Company's server farm through a broadband
internet-enabled workstation. As of April 30, 2005, the Company also sells its
own proprietary accounting and financial quoting software applications.

BACKGROUND

On February 18, 2000, the Company merged with Xcel Management, Inc. (Xcel), a
non-reporting public shell company. The merger was accompanied by a
re-capitalization and was accounted for as a change in capital structure. On
August 3, 2000 Xcel completed a re-incorporation as a Delaware corporation and
changed its name to Insynq, Inc.

On July 25, 2002, the Board of Directors approved a re-incorporation merger of
the Company with its wholly owned subsidiary, Insynq, Inc., a Nevada
corporation, and effectuated a 100 to 1 common stock exchange of the Company's
currently issued and outstanding shares of common stock. The re-incorporation,
which was effective December 23, 2002, resulted in the exchange of 59,013,393
common shares of the terminating entity, Insynq, Inc. - Delaware, for 590,134
common shares of the surviving entity, Insynq, Inc. - Nevada.

On July 16, 2004, the Board of Directors approved a 1 for 50 reverse split of
the Company's authorized common stock. Accordingly, the date of record and the
effective date will be August 2, 2004. Par value will remain unchanged at $.001
per share. The effect of the reverse split reduced the number of authorized
shares from 500,000,000 to 10,000,000 and reduced the number of outstanding and
issued shares of common stock from 445,384,987 shares to 8,907,700 shares.

In addition, at the same board meeting on July 16, 2004, the Directors adopted,
by unanimous consent, to approve the increase of the number of authorized shares
of common stock from 10 million shares to 2 billion shares. On August 2, 2004,
in lieu of a meeting of the stockholders, written consents were received from
stockholders who were entitled to vote a majority of the common stock and the
Series A Preferred Stock, which then approved the July 16, 2004 actions of the
Board of Directors.

All shares of common stock and per share amounts in the accompanying financial
statements and notes to financial statements have been retroactively restated to
reflect this August 2, 2004 transaction.

Note 2 - Basis of Presentation and 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 has two sources of revenue, described as follows:

A.       Application Service Provider

The Company's principal source of revenue is generated from application hosting,
managed software and related types of services. Application hosting and managed
services revenues are generated through a variety of contractual arrangements
directly with customers. The Company sells its services directly to customers
through annual service subscriptions or month-to-month service subscriptions.


                                      F-8
<PAGE>

Subscription arrangements include monthly subscriber fees, application hosting
fees, user setup fees and a last month deposit. Revenue is recognized when
earned or over the period of the contractual arrangement. Customer discounts, if
any, are recorded as a reduction of revenue at the time of sale.

B. Sales of Software and Licensing Fees to Value Added Reseller Dealers ("VARS")

The Company's second source of revenue is generated from the sales of the
Company's software applications and from licensing fees billed to the Company's
VARS.

Sales of the Company's software products are recognized at the time of sale to
the end-user. The Company generally uses an e-commerce website to procure
payment by credit card, and provides the software by magnetic media (disc) or
allows the end-user to download it directly to their computer.

The Company's standard agreement for the sale of its software products limits
its liability to the replacement of the magnetic media. The Company has not set
up an allowance for future product warranty because the Company expects that any
such amounts will be immaterial. Any future costs associated with warranty will
be charged to the period in which the obligation is incurred. Discounts, if any,
are recorded as a reduction of revenue at the time of sale.

VARS enter into a licensing agreement that allows them to resell to an end user
either: (a.) a custom suite of enterprise accounting and management software or
(b.) a standard off-the-shelf accounting software application. VARS sign an
agreement with the Company for a period, generally one year, for a predetermined
fixed licensing fee. The licensing fee revenue is recognized ratably over the
term of agreement. Once an agreement is executed, the VARS are then entitled to
resell or license the Company's software under their proprietary name. The VARS
will purchase the Company's software (usually at wholesale prices) and customize
the software to the end users' specifications. The Company recognizes revenue
for the sale of its software to the VARS at the time of sale.

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 disclosures 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 previously reported amounts to
conform to the Company's current year presentation. Effective May 31, 2004, the
Company elected to reclassify related party receivables totaling $83,343 from
current assets to stockholders' equity to conform with this year's Balance
Sheets. The effects of this reclassification reduced previously reported current
assets and total assets from $216,075 and $543,053, respectively, to $132,732
and $459,710, respectively. The effect of this reclassification also increased
the working capital deficit as previously reported from $4,398,102 to $4,481,445
and the total stockholders' deficit as previously reported from $4,071,124 to
$4,154,467.

Also, as a result of the reclassifying of the related party receivables from
current assets to stockholders' deficit, the Company elected to reclassify this
asset on the Statements of Cash Flows. The effect of this reclassification
reduced previously reported net cash used in operating activities from $496,287
to $397,306, and, reduced cash flows from financing activities from $552,765 to
$453,784. There was no effect on previously reported net loss or net loss per
share of common stock for the year ended May 31, 2004.

EQUIPMENT

Equipment is recorded at cost. The cost of maintenance and repairs of equipment
is charged to operating expense when incurred. Depreciation is determined based
upon the assets' estimated useful lives and is calculated on a straight-line
basis when the asset is placed in service. When the Company sells, disposes of
or retires equipment, the related gains or losses are included in operating
results. The following table summarizes the Company's asset


                                      F-9
<PAGE>

classifications as of May 31:



                              Useful Lives            2005            2004
                              --------------    -------------    -------------
  Computer hardware            5 Years          $    516,143     $    603,815
  Equipment                    5 Years               149,157          158,762
  Software                     3 Years                50,825           85,178
  Furniture and fixtures       7 Years                44,680           81,186
                                                -------------    -------------
                                                     760,805          928,941
                                                    (727,659)        (813,678)
                                                -------------    -------------
  Equipment, net                                $     33,146     $    115,263
                                                =============    =============

Depreciation expense for the years ended May 31, 2005 and 2004 was $70,587 and
$158,877, respectively.

INTANGIBLE ASSETS

In accordance with Statement of Financial Accounting Standards ("SFAS") No.86,
"Accounting Costs of Computer Software to be Sold, Leased or Otherwise
Marketed," the Company capitalizes software and product rights (intellectual
property) as allocated within the purchase agreements. Capitalized costs are
recorded at the lower of cost, or net realizable value and are amortized on a
straight-line basis over five years, the estimated economic life of the
products.

Trademarks - Trademarks are recorded at cost and are amortized over fifteen
years.

The following table summarizes the classifications of the intangible assets:

                                  Useful Lives          2005            2004
                                ----------------   -------------    -----------
  Intellectual property             5 Years        $    450,000     $   130,000
  Trademarks                       15 Years               8,381              --
                                                   -------------    -----------
                                                        458,381         130,000
  Less accumulated amortization                        (135,380)       (130,000)
                                                   -------------    -----------
  Intangible assets, net                                323,001      $      -0-
                                                   =============    ===========

Amortization expense for the years ended May 31, 2005 and 2004 was $5,380 and $
-0-, respectively.

The following is a schedule by years of the future estimated minimum
amortization expense, which will be recognized, in the Company's financial
statements subsequent to fiscal year 2005:

   Fiscal years ended May 31:                                  Amount
   ----------------------------------------------------     --------------
   2006                                                     $      64,560
   2007                                                            64,560
   2008                                                            64,560
   2009                                                            64,560
   2010 and thereafter                                             64,761
                                                            -------------
                                                            $     323,001
                                                            =============


RESEARCH AND DEVELOPMENT COSTS

Research and development costs are expensed in the period incurred.

ADVERTISING EXPENSE


                                      F-10
<PAGE>

Advertising costs are expensed in the period incurred. For the years ended May
31, 2005 and 2004, advertising costs totaled $45,866 and $45,906, respectively.

CONCENTRATIONS OF CREDIT RISK

The Company maintains its cash in bank deposit accounts, which, at times may
exceed federally insured limits. The Company has not experienced any losses in
such accounts and believes it is not exposed to any significant credit risk on
cash and cash equivalents.

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, 2005,
approximately thirty-one percent (31%) or $ 357,600 of revenues was from eleven
customers, of which, two are related to a director and officer of the Company.
The two related party businesses comprised approximately 5.0%, or $58,300, and
7.1%, or $87,000, of total company revenues for the years ended May 31, 2005 and
2004, respectively.

The Company has nine vendor relationships that are critical to the day-to-day
operations. 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. The Company is not in compliance with the
proper registration and licensing of software applications and products from
certain of these vendors that are critical to support the customer base and its
own internal operations. Should the Company not resolve these compliance issues
with these certain vendors, and due to the vital and critical nature of these
licenses to support operations, it may be forced to cease operations and/or file
bankruptcy. (See also Note 3.)

FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments consist principally of cash, accounts and related party
receivables, accounts payable, accrued liabilities, and short and long-term debt
obligations. The carrying amounts of such financial instruments in the
accompanying balance sheets approximate their fair values due to their
relatively short-term nature. It is management's opinion that the Company is not
exposed to any significant currency or credit risks arising from these financial
instruments.

STOCK-BASED COMPENSATION

The Company accounts for stock based employee compensation arrangements in
accordance with the provisions of Accounting Principles Board ("APB") Opinion
No. 25 - "Accounting for Stock Issued to Employees"' and the related
interpretations, and complies with the disclosure provisions of SFAS No. 148 - "
Accounting for Stock-Based Compensation". Under APB No. 25, compensation expense
is based on the difference, if any, on the date the number of shares receivable
is determined, between the estimated fair value of our stock and the exercise
price of the options to purchase that stock.

The Company applies the provisions of SFAS No. 123 for stock-based awards to
those entities other than employees. Stock-based compensation expense for these
awards is calculated over 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 or net loss.

On February 11, 2005, two officers of the Company were granted a total of
14,000,000 options to purchase shares of common stock at an exercise price
$0.0061 per share, the market price of the Company stock at the close of trading
that day. The value of these two grants was $85,400. The pro-forma impact for
the year ended May 31, 2005 would increase the Company's reported net loss of
$3,032,518 to a pro-forma net loss of $3,117,918. Both the reported and
pro-forma net loss per share of common stock for the year ended May 31, 2005 is
$0.05 per share.

There was no pro-forma impact for the year ended May 31, 2004.


                                      F-11
<PAGE>

LOSS PER COMMON SHARE

Basic loss per common share is computed by dividing the net loss applicable to
the common stockholders by the weighted average number of shares of outstanding
common stock during the period. Diluted loss per share is computed by dividing
the net loss by the weighted average number of common shares including the
dilutive effect of common share equivalents then outstanding. For the years
ended May 31, 2005 and 2004, common stock equivalents are not included in the
computation of diluted net loss per common share because the effect would be
anti-dilutive.

BUSINESS SEGMENTS

The Company operates in one segment as an Application Service Provider.
Therefore, segment information is not presented.

RECENT AUTHORITATIVE ACCOUNTING PRONOUNCEMENTS

In December 2004, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 153, " Exchanges of
Non-Monetary Assets, an Amendment of APB No. 29". This statement amends APB
Opinion No. 29, "Accounting for Nonmonetary Transactions". Earlier guidance had
been based on the principle that exchanges of nonmonetary assets should be based
on the fair value of the assets exchanged and APB No. 29 included certain
exceptions to this principle. However, FASB 153 eliminated the specific
exceptions for nonmonetary exchanges with a general exception rule for all
exchanges of nonmonetary assets that do not have commercial and economic
substance. A nonmonetary exchange has commercial substance only if the future
cash flows of the entity are expected to change significantly as a result of the
exchange. This statement is effective for nonmonetary exchanges occurring in
fiscal periods beginning after June 15, 2005. The implementation of this SFAS
No. 153 is not expected to have a material impact on the Company's financial
statement presentation or its disclosures.

In December 2004, the FASB issued SFAS No. 123 (R), "Share-Based Payment". SFAS
No. 123 (R) revises SFAS No. 123, "Accounting for Stock-Based Compensation" and
supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees". SFAS
No. 123 (R) focuses primarily on the accounting for transactions in which an
entity obtains employee services in share-based payment transactions. SFAS No.
123 (R) requires companies to recognize in the statement of operations the cost
of employee services received in exchange for awards of equity instruments based
on the grant-date fair value of those awards (with limited exceptions). SFAS No.
123 (R) is effective as of the first interim or annual reporting period of the
first fiscal; year that begins after June 15, 2005 for non-small business
issuers and after December 15, 2005 for small business issuers.

Accordingly, the Company will adopt SFAS No. 123 (R) in its quarter ending
February 28, 2006. The Company is currently evaluating the provisions of SFAS
No. 123 (R) and has not yet determined the impact, if any, that SFAS NO 123 (R)
will have on its financial statement presentation or disclosures.

Note 3 - Going Concern and Management's Plans

The Company's financial statements as of and for the year ended May 31, 2005
have been prepared on a going concern basis, which contemplates the realization
of assets and the settlement of liabilities and commitments in the normal course
of business. For the year ended May 31, 2005, the Company had a net loss of
$3,032,518 and a negative cash flow from operations of $1,599,206. The Company
had a working capital deficit of $3,680,744 and a stockholders' deficit of
$3,284,247 at May 31, 2005. The Company's working capital deficit as of May 31,
2005 may not enable it to meet certain financial objectives as presently
structured. The accompanying financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

As of May 31, 2005 and through August 24, 2005, the Company is not in compliance
with the proper registration and licensing of certain software applications and
products critical to support the customer base and its own internal operations.
The Company has initiated negotiations with these software vendors in an effort
to remedy this deficiency by either offering to purchase or lease/rent the
licenses to meet the licensing requirements. Should the Company not reach a
satisfactory agreement with these vendors, and due to the vital and critical
nature of these licenses to support its services, sales and operations it may be
forced to cease operations and/or to file bankruptcy.

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 capital to finance its operations and may seek such additional
funding through public or private equity or new debt. There can be no assurance
that such additional funding, if any, will be available on acceptable terms. The
Company's continued existence as a going concern is ultimately dependent upon
its ability to secure additional financing.

                                      F-12
<PAGE>

Note 4 - Related Party Transactions

As of May 31, 2005, the Company has extended credit and or loaned money to four
business entities that are directly related to one or more officers/stockholders
of the Company and since the amounts due from the related parties are uncertain
as to the timing of repayment they are recorded in the stockholders' deficit
section in the accompanying balance sheets. The following discusses the
activities and balances due from the respective entities:

o    Two of the businesses were related to a corporate officer, stockholder and
     director. Insynq provides these two businesses monthly application hosting
     services and other related management services. At May 31, 2005, the
     balance due from these two companies aggregated $100,311, and an allowance
     for past due collections of $99,000 was set up on these accounts. During
     the years ended May 31, 2005 and 2004, the Company billed these related
     businesses approximately $58,300 and $137,700, respectively. In fiscal
     2004, inclusive of the total related entity billings, approximately $50,745
     was billed under mutual agreement to co-share certain marketing and
     advertising expenses incurred by Insynq.

o    The third business is partially owned by two officers and four stockholders
     of Insynq. Insynq advanced money and paid certain expenses on behalf of
     this business aggregating $379,641 and received reimbursements totaling
     $68,558. On April 30, 2005, the net balance due Insynq, or $311,083, was
     credited toward the purchase of the intellectual property owned by this
     business and is included in the accompanying balance sheets as intellectual
     property. The Company acquired the intellectual property for less than the
     cost basis held by the related party. Accordingly, Insynq now owns all the
     rights, codes, and trademarks of a family of proprietary accounting and
     management software applications, and, a family of financial quoting
     software applications. Net revenues from the acquisition of these
     applications approximated $24,600 in May 2005, Insynq's first month of
     sales. At May 31, 2005, $1,779 is due to Insynq from this entity for net
     cash transactions paid or received on behalf of the related party. (See
     Note 9 regarding a terminated related party prepaid license and hosting
     agreement.)

o    The fourth business is also partially owned by the same two officers of
     Insynq as noted in the third business discussion above. As of May 31, 2005,
     Insynq has advanced in the form of cash, paid expenses and administrative
     and operational support a total of $194,567 and has received reimbursements
     totaling $10,607. The net balance of $183,960 is due the Company and does
     not bear interest and is unsecured. Insynq has also charged this related
     entity $2,200 per month for administrative support and facilities from
     August 1, 2004 through May 31, 2005, for a total of $22,000. This amount is
     recorded as other income in the accompanying financial statements.

In addition, in June 2005 Insynq and this related entity entered into a five
year agreement whereby Insynq was awarded an application management services
agreement in exchange for supplying business technology, IT management and
communications infrastructure. As of August 24, 2005 Insynq has advanced
approximately $266,000.

Note 5 - Notes Receivable - Stockholders and Officers

STOCKHOLDERS

Between August 5, 2003, and December 1, 2003, the Company executed six
consulting agreements that granted a total of 1,268,518 options to purchase
shares of common stock within thirty to ninety days of each respective
agreement. The fair value of these options was estimated at $391,392 on the
grant dates, using the Black-Scholes option pricing model and amortized to
consulting expense over the terms of the each respective agreement. Amortization
for the year ended May 31, 2004 was $391,392. The options were exercised into
1,268,518 shares of common stock on August 5, 2003, September 24, 2003 and
December 1, 2003. Upon exercise of the respective options, the following secured
promissory notes receivable, aggregating $636,111, with interest accruing at 8%
per annum, were executed:


                                      F-13
<PAGE>

                             Date of Issuance                 Amount
                      --------------------------------      ----------
                      August 5, 2003                        $  236,111
                      September 24, 2003                       150,000
                      December 1, 2003                         250,000
                                                            ----------
                           Total                            $  636,111
                                                            ==========

In March 2004, the Company wrote down the December 1, 2003 note receivable by
$40,000 because this portion of the total amount was deemed not collectible.
Accordingly, the Company recognized a loss of $40,000 and recorded it as a
reduction to stockholders' notes receivable and paid in capital. Total notes
receivable recognized, net of the uncollectible amount of $40,000 was $596,111.
This amount was received by the Company in cash during the year ended May 31,
2004.

OFFICERS

In January 2002, the Company entered into two promissory notes totaling $90,000
with two of its officers in conjunction with the exercise of non-qualified class
A common stock options. Each note recognized interest at 12% per annum, payable
on or before June 2003 and was secured with shares of common stock. The notes
receivable, plus related accrued interest of $16,515, had been recorded in the
Statements of Stockholders' Deficit. On June 18, 2003 the two promissory notes
and accrued interest, amounting to $106,515, were exchanged for a total of
15,216 shares of common stock held by the officers, which were cancelled upon
receipt. The common stock was valued at market, based on the closing price of
the Company's common stock, on the date of the exchange agreement, which was
$7.00 per share.

Note 6 - Notes Payable

The Company has five notes payable, one with a bank and four with private
parties. The private party notes, all of which are in default, plus the accrued
interest, were generally due within one year from the date of issuance or on
demand. The following describes the general terms and current conditions of the
notes:

<TABLE>
<CAPTION>

                                                                      May 31, 2005            May 31, 2004
                                                                    ---------------         ---------------
<S>                                                                 <C>                     <C>
     Note payable to bank, $15,000 revolving line of                $         4,734         $         9,336
     credit, bearing interest prime plus 12.00% and
     personally guaranteed by an officer. Prime rate at
     May 31, 2005 was 6.0%. On June 7, 2005, this note,
     plus accrued interest, was paid off and the account
     was closed.

     Four notes payable to private parties, all past due,
     bearing default interest ranging from 10% to 21%,
     and are unsecured.                                                     116,500                 116,500
                                                                    ---------------         ---------------
                                                                    $       121,234         $       125,836
                                                                    ===============         ===============
Note 7 - Accrued Liabilities

Accrued liabilities consist of the following at:

                                                                     May 31, 2005             May 31, 2004
                                                                    ---------------         ---------------
     Salaries and benefits                                          $       302,902         $       464,387
     Taxes
          Payroll                                                             8,588                 338,176
          Business                                                           33,397                  38,499
          Penalties and interest                                            215,058                 357,875
     Interest                                                             1,011,503                 671,508
     Licenses, consulting and other                                         581,452                 668,074
                                                                    ---------------         ---------------
                                                                    $     2,152,900         $     2,538,519
                                                                    ===============         ===============
</TABLE>


                                      F-14
<PAGE>

In August 2004, the Company paid $340,000 to settle the entire payroll tax
deficiency pertaining to four Federal Tax Lien periods spanning the years 2000
and 2001. Upon receipt of the funds, the Internal Revenue Service (IRS) abated
certain penalties, approximating $111,558, and executed a Conditional Commitment
to Withdraw Notice of Federal Tax Lien(s). On July 11, 2005 the Company entered
into an installment agreement with the IRS to pay the remaining obligation, made
up of unabated penalties and accrued interest, approximating $215,000. Terms
require the Company to pay no less than $5,000 per month, including interest,
over the next 50 months or until the balance is zero. The IRS has a lien on
Company assets.

A lien for approximately $28,000 was filed several years ago by a State for
prior years' income taxes assessed to the predecessor company of Insynq, Inc.
The assessment was disputed and the Company filed amended returns to correct
this deficiency. As of the date of this report, the State has not responded to
the amended returns, thereby, neither granting approval nor denying the filing
of the amended returns. This obligation is recorded under business taxes.

Note 8 - Secured Convertible Securities

CONVERTIBLE DEBENTURES

Between June 2001 and March 2003, the Company issued a total of $2,050,000 of
secured convertible debentures, under three separate private financing
transactions with four investor groups (See also Convertible Notes below). Terms
of each of the three private financing transactions, are essentially the same:
the debentures are convertible into shares of common stock at the lesser of (i)
$15 per share and (ii) the average of the lowest three intraday trading prices
in the twenty-day trading period immediately preceding the notice to convert,
discounted by sixty percent (60%). Pursuant to an amendment in June 2004, the
due date of the debentures was extended for an additional two years until June
25, 2006. As of May 31, 2005, the Company owes $1,300,045 on the convertible
debentures, and $924,319 of accrued interest related to the debentures. Accrued
interest is included in accrued liabilities in the accompanying balance sheets.

For the years ended May 31, 2005 and 2004, the Company issued 33,80,017 and
3,895,618 shares of common stock in the redemption of $30,507 and $643,399 of
debentures, respectively.

For the years ended May 31, 2005 and 2004, the Company recognized as interest
expense from the amortization of discounts on the convertible debentures
totaling $ -0- and $184,085, respectively. The discounts resulted from the fair
value of the warrants issued with the convertible debentures, as determined
using the Black-Scholes pricing model, and the intrinsic value of the beneficial
conversion features.

Warrants were granted to the investors in conjunction with the convertible
debenture transactions. Investors may exercise each warrant at $12.50 per share.
As of May 31, 2005, 104,000 of these warrants were outstanding and were
unexercised with an amended expiration period until June 25, 2009 (See Note 13).

As of May 31, 2005, the Company is in default on these securities because of
non-compliance with certain terms and conditions underlying the debentures.
Therefore, these securities are classified as a current liability.

CONVERTIBLE NOTES PAYABLE

The Company entered into two separate Securities Purchase Agreements during
fiscal year 2005, one on February 28, 2005 for $2,700,000 and one on June 25,
2004 for $900,000. The June 2004 transaction was paid off with proceeds from the
February 2005 transaction. The following discussion provides details of each
agreement:

         I. On February 28, 2005, the Company entered into a $2,700,000
         Securities Purchase Agreement with four investor groups, who are also
         holders of the Company's convertible debentures. Under terms of this
         agreement, the Company:

         (a.) Issued four 8% callable secured convertible notes aggregating
         $2,700,000, and
         (b.) Granted 5,400,000 warrants with an exercise price of $0.007 per
         share, and
         (c.) May be exercised from time to time until February 28, 2010 (See
         Note 13).


                                      F-15
<PAGE>

         The notes are due three years form the date of issuance, bear interest
         at 8% per annum, payable quarterly in cash. No interest will be charged
         in any month in which the reported intraday trading price is greater
         than 125% of the initial market price ($0.005) or $0.0063 for each
         trading day of that month. The notes or portions of these notes are
         immediately convertible into shares of the Company's common stock
         during the term. The conversion price is equal to the lesser of: (a.)
         $0.0075, the fixed conversion price, and, (b.) the average of the
         lowest three intraday trading prices during the twenty days immediately
         prior to the conversion date multiplied by 40%, the applicable
         conversion percentage.

         The Company recorded a discount on the convertible notes payable
         totaling $2,700,000, an amount equal to the fair value of the warrants,
         as determined by applying the Black-Scholes pricing model, and the
         intrinsic value of the beneficial conversion feature, which is the
         difference between the conversion price and the fair market value of
         the common stock on the date of issuance. The amount attributable to
         the beneficial conversion feature and warrants were recorded as a
         discount on the debt and accretes over a thirty-six month period as
         interest expense in accordance with paragraph 19 of Emerging Issues
         Task Force ("EITF") No. 00-27 and APB No. 14, Accounting for
         Convertible Debt and Debt Issued with Stock Purchase Warrants.

         For the year ended May 31, 2005, the Company recognized as interest
         expense, discounts on the convertible notes payable totaling $227,466.

         In the event of default under the terms of these notes, the investors
         have the right to redeem the notes at 130% of the outstanding principal
         balance, plus accrued and unpaid interest, plus default interest and
         other penalty payments that may be due. The default interest is at 15%
         per annum, if any amounts due under the notes are not paid when due. At
         the option of the investors, such redemption payments may be made in
         shares of common stock. If certain conditions are satisfied, the
         Company may elect to prepay the notes before the scheduled maturity at
         a premium. The premium is 150% of the outstanding principal balance
         plus accrued and unpaid interest, plus default interest and other
         penalty payments due, depending on when the prepayments occurs. Because
         the Company is not in compliance with certain terms and conditions
         underlying this agreement, the principal amount due is reported in the
         balance sheet as a currently liability.

         II. As a condition of the above financing agreement, the Company paid
         off the principal balance of four 12% callable secured convertible
         notes totaling $900,000 issued on June 25, 2004, also to the same four
         investors. In addition to the $900,000 principal balance paid, the
         Company paid accrued interest of $38,292, and, an early call premium of
         $281,488, which is recorded as interest expense in the accompanying
         financial statements.

         At the time of issuance, the Company recorded a discount on the
         $900,000 convertible notes payable which totaled $741,640, an amount
         equal to the fair value of the warrants, determined by applying the
         Black-Scholes pricing model, and the intrinsic value of the beneficial
         conversion feature, which was the difference between the conversion
         price and the fair market value of the common stock on the date of
         issuance. The amount attributable to the beneficial conversion feature
         and warrants were recorded as a discount on the debt and accreted over
         a twenty-four month period as interest expense in accordance with EITF
         No. 00-27 and APB No. 14. The Company recognized the full discount of
         $741,640 in fiscal 2005 as interest expense because of the early payoff
         of this security on February 28, 2005.

         In conjunction with the issuance of the $900,000 convertible notes
         payable, the Company granted the note holders a total of 54,000
         warrants to purchase common stock at an exercise price of $0.05 per
         share, exercisable through June 25, 2011 (See Note 13). These warrants
         have not been exercised as of May 31, 2005 and as of August 24, 2005.

The Company granted the investors of the convertible securities a security
interest in all corporate assets.

Note 9 - Common Stock and Agreements

On July 16, 2004, the Board of Directors approved a 1 for 50 reverse split of
the Company's authorized common stock. The date of record and the effective date
for the split was August 2, 2004. In conjunction with the reverse split, the


                                      F-16
<PAGE>

Company reduced the number of authorized shares from 500,000,000 to 10,000,000.
Par value remained at $.001 per share. As a result of the reverse split, the
number of outstanding shares of common stock was reduced from 445,384,987 to
8,907,700. Upon the conversion, all resulting fractional shares were rounded up
to the nearest whole share. In addition, the Company cancelled all of the stock
of the shareholders holding nine or less shares of post split stock.

On July 16, 2004, the Board of Directors adopted, by unanimous consent, to
approve the increase in the number of authorized shares of common stock from 10
million to 2 billion shares. On August 2, 2004, the Company received the written
consent in lieu of a meeting of stockholders from stockholders who were entitled
to vote a majority of the common stock and Series A Preferred Stock, which
approved the July 16, 2004 action of the Board of Directors.

CONSULTING AGREEMENTS

In October 2004, the Company entered into seven consulting agreements with
independent financial and business advisors, in which the consultants were to
provide business expertise, advice and negotiations in strategic corporate
planning, private financing, mergers and acquisitions, and such other business
areas as deemed necessary by Company management. Under the terms of the
agreements, the consultants received 21,000,000 shares of common stock from the
Company's 2002 Directors, Officers, and Consultants Stock Option Plan. The stock
was valued at the closing market price of $0.015 per share on the date of the
execution of the agreements. The total value of the services was $315,000: (a.)
$300,000 was recorded as unearned compensation in the stockholders' equity
section and was being ratably amortized over one year, per the terms of six
agreements, and (b.) $15,000 was deemed earned in October 2004

In December 2004, the Company agreed to accept the return of 10 million shares
of common stock related to three consulting agreements because of contractual
nonperformance. The effective date for canceling the issuance of this stock was
December 14, 2004. The ten million shares were returned and subsequently
canceled during fiscal year 2006. Accordingly, the Company reversed the
unamortized portion of the original $150,000 consultants' unearned compensation,
and reduced: (a.) the outstanding number of shares of common stock by 10 million
shares, (b.) common stock by $10,000, and (c.) additional paid-in capital by
$140,000.

In conjunction with the consulting agreements, four advisors were granted 19
million options to purchase common stock at an exercise price of $.005 per
share, with an exercise period until November 2, 2004. The options were valued
using the Black-Scholes pricing model resulting in a total value of
approximately $215,800, which was recorded as unearned compensation and was to
be amortized over one year, the term of each respective consulting agreement.
The options were exercised on October 4, 2004, and, in conjunction with the
exercise, the Company issued 19,000,000 shares of common stock and executed four
promissory notes for a total of $95,000. The notes were unsecured, did not bear
interest and were due on February 28, 2005.

On February 10, 2005, the Company received $20,000 in full consideration of the
consultants' $95,000 notes receivable. As of the date of the cash receipt, the
Company wrote off the remaining $75,000 to bad debts as the balance was deemed
uncollectible.

In January 2005, the Company entered into an agreement with an independent
consultant. Under the terms of the agreement, the consultant received 15,000,000
shares of common stock from the Company's 2002 Directors, Officers, and
Consultants Stock Option, Stock Warrant and Stock Award Plan. The stock was
valued at the closing market price of $0.005 per share on the date of the
execution of the agreement for a total value of $75,000. The $75,000 is being
amortized over six months, the term of the agreement. At May 31, 2005, the
Company has recorded $58,333 as consulting expense and the balance of the
$16,667 is recorded as unearned compensation in the stockholders' equity section
of the accompanying financial statements.

PREPAID LICENSES AND A NON-EXCLUSIVE MASTER LICENSE APPLICATION HOSTING
AGREEMENT

On October 4, 2004, the Board of Directors authorized the issuance of 40,000,000
shares of common stock to a company partially owned by two officers of Insynq,
Inc. for 1,500 licenses to either resell and/or rent certain proprietary
accounting and management software owned by the related entity. The fair value
of this transaction was $600,000 and was classified as prepaid licenses in the
balance sheets. The stock was valued at the market price, $0.015 per share,


                                      F-17
<PAGE>
of the Company's common stock at the close of business on October 4, 2004. In
addition to the purchase of the licenses, the related party granted Insynq a
non-exclusive master license application hosting agreement to host this
internet-based accounting software program. However, on April 10, 2005, by
mutual agreement between both related parties, the 40 million shares issued to
the related party were returned to Insynq and subsequently cancelled during the
fiscal year 2006. The licensing agreement was voided and Insynq returned all
prepaid licenses. There was no impact on the financial statements as of and for
the year ended May 31, 2005. (See also Note 4.)

Note 10 - 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 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.

Note 11 - Preferred Stock

The Board approved and authorized in its July 16, 2004 meeting, the designation
of 1,000,000 shares of "Series A, Non-Participating Preferred Stock" as part of
the authorized 10,000,000 preferred shares. The par value of this series of
preferred stock is $0.001 per share, with each share having 1,000 votes on all
matters upon which the shareholders are entitled to vote. The Board then issued
165,000 shares of this designated preferred stock in equal portions to its three
corporate officers.

Note 12 - Incentive Plans

As of May 31, 2005, the Company's Board of Directors have adopted three
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 and
consultants. At the adoption of the Plan, the Company set aside 3,335 shares of
common stock. On November 19, 2001, the stockholders approved an amendment to
the Plan, which would set aside an additional 3,000 shares of common stock for a
total of 6,335 shares of common stock, which may be issued upon the exercise of
granted options. As of May 31, 2005 the LTIP had 2,895 options available for
issuance and 1,860 unexercised and fully vested granted options.

2000 EXECUTIVE LONG TERM INCENTIVE PLAN (EXECUTIVE LTIP).

The Executive LTIP provides for the issuance of incentive and non-qualified
stock options, appreciation rights and restricted stock to executive officers of
the Company. The Company originally set aside 1,080 shares of Class A common
stock under this Plan, of which 1,000 shares were granted in fiscal 2000 and
exercised in fiscal 2002. As of May 31, 2005 the Executive LTIP had 80 shares of
Class A common shares available for issuance and no unexercised options.

2002 DIRECTORS, OFFICERS AND CONSULTANTS STOCK OPTION, STOCK WARRANT AND STOCK
AWARD PLAN (2002 SP)

On July 25, 2002, the Board of Directors adopted a third incentive plan, the
2002 Directors, Officers and Consultants Stock Option, Stock Warrant and Stock
Award Plan (2002 SP). The 2002 SP provides for the issuance of incentive and
non-qualified deferred stock incentives to certain executives, directors and key
employees of the Company who contribute significantly to the long-term
performance and growth of the Company. The Company may make awards in the form
of options, warrants, restricted common stock, convertible preferred stock or
unrestricted common or convertible preferred stock and other awards, or any
combination thereof. The Company originally set aside 320,000 shares of common
stock under this plan at its adoption and, in fiscal 2005 and 2004, set aside an
additional 79,799,244 and 1,780,000 shares, respectively. A historical summary
of the 2002 Plan is as follows:


                                      F-18
<PAGE>

<TABLE>
<CAPTION>
                                    Plan Summary          NET TRANSACTIONS FOR YEARS ENDED MAY 31,
                                    ------------       ---------------------------------------------
     Security Transactions                                2005              2004              2003
     ------------------------        ----------        ----------        ----------        ----------
<S>                                  <C>               <C>                <C>                 <C>
     Shares authorized               81,899,244        79,799,244         1,780,000           320,000
                                     ----------        ----------        ----------        ----------

     Stock subscribed                   120,000                --           120,000                --
     Warrants granted,                    6,000                --                --             6,000
     unexercised
     Options granted,                14,009,500        14,000,000                --             9,500
     unexercised
     Stock issued                    36,079,214        36,000,000            27,000            52,214
     Option exercised                20,583,530        19,000,000         1,583,530                --
     Warrants exercised                 101,000                --                --           101,000
                                     ----------        ----------        ----------        ----------
                                     70,899,244        69,000,000         1,730,530           174,714
                                     ----------        ----------        ----------        ----------
     Stock returned                  10,000,000        10,000,000                --                --
     Warrants cancelled                   6,000                --             6,000                --
                                     ----------        ----------        ----------        ----------
                                     60,899,244        59,000,000         1,724,530           174,714
                                     ----------        ----------        ----------        ----------
     Net shares available
     for issuance at year end        21,000,000        20,799,244            55,470           145,286
                                     ==========        ==========        ==========        ==========
</TABLE>

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

During the years ended May 31, 2005 and 2004, the Company recorded unearned
service compensation totaling $215,800 and $391,392, respectively, for the fair
value of options granted to consultants as a reduction of stockholders' equity
in the accompanying financial statements. Such amount was amortized ratably over
the service periods. The fair value of options granted under the Company's stock
option plans during the years ended May 31, 2005 and 2004 was estimated on the
date of grant, using the Black-Scholes pricing model with the following
assumptions:

<TABLE>
<CAPTION>
                                                                       2005               2004
                                                                  ---------------     --------------
<S>                                                                   <C>                 <C>
         Weighted average of expected risk-free interest rates        3.85%               3.85%
         Expected years from vest date to exercise date               3 - 10             3 - 10
         Expected stock volatility                                   304.74%             206.98%
         Expected dividend yield                                        0%                 0%
</TABLE>

The following table is a summary of Insynq's stock option transactions as of
May 31:

<TABLE>
<CAPTION>

                                                             2005                                2004
                                               ----------------------------------   --------------------------------
                                                                Weighted Average                       Weighted
                                                                 Exercise Price                         Average
                 Activity                        Options                              Options       Exercise Price
-------------------------------------------    -------------    -----------------   ------------    ----------------
<S>                                             <C>            <C>               <C>                 <C>
Outstanding at May 31                                11,447     $   132.50              11,724           $ 196.00
Options granted                                  33,000,000            .01           1,583,530                .50
Options exercised                               (19,000,000)           .01          (1,583,530)               .50
Options forfeited                                       (88)         5,423                (277)          2,824.00
                                               -------------    -----------------   ------------    ----------------
Balance at May 31                                14,011,360            .08              11,447             132.50
Options exercisable                              14,011,360            .08              11,447             132.50

Options available for grant                      21,002,975                            203,644
</TABLE>


                                      F-19
<PAGE>

The following table summarizes information about the Company's outstanding stock
options at May 31, 2005:


<TABLE>
<CAPTION>
                     Options Outstanding Options Exercisable
                     ---------------------------------------
                                                                       Weighted
                                                   Weighted             Average                             Weighted
         Range of                                   Average            Remaining                             Average
         Exercise                  Number          Exercise           Contractual         Number            Exercise
          Prices                Outstanding          Price               Life           Exercisable           Price
---------------------------     -------------     ------------        ------------     --------------      ------------

<S>                               <C>                  <C>                   <C>          <C>                <C>
       $  0.00 - $1,500.00        14,011,125           $  .02                9.71         14,011,125            $  .02
       1,500.01 - 3,750.00               122         1,813.39                3.76                122          1,813.39
       3,750.01 - 7,500.00                90         5,016.67                4.34                 90          5,016.67
      7,500.01 - 15,000.00                23         8,445.65                4.86                 23          8,445.65
                                -------------     ------------        ------------     --------------      ------------
                                  14,011,360             0.08                9.70         14,011,360              0.08
                                =============                                          ==============
</TABLE>

During the years ended May 31, 2005 and 2004, the Company granted options to
non-employees totaling 19,000,000 and 1,583,530, respectively, all of which were
exercised within the fiscal year of issuance. Outstanding and unexercised
options granted to non-employees at May 31, 2005 and 2004 totaled 1,178 and
1,241, respectively, with exercise prices ranging between $2.50 and $11,550 per
share.

At May 31, 2005 and 2004, outstanding and unexercised stock options awarded to
Company officers and employees totaled 14,010,182 and 10,206, respectively, with
exercise prices ranging between $0.0061 and $11,550.00 per share.

Note 13 - Warrants

For the year ended May 31, 2005, the Company issued a total of 5,454,000
warrants to purchase shares of common stock. These warrants were issued in
conjunction with two securities purchase agreements, one of which was executed
on June 25, 2004 and the second one executed on February 28, 2005. (See Note 8.)

The June 25, 2004 agreement called for the grant of 54,000 warrants at an
exercise price of $0.05 per share with an expiration date of June 25, 2011.

The February 28, 2005 agreement called for the grant of 5.4 million warrants at
an exercise price of $0.007 per share, expiring on February 28, 2010.

Warrants that expired and were cancelled during the fiscal year totaled 658.
Outstanding warrants to purchase common stock as of May 31, 2005 totaled
5,558,667, of which 667 warrants are to entities other than the holders of the
convertible securities. As of May 31, 2005, warrant exercise prices, exclusive
of the 5,558,000 warrants issued in conjunction with the convertible securities,
ranged between $650 and $25,000 per share of common stock.

Substantially, all warrants will expire on or before May 31, 2011.

Note 14 - Income Taxes

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.

The following is a reconciliation of the Federal statutory income tax amount to
the provision for income taxes for the years ended May 31:
<TABLE>
<CAPTION>
                                                                 2005                2004
                                                          -----------         -----------
<S>                                                       <C>                 <C>
      Tax benefit at federal statutory rate of 34%        $(1,031,000)        $  (297,000)
      Permanent differences                                   437,000             204,000
      Temporary differences                                   (63,000)             23,000
      Other                                                   (73,000)                 --
                                                          -----------         -----------
                                                             (730,000)            (70,000)
      Increase in valuation allowance                         730,000              70,000
                                                          -----------         -----------
                                                          $        --         $        --
                                                          ===========         ===========
</TABLE>


                                      F-20
<PAGE>

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:

<TABLE>
<CAPTION>
                                                          2005                 2004
                                                     ------------         ------------
<S>                                                  <C>                  <C>
      Deferred tax asset
      Net operating loss carryforwards               $ 12,144,000         $ 11,352,000
      Amortization                                         23,000               26,000
      Accrued vacation                                     15,000               14,000
      Allowance for doubtful accounts                      46,000               17,000
      Accrued officer compensation                             --               98,000
                                                     ------------         ------------
                    Total deferred tax assets          12,228,000           11,507,000
                                                     ------------         ------------
      Deferred tax liability
          Depreciation                                      4,000               13,000
                                                     ------------         ------------
              Total deferred tax liabilities                4,000               13,000
                                                     ------------         ------------
      Net deferred tax assets                          12,224,000           11,494,000
      Valuation allowance                             (12,224,000)         (11,494,000)
                                                     ------------         ------------
                                                     $         --         $         --
                                                     ============         ============
</TABLE>


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, 2005, net operating loss carryforwards are approximately $35,900,000,
expiring through 2025, and are available to offset future taxable income.
Utilization of these carryforwards is significantly dependent on future taxable
income, and, any future tax benefit may be further limited due to a change of
control in the Company's ownership as defined by the Internal Revenue Code,
Section 382.


Note 15 - Commitments and Contingencies

OPERATING LEASES

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

o        Office Facility - The Company is currently on a month-to-month
         agreement. Base rent is $2,240 per month plus a proportionate share of
         the office building utilities.

o        Racking and Bandwidth - The Company has automatic renewable one-year
         rental agreement by which it receives racking and bandwidth for its
         server farm. The base rent is $8,305 per month. The agreement expires
         on February 28, 2006.

o        Office Facility - On May 1, 2005 and in conjunction with April 30, 2005
         asset purchase agreement, the Company assumed responsibility for an
         office lease for the development and support services staff. The base
         rent is approximately $800 per month. The lease terminates on June 30,
         2006.

The future minimum operating lease payments under these non-cancelable lease
agreements are approximately:


                                      F-21
<PAGE>

                        Years ending May 31,                   Amount
                      -------------------------            ---------------
                                2006                       $       85,995
                                2007                                  950
                                                           ---------------
                                                           $       86,945
                                                           ===============

LAWSUITS

On July 18, 2005, the Company was served with a complaint for a material breach
of contract. The complaint was filed by the Company's former landlords for the
breach of a long-term lease for office space. The lease term was March 2002
through July 2006. The claim is for an unspecified amount of damages. The
Company denies the allegations under this claim and believes this claim is
without merit and intends to continuously and vigorously defend against it. The
Company has not recognized an expense for this claim in the May 31, 2005
financial statements.

In another related matter with the same landlord, on March 25, 2005, the Company
satisfied an April 9, 2002 partial summary judgment in the amount of $95,000 and
received a full release by the Court on this claim. In fiscal 2002, the Company
recorded approximately $124,000 as a liability resulting from the judgment and
subsequently recorded a $29,000 gain on this settlement.

The Company is also subject to other legal proceedings and business disputes
involving ordinary and routine claims. The ultimate legal and financial
liability with respect to such matters cannot be estimated with certainty and
requires the use of estimates in recording liabilities for potential litigation
settlements. Estimates for losses from litigation are made after consultation
with outside counsel. If estimates of potential losses increase or the related
facts and circumstances change in the future, the Company may be required to
record either more or less litigation related expense.

It is management's opinion that none of the open matters at May 31, 2005, nor to
August 24, 2005, will have a material adverse effect on the Company's financial
condition or operations.

LICENSING

The Company is operating without proper registration and a current licensing
agreement for hosting certain software. The Company has been accruing monthly an
estimated liability to cover this obligation. As of May 31, 2005 the Company
estimates it owes this vendor approximately $361,000. The Company is in contact
with the vendor company to negotiate the amount due and execute a definitive
agreement in order to use the software according to a standard licensing
registration.

EMPLOYMENT CONTRACTS

The Company has two employment agreements with its two key officers. The
agreements are in the second year of a three-year extension and will terminate
in February 2007. Each agreement calls for a current year annual base
compensation of $150,000 and $225,000, respectively. The base salaries for the
third year of the agreements are $160,000 and $275,000, respectively. Each
agreement contains: (a.) a bonus incentive clause for performance, and, (b.) the
right to exercise vested stock options at a predetermined price, generally
granted at market value, which range between $90 and $1,000 per share. Both
agreements contain a severance clause that stipulates if the executive's
contract is not renewed, a severance payment equal to twice the annual salary at
the date of termination will be paid within sixty days, plus provide other
certain benefits.

A third officer has an annually renewable contract stipulating a salary base of
$96,800 per year and was automatically renewed on the anniversary date, February
20, 2005, for one year.

CONSULTING AND DISTRIBUTION AGREEMENTS

Pursuant to the asset purchase agreement with a related party (see also Note 4)
dated April 30, 2005, whereby the Company acquired certain intellectual
property, the Company assumed certain other obligations. The following describes
these obligations:

                                      F-22
<PAGE>

o        Consulting Agreement - A $5,000 per month consulting agreement existed
         at the time of sale (April 30, 2005) between the related party (seller)
         to Insynq (Company) and the original seller of the intellectual
         property to the related party. Insynq agreed to honor the remaining
         term of the consulting agreement in exchange for the original
         consultants' expertise and guidance. At the time of closing, April 30,
         2005, the Company assumed a liability of $5,000, which was part of the
         purchase price. The agreement will terminate on or before May 2006.

o        Distribution Agreement - At the time of sale, a distribution agreement
         existed between the same original selling party as discussed above, and
         the related party. Insynq assumed the responsibility for fulfilling the
         terms of this agreement as part of the asset purchase agreement. This
         agreement stipulates that 5.5% of gross cash receipts from the sales of
         certain software products will be paid each quarter to the original
         selling party. This agreement is in perpetuity. There is, however, a
         $1,250,000 buyout provision whereby at any time the obligator may
         completely satisfy the terms underlying this agreement. The Company
         assumed approximately $14,000 related to this obligation at closing on
         April 30, 2005 and the amount was included in the purchase price.

Note 16 - Other Disclosures

GAIN ON FORGIVENESS AND SETTLEMENTS OF DEBTS

The Company has executed settlements of certain outstanding obligations due
several creditors as follows:

o        For the year ended May 31, 2005 the Company settled $356,605 of
         obligations for approximately $99,037 in cash, for a recognized gain of
         $257,658.

o        For the year ended May 31, 2004 the Company settled approximately
         $2,715,900 of term debt, trade obligations and leases for approximately
         $54,000 in cash and 1,300,000 shares of common stock valued at market
         of $.50 per share for $650,000, based on the then closing market price
         of the Company's common stock. Gain recognized on the settlements of
         these obligations was approximately $2,011,900.

NON-CASH INVESTING AND FINANCING

Non-cash investing and financing activities included the following for the years
ended:

<TABLE>
<CAPTION>

                                                                                               May 31,
                                                                                         2005             2004
                                                                                    -------------    --------------
<S>                                                                                 <C>              <C>
Conversion of debentures into common stock                                                 30,507           643,399
Record discounts on convertible notes payable issued with
   warrants                                                                             3,441,640                --
Issuance of common stock and options recorded as unearned
   compensation in conjunction with services to be rendered by
   non-employees                                                                          685,800                --
Issuance of common stock for prepaid licenses                                             600,000                --
Cancel prepaid licenses and cancel issuance of common stock                              (600,000)               --
Purchase of intellectual property in exchange for the net
    amount due to the Company from the related party                                      328,381                --
Notes receivable issued for options exercised                                                  --           636,111
Principal written down on notes receivable                                                     --            40,000
Promissory   notes  and  interest   receivable   due  from  officers
exchanged
    for common stock held by officers                                                          --           106,515
Accrued liabilities and accounts payable converted into common stock                           --            41,800
Reclassify note payable to accrued liability                                                   --             4,000
</TABLE>


                                      F-23
<PAGE>

SUPPLEMENTAL CASH FLOWS INFORMATION

Cash paid for interest expense for the years ended May 31, 2005 and 2004 was
$90,765 and $1,217, respectively.

Note 17 - Subsequent Events

CONVERTIBLE DEBENTURES

From May 31, 2005 to August 24, 2005, the Company has issued 115,969,022 shares
of common stock for the principal redemption of $79,545 of convertible
debentures.


                                      F-24