ESYNCH CORPORATION
(a Delaware Corporation)
One Technology Drive, Building H
Irvine, CA 92618
(Principle Executive Offices of the Company)
NOTICE OF WRITTEN CONSENT OF SHAREHOLDERS IN LIEU OF MEETING
NOTICE IS HEREBY GIVEN that certain shareholders of eSYNCH CORPORATION,
(hereinafter referred to as the "Company"), having more than fifty percent (50%)
of the total voting shares of the Company, have provided their written consent
to the proposed actions as set forth in the Information Statement, which actions
shall take effect no sooner than 20 calendar days following the mailing of the
herein Information Statement. The certain shareholder's written consents cover
the following shareholder action:
(i) an Action by Written Consent dated March 26th, 2003, of the Stockholders of
the Company on the amendment to the Articles of Incorporation of the Company, as
amended, to provide for a stock combination (reverse split) of the Common Stock
in an exchange ratio to be approved by the Board, ranging from one newly issued
share for each two outstanding shares of Common Stock to one newly issued share
for each forty outstanding shares of Common Stock and the approval of a name
change for the Company from eSynch Corporation to Nacio Corporation.
As of March 26, 2003, there were 184,139,023 Class A Common Stock shares issued
and outstanding, having 184,139,023 for any matter that may be voted upon by the
shareholders of the Company. This Information Statement will be mailed to all
shareholders of record as of March 26th, 2003.
By order of the Board of Directors. March 26, 2003
/S/ THOMAS HEMINGWAY
----------------------
THOMAS HEMINGWAY
CHIEF EXECUTIVE OFFICER
ESYNCH CORPORATION
ESYNCH CORPORATION.
(a Delaware Corporation)
One Technology Drive, Building H
Irvine, CA 92618
(Principle Executive Offices of the Company)
INFORMATION STATEMENT
DATE FIRST MAILED TO SHAREHOLDERS OF RECORD:
March 31, 2003
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY
INTRODUCTION
This Information Statement is being furnished to the shareholders of record of
eSynch Corporation, a Delaware corporation (the "Company"), as of March 26th,
2003, pursuant to the requirements of Regulation 14C under the Securities
Exchange Act 1934, as amended. Certain shareholders having more than fifty
percent (50%)of the total voting shares of the Company have provided their
written consent to the proposed actions as set forth within this Information
Statement, which actions shall take effect no sooner than 14 calendar days
following the mailing of the herein Information Statement. The certain
shareholder's written consents cover the following shareholder actions:
(i) an Action by Written Consent dated March 26th, 2003, of the
Stockholders of the Company on the amendment to the Articles of Incorporation of
the company, as amended, To approve an amendment to the Certificate of
Incorporation in order to provide for a stock combination (reverse split) of the
Common Stock in an exchange ratio to be approved by the Board, ranging from one
newly issued share for each two outstanding shares of Common Stock to one newly
issued share for each forty outstanding shares of Common Stock and the approval
of a name change for the Company from eSynch Corporation to Nacio Corporation.
A copy of the Written Consents are attached as Exhibit "A" to this Information
Statement.
Management of the Company is utilizing the Written Consents in order to save
expense and time.
Certain shareholders of the Company having more than fifty percent (50%) of the
issued and outstanding shares of the Company's common stock (the "Common Stock")
have provided written consents to a stock combination. See "Vote Required";
"Other Information Regarding the Company - Security Ownership of Certain
Beneficial Owners and Management"; and "Directors and Executive Officers". See
"Matters Set Forth in the Written Consents".
Shareholders of record at the close of business on March 26th, 2003 are being
furnished copies of this Information Statement. The principal executive office
of the Company is located at One Technology Dr., Bldg. H Irvine, CA 92618, and
the Company's telephone number is (714) 258-1900.
MATTERS SET FORTH IN THE WRITTEN CONSENTS
The Written Consents contain:
(i) A Resolution dated March 20, 2003, to amend the Certificate of
Incorporation in order to provide for a stock combination (reverse split) of the
Common Stock in an exchange ratio to be approved by the Board, ranging from one
newly issued share for each two outstanding shares of Common Stock to one newly
issued share for each forty outstanding shares of Common Stock and the approval
of a name change for the Company from eSynch Corporation to Nacio Corporation.
Shareholders representing 53.77% of the votes of the currently issued and
outstanding shares of Common Stock have executed the Written Consents, thereby
ensuring the stock combination and name change. See "Other Information Regarding
The Company - Security Ownership of Certain Beneficial Owners and Management."
Set forth below is a table of the stockholders who have executed the Written
Consents and, to the best of the Company's knowledge, the number of shares of
Common Stock beneficially owned by such stockholders as of October 18, 2002:
Common . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shrs. Votes/Shr. Common Votes % of Total Votes
---------------------------------------------------------------- ----------- ------------- ------------ -----------------
Total Common Issued and Outstanding Votes Possible . . . . . . . 1 184,139,023 100.00%
Votes by Written Consent For Increase in Issue-able Common Stock
Beneficial Owner
----------------------------------------------------------------
Angos Property, Ltd. . . . . . . . . . . . . . . . . . . . . . 5,123,263 1 5,123,263 2.78%
Intercoastal Holdings, LLC . . . . . . . . . . . . . . . . . . . 3,322,970 1 3,322,970 1.80%
Stonestreet Limited Partnership. . . . . . . . . . . . . . . . . 1,682,516 1 1,682,516 .91%
Aspen International, Ltd. . . . . . . . . . . . . . . . . . . . 8,538,771 1 8,538,771 4.64%
Triton Private Equity Fund L.P. . . . . . . . . . . . . . . . . 1,261,887 1 1,261,887 .69%
LightLine Limited . . . . . . . . . . . . . . . . . . . . . . . 487,930 1 487,930 .26%
Manchester Asset Management . . . . . . . . . . . . . . . . . . 2,582,663 1 2,585,663 1.40%
Eric Andresen . . . . . . . . . . . . . . . . . . . . . . . . . 3,596,519 1 3,596,519 1.95%
Frank Ehret . . . . . . . . . . . . . . . . . . . . . . . . . . 15,078,072 1 15,078,072 8.19%
David Ranghiasci . . . . . . . . . . . . . . . . . . . . . . . . 1,317,462 1 1,317,462 .72%
David Lyons. . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000,000 1 5,000,000 2.72%
Tom Hemingway. . . . . . . . . . . . . . . . . . . . . . . . . . 17,951,438 1 17,951,438 9.75%
Dick Hutt. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,035,768 1 11,035,768 5.99%
Jim Budd . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,032,920 1 11,032,920 5.99%
Mark Utzinger. . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 1 10,000,000 5.43%
Danny Loy. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 1 1,000,000 .54%
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,012,179 1 99,012,179 53.77%
---------------------------------------------------------------- ----------- - ---------- ------
VOTE REQUIRED
Counterpart copies of the Written Consents evidencing a majority of the
outstanding shares of Common Stock, must be received by the Company within sixty
days of the earliest dated consent delivered by the Company in order to
effectuate the matters set forth therein. As of March 26, 2003 (the dates of the
Written Consents), 184,139,023 shares of Common Stock were issued and
outstanding with votes of 184,139,023 votes thus, Stockholders representing no
less than 92,069,512 votes from Common Stock, were required to execute the
Written Consents to effect the matter set forth therein. As discussed under
"Matters Set Forth in the Written Consents," shareholders owning approximately
99,012,179 votes, or 53.77% of the votes of Common Stock, have executed the
Written Consents and delivered them to the Company as required by law within the
60 day period, thereby ensuring the stock combination and name change.
CERTAIN EFFECTS OF THE REVERSE SPLIT
The following table illustrates the principal effects of the Reverse Split to
the 184,139,023 shares of Common Stock outstanding as of March 26, 2003:
COMMON SHARES:
--------------
PRIOR TO AFTER 1 FOR 2 AFTER 1 FOR 40
NUMBER OF SHARES REVERSE REVERSE REVERSE
STOCK SPLIT STOCK SPLIT STOCK SPLIT
Common Stock:
Authorized................. 250,000,000 250,000,000 250,000,000
Outstanding ............... 184,139,023 92,069,512 4,603,476
Available for Future
Issuance ................. 65,860,977 157,930,488 245,396,524
OTHER INFORMATION REGARDING THE COMPANY
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth to the best of the Company's knowledge the number
of shares beneficially owned as of March 26th, 2003, by (i) each of the current
Executive Officers and Directors of the Company (ii) each person (including any
"group" as that term is defined in Section 13(d)(3) of the Exchange Act) who
beneficially owns more than 5% of the Common Stock, and (iii) all current
Directors and officers of the Company as a group. (1)
SHARES BENEFICIALLY OWNED
--------------------------
COMMON PREFERRED
------ ---------
NAME OF BENEFICIAL OWNER NUMBER PERCENT NUMBER PERCENT
------------------------ ------ ------- ------ -------
Thomas Hemingway(1) 17,951,438 9.75% 0 0%
James H. Budd(2) 11,032,920 5.99% 0 0%
T. Richard Hutt(3) 11,035,768 5.99% 0 0%
David Lyons(4) 5,000,000 2.72% 0 0%
Robert Orbach(5) 32,684 0.00% 0 0%
All Directors and Executive
Officers as a group (5 Persons) 45,052,810 24.45% 0 0%
(1) Includes 842,500 shares which may be purchased pursuant to stock options
which are currently, or within the next 60 days will be, exercisable. Includes
111,395 shares owned by Ms. Detra Mauro Hemingway, the spouse of Mr. Hemingway.
(2) Includes 387,000 shares which may be purchased pursuant to stock options
which are currently, or within the next 60 days will be, exercisable.
(3) Includes 376,932 shares which may be purchased pursuant to stock options
which are currently, or within the next 60 days will be, exercisable.
(4) Includes 36,700 shares which may be purchased pursuant to stock options
which are currently, or within the next 60 days will be, exercisable.
(5) Includes 25,000 shares which may be purchased pursuant to stock options
which are currently, or within the next 60 days will be, exercisable.
DIRECTORS AND EXECUTIVE OFFICERS
NAME POSITION(S) WITH THE COMPANY AGE
----------------------------------------------------------------------
Thomas Hemingway Chairman and Chief Executive Officer 44
David Lyons Director and President 51
T. Richard Hutt Director, Vice President and 61
Secretary/Treasurer
James H. Budd Director and Vice President 59
Robert Orbach(1) Director 48
THOMAS HEMINGWAY
----------------
On August 5, 1998, Mr. Hemingway became the Chief Executive Officer and Chairman
of the Company pursuant to the Agreement and Plan of Share Exchange among the
Company, Intermark Corporation, a California corporation ("Intermark"), and
Intermark's securityholders upon the consummation of that transaction. A
co-founder of Intermark, from October 1995 to the present Mr. Hemingway served
as Chief Executive Officer and in other senior management positions at
Intermark, a software publishing, sales and marketing company. From August 1994
to September 1995, Mr. Hemingway operated a consulting business specializing in
software sales and marketing. From January 1994 to July 1994, Mr. Hemingway was
chief operating officer at Ideafisher Systems, an artificial intelligence
associative processing software company. From August 1993 to December 1993, Mr.
Hemingway was serving as a consultant with L3, an edutainment software company.
From January 1993 to July 1993, Mr. Hemingway was involved in computer-related
consulting in the capacity of chief executive officer of Becker/Smart House, LV,
a home automation enterprise. In 1992, Mr. Hemingway was involved in making
private investments in various industries. Previously, from 1987 to 1991, Mr.
Hemingway founded and served as president of Intellinet Information Systems, a
provider of network services and systems. Earlier in his career, Mr. Hemingway
was a founder of Omni Advanced Technologies, a research and development firm
developing products for the computer and communications industry.
DAVID LYONS
-----------
Mr. Lyons was appointed to the Board of Directors in January 2000 and was
appointed President in February 2001. From 1997 into 2000, Mr. Lyons served as
Vice President - Acquisitions, Eastern Region, for Expanets, Inc., a start-up
consolidation venture financed by Northwestern Corp. (NYSE:NOR) to acquire
telecommunications voice and data companies. From 1996 to 1997, Mr. Lyons was
employed by Extel Communications, Inc., a telecommunications installation and
maintenance company, as Executive Vice President, Acquisitions. From 1992 to
1996, Mr. Lyons served as a principal in the Sherman Investment Group, Inc., a
Merchant Banking Company which invests in and provides managerial assistance to
medium sized public and private companies. Prior to 1996, Mr. Lyons was Chairman
and CEO of Amnex, Inc., an operator service and long distance company. Mr. Lyons
previously served as a member of Board of Directors from October 27, 1998 to
November 15, 1999.
JAMES H. BUDD
-------------
Mr. Budd was elected to the Board of Directors on October 27, 1998. In August,
1998, Mr. Budd became a Vice President of the Company pursuant to the Agreement
and Plan of Share Exchange among the Company, Intermark and Intermark's
securityholders. A co-founder of Intermark, from October 1995 to the present Mr.
Budd has served as Vice President of Marketing and in other executive capacities
of Intermark, a software publishing, sales and marketing company. From August
1994 to September 1995, Mr. Budd operated a consulting business specializing in
software sales and marketing. From March 1994 to July 1994, Mr. Budd was vice
president of marketing at Ideafisher Systems, an artificial intelligence /
ssociative processing software company. From November 1993 to February 1994, Mr.
Budd was involved in making private investments in various industries.
Previously, from July 1978 to October 1993, Mr. Budd was founder and chief
executive officer of Command Business Systems, a developer of business software
products. Earlier in his career, Mr. Budd held marketing and sales management
positions at Unisys, Nixdorf, Tymshare, and Prime Computer.
T. RICHARD HUTT
---------------
Mr. Hutt was elected to the Board of Directors on October 27, 1998. In August,
1998, Mr. Hutt became a Vice President and the Secretary of the Company pursuant
to the Agreement and Plan of Share Exchange among the Company, Intermark and
Intermark's securityholders. A co-founder of Intermark, from October 1995 to the
present Mr. Hutt has served as Vice President of Sales and Secretary of
Intermark. From September 1992 to September 1995, Mr. Hutt was distribution
sales manager for Strategic Marketing Partners, a leading national software and
technology marketing firm. Previously, he was in the communications and
mini-computer industry with TRW where he formed the Canadian subsidiary as vice
president of sales. He moved to TRW's Redondo Beach headquarters and managed the
western division until Fujitsu acquired the business unit. Before joining TRW,
he was with NCR's financial sales division in Canada. Prior to that he managed
the VAR division at Wang Laboratories. Moving to Matsushita, he played a key
role in the development of the distribution channel for their Panasonic
products.
ROBERT ORBACH
-------------
Mr. Orbach was appointed to the Board of Directors in January, 2000. Mr. Orbach
is the founder and president of Orbach, Inc., providing high level consulting
and advisory services for PC hardware and software companies, regarding
acquisitions and strategic partnering as well as marketing, and has served in
that capacity since May 1990. In addition, Mr. Orbach is on the Board of
Directors of Midisoft and In10city. Mr. Orbach previously served as a member of
Board of Directors from October 27, 1998 to November 15, 1999.
LEGAL PROCEEDINGS
We are involved in several lawsuits in the normal course of business and all
amounts for exposure to these lawsuits have been recorded in our financial
statements except as noted below.
On April 3, 2001, a lawsuit was filed by BFree Ltd. in Superior Court, County of
Orange, California, against the Company as successor to Innovus Corporation,
seeking $25,544 for goods and services claimed to have been provided to Innovus
during 1997. The claim is included in pre-acquisition liabilities on the
accompanying balance sheets. Subsequent to December 31, 2001 the Company entered
into a settlement agreement with Bfree Ltd. Under the agreement the Company is
to pay $4,000 in monthly increments of $500 starting on March 15, 2002. The
amount bears interest at 10%.
On July 26, 2001, Bixby Land Company, the Company's landlord, filed an unlawful
detainer action to recover delinquent rent and penalties in the amount of
approximately $125,000. On November 1st, 2001 the Company relocated its
corporate offices to 29 Hubble Irvine, CA 92618. In October a settlement
agreement with Bixby Land Company was reached regarding a settlement of the
Company's liability of $808,134 with respect to a lease obligation for the
Tustin facility. The settlement agreement provided that the Company would be
release from all future payments under the terms of the lease if the Company
made payments totaling $100,000 and transferred the Company's existing $60,010
security deposit to the landlord. The Company did not make the required payments
under the settlement agreement. In October 2001, Bixby received a judgment
against the Company for $136,058. As of December 31, 2001, the Company accrued
the $136,058 and expensed the security deposit. Additionally in conjunction with
this event the Company has written off the total net asset value of its
leasehold improvements of $51,174.
On August 9, 2001, an action was filed in California Superior Court, County of
Orange, against the Company, certain officers and its current Directors by
Donald C. Watters, the Company's former president, chief operating officer and
director, claiming breaches of contract, good faith and fair dealing, and
fiduciary duty, and adverse employment action in violation of public policy. Mr.
Watters is seeking general damages of not less than $2,780,000, punitive
damages, interest, attorney's fees and court costs. Mr. Watters was terminated
by the Company for cause. The Company believes that the claims are without merit
and intends to vigorously defend the action and thus nothing has been accrued as
of December 31, 2001.
On August 10, 2001, a lawsuit was filed by Kforce.com seeking to collect
approximately $43,000 to be owed under a consulting services agreement. During
2001, the Company stipulated a judgment in favor of Kforce.com. The judgment is
fully accrued in the Company's financial statements as of December 31, 2001.
In September, 2001 a lawsuit was filed by Technopolis Communications, Inc. in
the Superior Court of California, County of Orange, against Innovus Corporation,
dba eSynch Corporation, seeking $35,733 for services claimed to have been
provided to eSynch. The case is currently in the discover stage and a mandatory
settlement conference date has been set. As of December 31, 2001 the Company has
accrued $50,000.
On April 8, 2002 Adams Business Media filed a request for entry of default for
$11,000 for advertising services. The request was not contested. This amount has
been included in the account payable liability account.
On April 17, 2002 a request for Entry of Default was filed by Information
Leasing Corporation for $179,364. The request was not contested. This amount was
fully accrued in Capital Lease Obligations - Current Portion as of March 31,
2002.
On May 21, 2002 Internap filed a request for entry of default with no specified
amount. The request was not contested. As of June 30, 2002 the Company carried a
balance of $17,798 for this vendor in accounts payable.
On May 31, 2002 Reuters Newsmedia filed a request for entry of default with no
specified amount. The Company believes the summons was not properly served and
the request is therefore invalid. As of June 30, 2002 the Company carried a
balance of $70,000 for this vendor in accounts payable.
CERTAIN TRANSACTIONS
On April 1, 1999, the Company acquired Kiss Software Corporation, a California
corporation (Kissco). Donald C. Watters, Jr. was a major shareholder of Kissco
and received in that acquisition 381,270 shares of Common Stock, and the Company
also assumed a Kissco option entitling Mr. Watters to acquire 48,568 shares of
Common Stock at a price of $ 2.11 per share. Robert B. Way was also a
shareholder of Kissco and received in the acquisition 32,430 shares of Common
Stock, and the Company also assumed a Kissco option entitling Mr. Way to acquire
19,427 shares of Common Stock at $2.11 per share.
On September 30, 1999, the Company acquired Oxford Media Corporation, a Delaware
corporation, for 450,000 shares of the Company's Common Stock. Oxford Media
Corporation was controlled by Mr. Norton Garfinkle. In addition, for consulting
services and services as a director of the Company, Mr. Garfinkle received
warrants to purchase 450,000 shares of Common Stock.
On March 1, 2000, the Company entered into a License Agreement with Garfinkle
Limited Partnership II, of which Norton Garfinkle, a director and shareholder of
the Company, is a Partner. The License Agreement grants the Company the use of
two patents for use in the video-on-demand segment of the Company's business. As
consideration for the grant of license, Garfinkle Limited Partnership II was
given a warrant for 950,000 shares of the Company's common stock plus the
Company will pay a royalty of five percent of the gross revenue paid by end
users as a result of the use of the Patents.
On June 14, 2000, the Company borrowed $450,000 from Norton Garfinkle, a
director and shareholder, evidenced by an unsecured note bearing interest at
eight percent and due on demand. On January 10, 2001, the Company renegotiated
the terms of the terms of the note requiring Mr. Garfinkle to deliver to the
Company a written notice at least 20 days prior to demand for repayment. In
consideration of the change in payment terms, the Company issued to Mr.
Garfinkle a warrant to purchase 250,000 shares of the Company's common stock.
On August 28, 2000, the Company loaned Thomas Hemingway, Chairman and Chief
Executive Officer, and a director of the Company, the sum of $500,000 evidenced
by a promissory note bearing interest at ten percent per annum, due and payable
on February 24, 2001. As of the date hereof, $300,000 plus accrued interest
remains outstanding, of which $300,000 was recorded in the Company's accounting
records as income to Mr. Hemingway for the year-ended December 31, 2000.
As reflected in the 8-K filed July 31, 2002, Pursuant to an Escrow Agreement and
Irrevocable Proxy (the "Agreement") effective as of July 31, 2002, between
eSynch and NACIO SYSTEMS, INC., a California corporation ("Nacio"), eSynch will
purchase from Nacio all of the issued and outstanding shares of common stock of
Nacio. Nacio is California based and provides high-reliability hosting,
commercial-grade Internet connectivity and outsourcing solutions and support
services for businesses that rely on the Internet for daily operations. On March
12, 2002, Nacio filed for voluntary Chapter 11 bankruptcy in the United State
Bankruptcy Court, Northern District of California, Santa Rosa Division (the
"Court"), Chapter 11 Case No. 02-10596. The transaction will be consummated upon
completion of Nacio's plan of reorganization and acceptance of this plan by the
court. eSynch intends to continue in this line of business. eSynch will acquire
one hundred percent (100%) ownership interest in Nacio in exchange for
30,000,000 shares of eSynch's common stock.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our officers and directors, and
persons who own more than 10% of a registered class of our equity securities to
file reports of ownership and changes in ownership with the SEC and NASDAQ.
These persons are required by regulation of the SEC to furnish us with copies of
all Section 16(a) forms they file.
The Company has been registered pursuant to Section 12 of the Securities
Exchange Act of 1934 since September 23, 1990 and, by reason thereof, all
officers, directors and 10% or more shareholders of the Company became obligated
to file Forms 3, 4 and 5, describing the ownership of securities in the Company
and any changes thereto, as they may apply, since that date. To the Company's
knowledge, based solely upon a review of the copies of such reports furnished to
the Company and representations made to the Company, no other reports were
required, during and with respect to the fiscal year ended December 31, 2000 and
all Reporting Persons have complied with all filing requirements applicable to
them
EXHIBIT A
ESYNCH CORPORATION
NOTICE PUSUANT TO SECTION 228 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
TO: ALL STOCKHOLDERS
1. PLEASE TAKE NOTICE THAT Stockholders owning at least a majority of the
outstanding stock of eSYNCH CORPORATION, by written consent dated March 26th,
2003 have duly adopted the following resolution:
"a resolution approving an amendment to the Corporation's Certificate
of Incorporation, as amended, to provide for a stock combination (reverse split)
of the Common Stock in an exchange ratio to be approved by the Board, ranging
from one newly issued share for each two outstanding shares of Common Stock to
one newly issued share for each forty outstanding shares of Common Stock and the
approval of a name change for the Company from eSynch Corporation to Nacio
Corporation.
DATE: March 26, 2003
BY: /S/ THOMAS HEMINGWAY
---------------------
THOMAS HEMINGWAY
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
End of Filing