Here is the whole artical check out the 14th paragraph
INSEQ Corporation INSEQ Releases Shareholder Letter
INSEQ Corporation (OTC Bulletin Board: INSQ) chairman, Kevin Kreisler, issued the following correspondence to its shareholders today: -0- *T Dear Shareholders:
We accomplished much during 2005 and we continue to make significant strides in INSEQ's growth, but I wanted to take this opportunity to update you on several of our key initiatives.
First, we have not yet closed on our planned acquisitions of Independent Metal Sales, Inc. ("IMS") and an Ohio based Specialty Metal Manufacturer ("SMM"). The primary reason for this is our desire and need to refinance INSEQ's current equity based convertible debentures simultaneously with the closing of more conventional asset-based financing for the IMS acquisition. Absent such a refinancing, the new consolidated company's capital structure will be potentially subject to substantial additional dilution and it has been and remains our plan to minimize this effect as much as possible as we grow. We are working with qualified financing sources on this front and we expect resolution of our path forward in the near term. While I would like to be more specific on the time frame, the refinancing of INSEQ's current convertible debentures is a complicated undertaking given their structure and we have already seen prior delays on this transaction.
Acquisitions nevertheless remain a key element of INSEQ's business model; we completed four strategic acquisitions and investments during 2005 - Warnecke Design Service, Inc., Separation and Recovery Technologies, Inc., Electronic Scrap Recycling Corporation ("ESRC"), and Air Cycle Corporation - and we have several more targeted.
The acquisition of ESRC allows INSEQ to establish a foothold in the e-waste recycling business - ESRC's business model is based on building, owning and operating innovative e-waste processing systems that utilize a number of proprietary technologies to enhance operating efficiencies. ESRC also plans to build and sell custom e-waste recycling systems that accomplish this on a distributed basis for targeted third party clients. E-waste recycling typically yields two classes of salable secondary commodities, plastics and metals, which INSEQ plans to sell through its distributor relationships and its new online portal. Importantly, the e-waste recycling market is highly fragmented, with a large number of small but asset-rich companies operating on thin margins that we believe we can improve upon - both through the use of our various proprietary technologies and through standard consolidation savings. We have consequently targeted several additional e-waste recycling companies for potential acquisition.
Not only is ESRC strategic to Warnecke Design - INSEQ's manufacturing division - given ESRC's specialty equipment manufacturing needs, but it is also strategic to Air Cycle as well. Air Cycle is a lamp, ballast, battery and e-waste recycling company with a substantial client base and strong marketing capabilities, both of which lend themselves to ready cross-selling opportunities with ESRC. Further, the lamp and lighting recycling market is also filled with a large number of small but asset-rich companies operating on thin margins.
INSEQ accordingly plans to help Air Cycle grow through acquisitions, in addition to increased sales and product development.
Air Cycle's Bulb Eater(R) product line crushes spent fluorescent lamps into small fragments and compacts them into 55-gallon containers. This greatly improves storage of the lamps, handling, safety and liability issues, and recycling costs. The units are complete with filtration systems to help ensure both OSHA and EPA compliance, even for facilities disposing of large quantities of lamps. Air Cycle's Bulb Eater(R) products are in use today at many small and large companies, schools, hospitals, military bases, and government agencies.
Importantly, this product line is strategic to Warnecke Design given Air Cycle's current manufacturing expenditures of about $1.5 million per year - which translate directly to new sales for INSEQ.
INSEQ's business model is to directly facilitate the more efficient use of natural resources. An essential element of this is building and selling innovative green products. INSEQ commenced testing last week on its new online green products marketplace and Air Cycle's Bulb Eater(R) product line and EasyPak(TM) Recycling Program will be among the initial array of innovative green products INSEQ plans to sell through the new online portal.
Other initial products for the INSEQ store include TerraPass and Sterling Planet renewable energy products, carbon nanotubes and related specialty chemicals and products, GreenShift Corporation's Tornado Trash Can and Ovation Purifier, and a yet to be announced Mean Green BioFuels appliance. Our ambition for the new INSEQ marketplace is that it becomes the premier source of innovative green products and that it also evolves to include distribution and trading of key liquid classes of commodities - such as plastics, metals, chemicals, fuels and renewable energy. The new INSEQ store commenced testing last month and is expected to be available to the public this month.
INSEQ's green products manufacturing expertise is itself a commodity that we intend to fully leverage. During 2005, INSEQ executed several manufacturing agreements with companies that, like INSEQ, are portfolio companies of GreenShift Corporation (OTC Bulletin Board: GSHF), including GreenShift Industrial Design Corporation, Ethanol Oil Recovery Systems, LLC, BioEnergy Engineering, LLC, and Mean Green BioFuels Corporation. While these agreements are expected to bring significant revenues into INSEQ during 2006, INSEQ's newly developed expertise with biofuels equipment has already translated into additional outside sales with alternative fuels companies.
On the issue of INSEQ's capital structure, while we made positive strides during the third quarter 2005 with the elimination of about 650 million shares of common stock and warrants, our growth plans require us to seek out new opportunities to achieve similar results.
We have accordingly cancelled certain financing agreements and we continue to expect that we will restructure GreenShift's stake in INSEQ in line with the completion of INSEQ's refinancing of its equity based convertible debentures. The conversion of GreenShift's stake can be expected to decrease INSEQ's common stock outstanding by about 3 billion shares.
I am hopeful that these changes will collectively help to enhance the impact of our completed and targeted new acquisitions and other growth initiatives on our overall shareholder wealth. We will however continue to aggressively seek opportunities to positively impact our capital structure and we hope to evaluate appropriate share repurchase programs once our operations are generating sufficient positive cash flows.
We are pleased with INSEQ's progress and we are very enthusiastic about our prospects for growth. We are grateful for your continued support and involvement. I look forward to our next communication.
Best Regards,
Kevin Kreisler Chairman INSEQ Corporation *T
About INSEQ Corporation
INSEQ Corporation is a publicly traded company whose mission is to directly facilitate the efficient utilization of natural resources including metals, chemicals, fuels and plastics. More information on INSEQ is available online at www.inseq.com.
INSEQ is 80% owned by GreenShift Corporation (OTC Bulletin Board: GSHF), a business development corporation whose mission is to develop and support companies and technologies that facilitate the efficient use of natural resources and catalyze transformational environmental gains.
