Edgar Filing: ACCESSPOINT CORP /NV/

U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-KSB

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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003

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

FOR THE TRANSITION PERIOD FROM __________________ TO ________________________

Commission File Number: 000-29217

ACCESSPOINT CORPORATION
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(Name of Small Business Issuer in its Charter)

Nevada 95-4721385
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)

3030 S Valley View Blvd., Ste 190 Las Vegas, NV 89102
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(Address of Principle Executive Offices) (Zip Code)

702-880-1040
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(Issuer's Telephone Number, Including Area Code)

6171 W. Century Blvd. Suite 200, Los Angeles, Ca. 90045
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Previous Address

Securities Registered Pursuant to Section 12(b) of the Exchange Act:

None

Securities Registered Pursuant to Section 12(g) of the Exchange Act:

Common Stock, $0.001 Par Value

Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes [X ]No [ ]

Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B not contained in this form, and no disclosure will be

contained, to the best of 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. [X]

The registrant's revenues for its most recent fiscal year were
$12,667,551.

The aggregate market value of the voting stock held by non-affiliates
of the registrant as of March 9, 2004 was $934,019 based upon the market
price of the registrant's Common Stock of $0.07 as of March 9, 2004.

The number of the Company's shares of Common Stock outstanding as of December
31, 2003 was 18,971,230.

Transitional Small Business Disclosure Format (check one): Yes [ ] No [ X ]

ACCESSPOINT CORPORATION
FORM 10-KSB ANNUAL REPORT
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2003
TABLE OF CONTENTS

Forward-Looking Statements 3

PART I

Item 1. DESCRIPTION OF BUSINESS 4
Item 2. DESCRIPTION OF PROPERTIES 9
Item 3. LEGAL PROCEEDINGS 9
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 12

PART II

Item 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 12
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 13
Item 7. FINANCIAL STATEMENTS 15
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE 32

PART III

Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT 32
Item 10. EXECUTIVE COMPENSATION 33
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS 34
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 37

PART IV

Item 13. EXHIBITS AND REPORTS ON FORM 8-K 39
Item 14. CONTROLS AND PROCEDURES 40

SIGNATURES 41

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-KSB contains forward-looking statements about the
business, financial condition and prospects of the Company that reflect
assumptions made by management and management's beliefs based on information
currently available to it. We can give no assurance that the expectations
indicated by such forward-looking statements will be realized. If any of
management's assumptions should prove incorrect, or if any of the risks and
uncertainties underlying such expectations should materialize, the Company's
actual results may differ materially from those indicated by the forward-looking
statements.

The key factors that are not within the Company's control and that may
have a direct bearing on operating results include, but are not limited to, the
acceptance by customers of the Company's products and services, the Company's
ability to develop new products and services cost-effectively, the ability of
the Company to raise capital in the future, the development by competitors of
products or services using improved or alternative technology, the retention of
key employees and general economic conditions.

There may be other risks and circumstances that management is unable to
predict. When used in this Form 10-KSB, words such as, "believes," "expects,"
"intends," "plans," "anticipates" "estimates" and similar expressions are
intended to identify forward-looking statements, although there may be certain
forward-looking statements not accompanied by such expressions. All
forward-looking statements are intended to be covered by the safe harbor created
by Section 21E of the Securities Exchange Act of 1934.

PART I

ITEM 1. DESCRIPTION OF BUSINESS

A. GENERAL

We were incorporated in Nevada on October 11, 1995. On March 19,1999 we
merged with Yamahama's, Inc., a Nevada corporation. On April 12, 2000 we merged
with J.S.J. Capital, III, Inc., a Nevada corporation. Reference to Company or
Accesspoint Corporation ("we", "us" and "our") in this report refers to the
historical Accesspoint Corporation, and its wholly owned subsidiaries,
Processing Source International and Black Sun Graphics, unless the context
otherwise requires.

B. BUSINESS OVERVIEW

We are a vertically integrated provider of electronic transaction
processing and value-added business services. Our transaction processing service
routes, authorizes, captures, and settles all types of non-cash payment
transactions for retailers and businesses nationwide. We service the payment
processing needs of sellers by (1) providing merchant underwriting, risk
management and account services, and (2) supporting the network and technology
services necessary for both retail (in-store) and Internet point of sale
transactions. To this core function we provide sellers with a entire suite of
integrated business applications that centralize the management of (A) both
in-store and online transaction processing and accounting, (B) automated web
site design, hosting services and catalog creation and management, (C)
merchandising and benefits management, (D) order processing and tracking
services, and (E) a whole host of reporting and monitoring tools.

Our multi-application e-payment and e-commerce systems provide a single
source solution to merchants, businesses and the sales organizations that market
our products. Our clients enjoy the benefits of a versatile, powerful,
multi-purpose system that provides a comprehensive level of payment acceptance
options and value-added businesses services without having to manage the
multiple business relationships normally required for these functions.

Major changes are occurring within the payment systems that enable the
exchange of value between buyers and sellers. The proliferation of non-cash
payment methods such as credit and debit card, smart card, electronic checking
and Automatic Clearing House (ACH), stored value, electronic benefit transfer
(EBT), loyalty programs, gift card and future electronic payment systems require
that merchants be prepared to accept an array of e-payment types subject to the
demands of which ever payment type a buyer chooses for a given purchase.

Businesses such as banks, transaction processors, software vendors and
internet service providers (ISPs) that service the needs of businesses in this
changing environment typically provide single service solutions, such as
Internet hosting services from an ISP or credit card processing through a
processor. Typically, businesses are forced to manage many disjointed
relationships without the benefits of a centralized service that provides
systems management, customer service and a multi-faceted e-payment and
e-commerce solution.

The complexities and inherent flaws of this service environment present
a significant business opportunity for us and have served to increase the need
for our solutions and our value proposition for our prospective clients.

C. ACCESSPOINT PRODUCTS AND SERVICES

Merchant bankcard services and e-commerce tools highlight our
solutions. These components may each be broken down into many individual
products and services that may be sold in any combination and customized
delivery methods can be developed for their unique marketplace.

MERCHANT ACCOUNTS (MERCHANT BANKCARD PROCESSING)

We are a primary processor and underwriter of electronic financial
transactions as a member processor, under the sponsorship of Chase Manhattan
Bank, within the Visa/MasterCard association for the processing of card
transactions and the National Automated Clearing House Association (NACHA)
network for the processing of electronic checks and check conversion under the
sponsorship of Provident Bank.

We provide sellers with point of sale (POS) terminal equipment,
transaction routing and authorization, settlement, Internet-based processing
services, risk management, stored value, loyalty program support and sponsorship
into all credit card associations (such as VISA and MasterCard) and major debit
networks (such as STAR, Pulse, and NYCE). This combination of products are all
sold and serviced through Processing Source International.

E-COMMERCE AND SOFTWARE SERVICES

We offer a number of e-commerce and value-added business services to
our resellers in the bankcard industry and the merchants they support. These
services are delivered through two primary software products - Transaction
Manager and Merchant Manager Enterprise.

TRANSACTION MANAGER is a secure web-based merchant account
administration and transaction processing system. The system provides Real-time
electronic payment solutions that enable the acceptance of Credit cards,
electronic checks and alternative payment types, as well As ACH payments.

MERCHANT MANAGER ENTERPRISE offers a complete, secure electronic
commerce solution that is cost-effective and easy to use. Web browser-based
administration tools provide businesses with a simple interface for controlling
catalog and content creation, accounts and discount management, point of sale
and inventory control systems, marketing tools and program administration,
legacy systems information management (through extensive information import and
export features), reporting and tracking tools, tax and shipping calculation,
and the secure transaction processing features of our Transaction manager
system. These services come complete with hosting, e-mail and technical support.
The system is virtually platform-independent and is accessed through a simple
Internet connection.

While there are some weaknesses inherent in our products, one notable
marketplace disadvantage is the added time and expense required if a business
insists that our e-commerce system be fully integrated into the business'
back-end systems. Because there is so much diversity in back-end systems, no
single e-commerce software product will automatically link to all existing order
entry and inventory management modules. Full integration requires either
replacing the back-end systems or customizing the e-commerce system to work
automatically with the existing back-end systems.

E. COMPETITION

Our current and prospective competitors in the market segments we serve
include many large companies that have substantially greater market presence and
financial, technical, marketing and other resources than we do. The major
strengths of our competitors in many cases include their longer operating
histories, greater installed bases and greater name recognition. Our principal
competitors include major national and regional banks such as Wells Fargo & Co.
and Bank of America Corp., local processing banks such as Imperial Bank and
Universal Savings Bank, F.A., non-bank processors such as Nova Information
Systems, Concord EFS, Inc. and First Data Merchant Services, check conversion
and authorization processors such as CrossCheck, Inc. and TeleCheck Services,
Inc. and other independent service organizations who re-sell these payment
processing services such as Electronic Exchange Systems, Retriever Payment
Systems and Cardservice International, Inc. In each of our payment processing
service types, we compete against other companies who have a dominant share of
each market.

Additionally, there are competitors in the processing market who focus
exclusively on providing electronic payment processing software and hardware
services. Our services provide web-based or outsourced transaction processing
and management software services, which compete in this market segment in an
Application Service Provider (ASP) model. Our principal competitors in software
services include boxed software, or merchant-deployed software, developers such
as Go Software, Inc. and Hewlett-Packard Co., outsourced or ASP model developers
and service providers such as Clear Commerce Corp., Signio (a subsidiary of
VeriSign, Inc.) and AuthorizeNet.

The potential exists that our competitors may be able to respond more
quickly than we can to new or emerging technologies and changes in customer
requirements. Competition could impede our ability to sell additional services
on terms favorable to us. Our current and potential competitors may develop new
technologies that render our existing or future services obsolete, unmarketable
or less competitive. Our current and potential competitors may make strategic
acquisitions or establish cooperative relationships among themselves or with
other e-commerce transaction service providers, thereby increasing the ability
of their services to address the needs of our prospective customers. Our current
and potential competitors may establish or strengthen cooperative relationships
with our current or future channel partners, thereby limiting our ability to
sell services through these channels. Competitive pressures could reduce our
potential market share or require the reduction of the prices of our services,
either of which could materially and adversely affect our business, results of
operations or financial condition.

F. CUSTOMERS AND MARKETING

We market our services through a variety of channels including direct
solicitation and limited advertising. Our employees are utilized in the direct
solicitation of new clients and the cross selling of additional Company services
to existing clients. We market on a nationwide basis for card processing
services. Most of the merchant service businesses are marketed regionally by
sales forces associated with independent sales organizations ("ISO").

G. SEASONALITY

Portions of our business are seasonal. Revenues and earnings are
affected favorably by increased card and check volume during the Halloween and
subsequent holiday shopping period in the fourth quarter and, to a lesser
extent, during the back-to-school buying period in the third quarter.

H. REGULATION

Various aspects of our service areas are subject to federal and state
regulation, which, depending on the nature of any noncompliance, may result in
the suspension or revocation of any license or registration at issue, as well as
the imposition of civil fines and criminal penalties.

Certain of our activities are subject to the Federal Fair Credit
Reporting Act, various similar state laws. Our collection activities are subject
to the Fair Debt Collection Practices Act and various similar state laws.

We have developed compliance programs to monitor regulatory
requirements and developments, and to implement policies and procedures to help
satisfy these requirements. We have developed compliance programs focused on
agent training and monitoring to help ensure legal and regulatory compliance by
our agents. Additionally, we continue to enhance our compliance policies and
programs to help augment our compliance efforts.

I. EMPLOYEES

As of December 31, 2003, we have no full-time or part-time employees.
We lease our employees from Merchants Billing Services ("MBS") under the terms
of that certain Master Support Services Agreement. We leased 51 full-time and 1
part-time employees from MBS. None of our leased employees is represented by a
labor union or is subject to a collective bargaining agreement, nor have we
experienced any work stoppage.

ITEM 2. DESCRIPTION OF PROPERTY

We do not own any real property. As of December 31, 2003, we pay MBS
for the use of a shared facility under the terms of the Master Support Services
Agreement dated October 15, 2002.

ITEM 3. LEGAL PROCEEDINGS

The Company is subject to various claims and legal proceedings covering
a wide range of matters that arise in the ordinary course of its
business activities. Listed below are only those matters considered to
be material to the Company by management and its counsel.

CITICORP - During 2001 the Company vacated office facilities it had
leased under an operating lease agreement in Chicago, Illinois. The
lessor subsequently filed suit against the Company for the remaining
amount of unpaid rent and other various expenses. A judgment was filed
against the Company in the amount of $95,000. As of December 31, 2003
the Company has accrued for the liability in full on its Balance Sheet.
No payments have been made.

ROYCAP - In June 2002, Roycap filed suit against the Company for
default on a loan agreement. Judgment was entered in favor of Roycap in
the amount of $730,000. This amount plus additional possible penalties
was fully accrued by the Company as December 31, 2003. On March 19,
2004 an assignment of judgment and Settlement Agreement was executed
whereby the judgment in full was settled for $300,000, $250,000 of
which is payable immediately upon execution of the settlement and
$50,000 payable in monthly installments over two years beginning April
1, 2004.

BENTLEY PROMISSORY NOTES - Various family trusts related to James W.
Bentley, a former Director of the Company, have filed three related
actions seeking to collect in excess of $500,000 in promissory notes
allegedly due. The Company believes these claims were settled by the
June 26, 2002 Settlement and in any event, believes the sums due are
substantially less than claimed. The Company continues to fight these
actions vigorously. These cases have been consolidated with the case of
Bentley v. Barber, et al (see below) and are scheduled to go to trial
on July 25, 2004

MERCHANTSWAREHOUSE.COM - This is a claim against PSI for breach of an
independent sales agent agreement. The claim is disputed. The matter
was submitted to arbitration and was heard by the arbitrator. The
arbitrator made an interim award of $296,720 and denied the Company's
counterclaim. The Company is directed to pay the agent residuals
according to the terms of the Company's agreement with the agent. The
Company has made all payments to the agent since the date of the award.
On November 7, 2003, Merchantswarehouse.com obtained a judgment
consistent with the arbitrator's award. The Company is presently
assessing the advisability of an appeal. The amount of the award has
been accrued.

NORTHWEST SYSTEMS, LLC - Two inter-related claims, one lawsuit and one
arbitration claim arising out of a dispute over a contract whereby PSI
agreed to purchase certain merchant accounts from Northwest Systems,
LLC ("NWS"). The first case (lawsuit) sought to recover damages of
$300,000 for alleged breach of the contact to purchase, while the
second case (arbitration) claimed that NWS had not been paid all
residual payments due it under its agency contract with PSI. In May
2003, an award in the arbitration claim in the amount of $149,000 was
made for the benefit of the plaintiff. In mediation on July 2, 2003,
the registrant settled both claims. The settlement calls for the
Company to allow the conversion/transfer of all merchants accounts
associated with NWS effective, July 1, 2003, and to pay $40,000 for
attorney costs, which have now been paid. While no accurate forecast
can be made as to the amount and timing of the anticipated conversion,
NWS merchants accounted for approximately 10% of the Company's gross
processing revenue for the quarter ended March 31, 2003. The settlement
also calls for a mutual release on both parties of all and any current
or contemplated actions arising from their business relationship.

MOCERI LEASING CO. - This is an action by an equipment lessor on a
defaulted lease. In August 2003 the Company entered into a structured
settlement agreement for a total payout of $30,000 payable in 20
installments through April of 2005.

CIT COMMUNICATIONS CO. ("CIT") - CIT, an equipment lessor, claims that
we defaulted on an equipment lease. We are vigorously defending against
this claim. The total amount of any potential judgment for the value of
the equipment has been accrued.

GLOBAL ATTORNEYS NETWORK CO. - This is an action filed on behalf of an
equipment lessor on a defaulted lease. In April 2003 the matter was
settled for $16,900. This amount has been accrued. No payments have
been made.

BAS MULDER - This is a lawsuit filed by the former owner and employee
of Black Sun Graphics, Inc. ("BSG"), claiming damages in excess of
$430,000 related to the purchase of BSG by the Company. The Company has
entered into a structured settlement agreement calling for payments
totaling $45,000 payable over 20 months and has begun making these
payments.

FOSTER TEPPER - This is an action recently brought by a former attorney
for the Company for approximately $63,000 in legal fees, which are
allegedly due and payable.

ACCESS HOLDINGS LIMITED PARTNERSHIP - This is a lawsuit brought on
behalf of two holders of Company stock who claim the Company has
violated a prior settlement agreement and that they are therefore
entitled to the return of approximately 4.1 million shares of Company
stock, which they had previously surrendered, to the Company per that
agreement. The Company denies both that it has breached the prior
settlement agreement and that the plaintiffs are entitled to the relief
they seek. Plaintiffs are not seeking monetary damages from the
Company, though they are seeking court costs and attorney fees. The
Company is fighting this action vigorously. No trial date has been set.

BENTLEY V. WILLIAM R. BARBER, ET AL. - On March 22, 2002, James Bentley
("Plaintiff"), a shareholder of the Company, filed a shareholder
derivative lawsuit against the Company and several individual
defendants for breach of contract, breach of fiduciary duty,
misappropriation of trade secret, recovery of personal property,
imposition of a constructive trust, unfair competition in violation of
Business and Profession Code Section 17200, conversion, unfair business
practices, and usurpation of corporate opportunity. On several
occasions, Plaintiff also sought provisional remedies with the Court,
including multiple applications for preliminary injunction and the
appointment of a receiver. To date, none of Plaintiff's requests for
provisional relief have been granted. On June 26, 2002, the parties to
the action executed a Settlement Agreement. Plaintiff purported to
rescind the Settlement Agreement in early December 2002. Plaintiff
thereafter filed an ex parte application for temporary restraining
order, which the court denied on December 24, 2002. The Court set a
hearing for Plaintiff's application for preliminary injunction in late
January 2003. Plaintiff thereafter continued the hearing on the
application for preliminary injunction on several occasions.
Ultimately, after Defendant's; opposition to the preliminary injunction
request was filed; Plaintiff took his application for preliminary
injunction off calendar completely. A number of depositions and law and
motion were conducted during January and February 2003. On July 3, 2003
in a special meeting of the Board of Directors, the Directors received,
reviewed and considered the report of the findings of the Special
Litigation Committee ("the Committee").

BENTLEY V. WILLIAM R. BARBER, ET AL. (continued) - The Committee was
formed in January 2003 for the purpose of investigating the allegations
contained within the shareholder derivative action known as BENTLEY v.
BARBER (" the Bentley matter"). Based on its investigation, which
included the review of thousands of pages of documents, 1,200 pages of
transcripts of depositions, reviews of the declarations of ten
witnesses, and interviews of the Plaintiff, and his representatives, as
well as of at least fifteen other witnesses, the Committee met on July
2, 2003 and unanimously agreed and found as follows:

1) The action was previously settled, after both the plaintiff and
the court in the Bentley matter concluded the settlement
agreement was in the best interests of the Company, so that the
Committee likewise concludes that the best interests of the
company are served by a dismissal of the action and the
enforcement of the settlement agreement previously approved by
the court:
2) That the allegations raised in the Bentley matter are without
merit;
3) That it is not in the Company's interests to pursue the
litigation, as the costs of prosecuting the litigation far exceed
any possible recovery to the Company, particularly given the
possible indemnity obligations of the Company;
4) The balance of the Company's corporate interests, including its
need to maintain its relationship with Chase, the need for and
ability to focus on obtaining new accounts, the need to apply the
Company's resources, management, and assets to the payment and
resolution of outstanding debts and the need to repair the
Company's reputation that has been damaged by this litigation,
warrants dismissal of the action, regardless of the merits of the
Bentley matter; and
5) The Company has new management and has carefully reviewed the
subject matter of the litigation and the accounting of the assets
of the Company and the handling of related party transactions.

Based on the findings of the Committee, the Directors determined it to
be in the best interests of the company to cause the Bentley matter to
be dismissed. On July 3, 2003, the company's attorneys filed a motion
for summary judgment with the Orange County Superior Court, the motion
contends that: there is no merit to the charges, the suit is not being
prosecuted for the benefit of the shareholders or the company, but is a
vendetta by the a shareholder brought for its own purposes and that the
burdens of litigation are largely responsible for the fall in the
corporation's stock price since the case was filed. On July 3, 2003,
the Company's attorneys concurrently filed a motion for an indefinite
stay in discovery pending judgment on the motion for summary judgment.
On July 25, 2003, the court granted the Company's request for stay
pending ruling on the motion for summary judgment. On September 18,
2003, the Court denied the summary judgment motion, finding that there
were triable issues of material fact as to the Committee's
investigation. As of this writing, the Court has not entered a formal
order on this motion. The Company believes the Court's ruling is
incorrect and plans to seek further review once the written order is
issued. The Court's ruling also ended the stay of proceedings which had
been in effect since July 25, and the case - along with the Bentley
Promissory Note cases (see above), with which it has been consolidated
- is now set for trial on July 26, 2004. The Company continues to fight
this action vigorously. The Company has recorded no liability for the
potential of an adverse outcome of the action.

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

No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the year ended December 31, 2003.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock is quoted on the over-the-counter bulletin board
system (OTC-BB) under the symbol "ASAP." The table below reflects the high and
the low bid and ask quotations for each of our fiscal quarters for the last
fiscal year. The prices reflect inter-dealer prices, without retail mark-up,
markdown or commission and do not necessarily represent actual transactions.

2003
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HIGH LOW
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1st Quarter $ 0.43 $ 0.20
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2nd Quarter $ 0.38 $ 0.12
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3rd Quarter $ 0.40 $ 0.12
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4th Quarter $ 0.35 $ 0.10
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2002
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HIGH LOW
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1st Quarter $ 1.45 $ 0.60
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2nd Quarter $ 1.00 $ 0.33
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3rd Quarter $ 0.83 $ 0.33
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4th Quarter $ 0.43 $ 0.20
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A. NUMBER OF HOLDERS

As of December 31, 2003, we had 1,288 common shareholders of record.
On, December 31, 2003 the last reported sales price of our common stock on the
Pink sheet was $0.10 per share.

Our stock has had a market price of less than $5.00 per share in recent
times. The SEC has adopted regulations which generally define "penny stock" to
be any equity security that has a market price (as defined) less than $5.00 per
share or an exercise price less than $5.00 per share, subject to certain
exceptions. Accordingly, our common stock may become subject to rules that
impose additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors
(generally those with assets in excess of $1,000,000 or annual income exceeding
$200,000, or $300,000 together with their spouse). For transactions covered by
these rules, the broker-dealer must make a special suitability determination for
the purchase of such securities and have received the purchaser's written
consent to the transaction prior to the purchase.

Additionally, for any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the transaction, of a
disclosure schedule prepared by the SEC relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and, if the broker-dealer is the sole market-maker, the broker-dealer
must disclose this fact and the broker-dealer's presumed control over the
market. Finally, monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks. Consequently, the "penny stock" rules may
restrict the ability of broker-dealers to sell our common stock and may affect
the ability of investors to sell our common stock in the public market.

B. DIVIDENDS

The payment of dividends is within the discretion of the Board of
Directors of our Company. We currently intend to retain all earnings, if any, in
the foreseeable future for use in the development of our business. We have not
paid dividends since inception. It is not anticipated that any dividends will be
paid in the foreseeable future and there can be no assurance that dividends can
or will ever be paid. The payment of dividends is contingent upon future
earnings, if any, our financial condition and capital requirements, general
business conditions and other factors.

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

The following discussion and analysis should be read in conjunction
with the financial statements and related notes contained elsewhere in this
document. The discussion contained herein relates to the financial statements,
which have been prepared in accordance with GAAP.

THE DISCUSSION IN THIS SECTION AND OTHER PARTS OF THIS REGISTRATION STATEMENT
CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS SUCH AS STATEMENTS OF THE COMPANY'S
PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS. THESE STATEMENTS INVOLVE RISKS
AND UNCERTAINTIES. THEY ARE MADE AS OF THE DATE OF THIS REPORT, AND THE COMPANY
ASSUMES NO OBLIGATION TO UPDATE THEM.

A. PLAN OF OPERATION

Our primary software products consist of: Merchant Manager Enterprise,
a complete and secure fully-hosted e-commerce solution for small to midsize
businesses, which provides an on-line store, catalog and credit card processing
abilities; Transaction Manager, an on-line credit card and ACH processing
solution for small to midsize businesses; and Merchant Manager, a hosted
e-commerce solution providing a simple-to-learn and simple-to-use set of tools
derived from Merchant Manager Enterprise. We provide hosting services in
conjunction with the software products.

During the coming twelve months, we will not be able to satisfy the
cash requirements and have no financing alternatives to satisfy the obligations
except for the sale of a portion of the merchant portfolio. The plans for the
coming twelve months include the contemplation of a sale of the merchant
portfolio for the purpose of recapitalizing the company and paying down debt.
Should a portion of the merchant portfolio be sold, we will be forced to reduce
the staffing levels in line with the reduction in revenue realized. During the
coming twelve months, we will continue to pursue enhancements of the existing
Merchant Manager and Transaction Manager products to meet the demands of an
increasingly competitive marketplace. We do not anticipate the development of
any products during the coming twelve-month period and will not expend
significant resources on the research or development of new product lines.

B. RESULTS OF OPERATIONS

For the year ended December 31, 2003 compared with year ended December
31, 2002.

Revenues for the year ended December 31, 2003 decreased to $12,687,551
from $13,264,318 for the year ended December 31, 2002. The decrease of $576,767,
4% is due primarily to the decreased revenues associated with credit card
processing which resulted in an overall decrease in sales.

Cost of sales for the year ended December 31, 2003 decreased to
$9,768,557 from $11,176,910 for the year ended December 31, 2002. The decrease
of $1,408,353 or 13%, resulted primarily from lowered agent residual expenses
and more attention focused on the profitability of each merchant's relationship.

Selling and marketing expenses for the year ended December 31, 2003
$10,117 remained about the same as the $13,595 for the year ended December 31,
2002.

General and administrative expenses for the year ended December 31,
2003 decreased to $2,982,035 from $3,166,032 for the year ended December
31,2002. The decrease of $183,997, or (6%), resulted primarily from a decrease
of salaries and wages, occupancy costs, and other operating efficiencies
realized through the consolidation of three offices into one.

The loss from operations for the year ended December 31, 2003 was
$73,158 as compared to a loss of $1,092,219 for the year ended December 31,
2002. The increase in income of $1,019,061 resulted primarily from the reduction
of salaries, operating efficiencies, lowered residual expenses, increased
transaction profitability and a reduction in bad debt expenses.

Interest expense, net, for the year ended December 31, 2003 was
$278,227, as compared to $529,646 for the year ended December 31, 2002. The
decrease resulted primarily from the Company's continued reduction of
in-debtedness and borrowing costs.

Other (Income) Expense, net of Interest expense was $(304,879) income
for the year ended December 31, 2003, as compared to $5,222,287 expense for the
year ended December 31, 2002. The turn around of $5,527,166 resulted primarily
from the reduction of the write downs on deferred financing ($3,756,927),
lowered amortization of deferred financing costs ($751,385), reduction in
litigation expenses ($224,998), reduced penalties ($206,393) and reduced loss on
sale of asset ($153,477) realized for the year ended December 31, 2003, as
compared to the year ended December 31, 2002 and the favorable settlement of a
law suit resulting in cancellation of debt and interest in the amount of
$432.000.

Net loss for the year ended December 31, 2003 was ($50,615), as
compared to ($6,846,552) for the year ended December 31, 2002. The difference is
the result of the increase in Income (loss) from operations and decrease in
Other (Income) expense as explained above.

C. Liquidity and Capital Resources

The Company had cash of $28,393 at December 31, 2003, as compared to
cash of $35,961 at December 31, 2002.

The Company had negative working capital at December 31, 2003. We
believe that cash generated from operations will not be sufficient to fund the
current and anticipated cash requirements and the pay down of existing debts.
The plans for the coming twelve months include the contemplation of a sale of
the merchant portfolio for the purpose of re-capitalizing the company and paying
down debt. Should a portion of the merchant portfolio be sold, we will be forced
to reduce the staffing levels in line with the reduction in revenue realized.

PART I
FINANCIAL INFORMATION

ITEM 7. FINANCIAL STATEMENTS

TABLE OF CONTENTS

Independent Auditors' Report 16

Consolidated Balance Sheets 17

Consolidated Statements of Operations 18

Consolidated Statements of Cash Flow 19

Consolidated Statement of Changes in Stockholders' Equity 20

Notes to Consolidated Financial Statements 21

INDEPENDENT AUDITORS' REPORT

To the Stockholders and Board of Directors of
Accesspoint Corporation and Subsidiaries

We have audited the accompanying consolidated balance sheets of Accesspoint
Corporation and Subsidiaries (a Nevada Corporation) as of December 31, 2003 and
2002 and the related consolidated statements of operations, stockholders' equity
and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Accesspoint Corporation and Subsidiaries as of December 31, 2003 and 2002 and
the consolidated results of its operations and cash flows for the years then
ended, in conformity with accounting principles generally accepted in the United
States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note L to the
financial statements, the Company has suffered recurring losses from operations
and its limited capital resources raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note L. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

Mendoza Berger & Company, LLP.

March 23, 2004
Irvine, CA

ACCESSPOINT CORPORATION AND SUBSIDARIES
CONSOLIDATED BALANCE SHEETS

ASSETS
------

December 31, December 31,
2003 2002
------------- -------------

Current Assets
Cash $ 28,393 $ 35,961
Accounts receivable, net of
allowance for doubtful accounts
$80,000 at 2003 and 2002 446,870 348,708
Receivable from a related party 0 157,172
Prepaid expenses 39,235 1,488
------------- -------------
Total Current Assets 514,498 543,329
------------- -------------
Fixed Assets
Furniture and equipment (net) 91,099 178,139
------------- -------------
Total Fixed Assets 91,099 178,139
------------- -------------
Other Assets
Deferred financing costs (net) 752,873 1,266,764
Portfolio Purchase 0 154,667
Deposits 285,108 280,108
------------- -------------
Total Other Assets 1,037,981 1,701,539
------------- -------------
Total Assets $ 1,643,578 $ 2,423,007
============= =============

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Current Liabilities
Accounts payable $ 939,851 $ 1,527,457
Accrued payroll taxes and penalties 1,328,138 1,412,432
Accrued liabilities 504,014 560,707
Merchant loss reserve 2,778 19,465
Lines of credit 1,373,049 1,364,761
Capitalized leases 577,638 419,460
Notes payable 415,000 565,000
------------- -------------

Total Current Liabilities 5,140,468 5,869,282

Total Liabilities 5,140,468 5,869,282
------------- -------------

Stockholders' Equity

Preferred Stock, $.001 par value,
5,000,000 shares authorized,
1,055,600 shares issued and
outstanding, respectively 1,056 1,056

Common stock, $.001 par value,
25,000,000 shares authorized,
18,971,230 and 24,163,965 issued
and outstanding at December 31,
2003 and 2002, respectively 18,971 24,164

Additional paid in capital 15,119,197 15,114,004
Accumulated (deficit) (18,636,114) (18,585,499)
------------- -------------
Total Stockholders' (Deficit) (3,496,890) (3,446,275)
------------- -------------
Total liabilities and
Stockholders' Equity $ 1,643,578 $ 2,423,007
============= =============

Refer to notes to the financial statements

ACCESSPOINT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended
-------------------
December 31, December 31,
2003 2002
------------- -------------

Sales, net $ 12,687,551 $ 13,264,318

Cost of sales 9,768,557 11,176,910
------------- -------------

Gross profit 2,918,994 2,087,408

Selling expenses 10,117 13,595

General and administrative expenses 2,982,035 3,166,032
------------- -------------

Income (loss) from operations (73,158) (1,092,219)
------------- -------------

Other (income) expense
Interest income (19,386) (15,634)
Loss on sale of asset 0 153,477
Penalties 14,659 221,052
Miscellaneous 2,040 (95,926)
Litigation expense 0 224,998
Amortization of deferred financing
costs 513,891 1,265,276
Write down of deferred financing costs 0 3,756,927
Debt forgiveness (816,083) (287,883)
Interest expense 278,227 529,646
------------- -------------

Total Other (income) expense (26.652) 5,751,933
------------- -------------
Income (loss) before income taxes (46,506) (6,844,152)

Provision for income taxes 4,109 2,400
------------- -------------
Net income (loss) $ (50,615) (6,846,552)
============= =============
Net loss per share
Basic $ (0.00) $ (0.29)

Weighted average number of shares
Basic 20,786,413 23,826,300

Refer to notes to the financial statements

ACCESSPOINT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended
-----------
December 31, December 31,
2003 2002
------------ ------------

CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (50,615) $(6,846,552)

Adjustments to reconcile net loss to net cash
used in operating activities:
Forgiveness of debts and notes payable (816,083) 0
Amortization 513,891 1,265,276
Depreciation 271,957 221,743
Impairment loss 0 45,333
Write down of deferred financing costs 0 3,756,927
Loss on disposal of assets 0 153,477
Decrease in deferred compensation 0 (221,477)
Increase in receivables (98,162) (92,835)
Decrease in inventory 0 6,366
Decrease (increase) in other current
assets 157,172 (157,172)
Increase (decrease) in prepaid expenses (37,748) 12,319
(Decrease) increase in deposits (5,000) 11,950
(Decrease) increase in accounts
payable and accrued expenses 5,098 59,769
(Decrease) increase in accrued payroll
taxes (84,293) 321,352
Decrease in merchants loss reserve 0 (80,000)
Increase in accrued liabilities 0 222,474
------------ ------------
Total adjustments (93,168) 5,525,502
------------ ------------
Net cash contributed by
(used in) operations (143,783) (1,321,050)
------------ ------------

CASH FLOWS FROM INVESTING ACTIVITIES
(Purchase) reduction of portfolio 154,667 (200,000)
Purchase of fixed assets (740) 0
------------ ------------
Net cash provided (used in) investing
activities 153,927 (200,000)
------------ ------------

CASH FLOWS FROM FINANCING ACTIVITIES
Payments on capital leases (26,000) (32,281)
Sale of stock 0 149,393
Line of credit 8,288 1,361,670
------------ ------------
Net cash provided by (used in)
financing activities (17,713) 1,478,782
------------ ------------
Net change in cash (7,568) (42,268)
------------ ------------
Cash at beginning of period 35,961 78,229
------------ ------------
Cash at end of period $ 28,393 $ 35,961
============ ============
Supplemental cash flow disclosures:
Conversion of notes payable $ 0 $ (546,500)
Forgiveness of accrued expenses $ 666,083 $ 0
Forgiveness of notes payable $ 150,000 $ 0

Refer to notes to the financial statements

ACCESSPOINT CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

COMMON STOCK
----------------------------------------------- Preferred
Additional Stock Total
Number of Par value paid-in 1,055,600 Retained Stockholders'
shares $0.001 capital shares issued (deficit) equity
------------- ------------- ------------- ------------- ------------- -------------

Balance at December 31, 2001 23,375,208 $ 23,375 $ 14,418,900 $ 1,056 $(11,738,947) $ 2,704,384

Stock issued various dates for
cash at $1.50 per share 788,757 789 148,604 -- -- 149,393

Conversion of notes payable -- -- 546,500 -- -- 546,500

Net loss -- -- -- -- (6,846,552) (6,846,552)
------------- ------------- ------------- ------------- ------------- -------------

Balance at December 31, 2002 24,163,965 24,164 15,114,004 1,056 (18,585,499) (3,446,275)

Stock returned by shareholders
and cancelled (5,192,735) (5,193) 5,193

Net loss -- -- -- -- (50,615) (50,615)
------------- ------------- ------------- ------------- ------------- -------------

Balance at December 31, 2003 18,971,230 $ 18,971 $ 15,119,197 $ 1,056 $(18,636,114) $ (3,496,890)
============= ============= ============= ============= ============= =============

Refer to notes to the financial statements

ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002

NOTE A - NATURE OF OPERATIONS
--------------------

Accesspoint Corporation (subsequently referred to as "Accesspoint", the
"Company" or "We") was incorporated as Accesspoint Corporation in
Nevada in 1995 and is a provider of card-based and web-based payment
processing services to small businesses throughout the United States.
The Company enables merchants to accept credit cards as payment for
their products and services by providing card authorization, data
capture, settlement, risk management, fraud detection and chargeback
services. Our services also include transaction organization and
retrieval, ongoing merchant assistance and support in connection with
disputes with cardholders. We market and sell our services primarily
through independent sales organizations ("ISOs") and registered sales
agents ("RSAs").

Our payment processing services enable merchants to process both
traditional swipe transactions, as well as card-not-present
transactions. A card-not-present transaction occurs whenever a customer
does not physically present a payment card at the point-of-sale and may
occur over the Internet or by mail, fax or telephone. Our processing
services include evaluation and acceptance of card numbers, detection
of fraudulent transactions, receipt and settlement of funds and service
and support. By outsourcing some of these services to third parties,
including the evaluation and acceptance of card numbers and receipt and
settlement of funds, we maintain an efficient operating structure,
which allows us to easily expand our operations without significantly
increasing our fixed costs. We believe our experience and knowledge in
providing payment processing services to merchants of all sizes gives
us the ability to effectively identify, evaluate and manage the payment
processing needs and risks that are unique to businesses of varying
levels.

We market and sell our services primarily through our relationships
with ISOs and RSAs. ISOs and RSAs act as a non-employee, external sales
force in communities throughout the United States. By providing the
same high level of service and support to our ISOs and RSAs as we do to
our merchants, we maintain our access to an experienced sales force
sales professionals who market our services, with minimal direct
investment in sales infrastructure and management. After an agent
refers a merchant to us and we execute a processing agreement with that
merchant, we pay the referring ISO or RSAs a percentage of the revenues
generated by that merchant. Although our relationships with agents are
mutually non-exclusive, we believe that our understanding of the unique
payment processing needs of merchants of all sizes enables us to
develop compelling incentives for agents to continue to refer newly
identified merchants to us.

Revenue Recognition
-------------------
The Company recognizes revenue from: settlement fees for electronic
payment processing, credit and debit card payment settlement, check
conversion and financial processing programs and transaction fees
related to the use of its software and credit card processing products,
licensing of its software products. Revenue from software and hardware
sales and services are recognized as products are shipped, downloaded,
or used.

The Company reports income and expenses on the accrual basis for both
financial and income tax reporting purposes.

ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2003 AND 2002

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------

Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of
Accesspoint Corporation, and its wholly owned subsidiaries Processing
Source International, Inc. (PSI) and Black Sun Graphics, Inc. (BSG),
collectively referred to within as the Company. All material
intercompany accounts, transactions and profits have been eliminated in
consolidation.

Risks and Uncertainties
-----------------------
The Company is subject to substantial risks from, among other things,
intense competition from the providers of financial electronic payment
processing, settlement services, software development and e-commerce
service companies specifically and the technology industry in general,
other risks associated with the Internet services industry, financing,
liquidity requirements, rapidly changing customer requirements, limited
operating history, and the volatility of public markets.

Contingencies
-------------
Certain conditions may exist as of the date the financial statements
are issued, which may result in a loss to the Company but which will
only be resolved when one or more future events occur or fail to occur.
The Company's management and legal counsel assess such contingent
liabilities, and such assessment inherently involves an exercise of
judgment. In assessing loss contingencies related to legal proceedings
that are pending against the Company or unasserted claims that may
result in such proceedings, the Company's legal counsel evaluates the
perceived merits of any legal proceedings or unasserted claims as well
as the perceived merits of the amount of relief sought or expected to
be sought.

If the assessment of a contingency indicates that it is probable that a
material loss has been incurred and the amount of the liability can be
estimated, then the estimated liability would be accrued in the
Company's financial statements. If the assessment indicates that a
potential material loss contingency is not probable but is reasonably
possible, or is probable but cannot be estimated, then the nature of
the contingent liability, together with an estimate of the range of
possible loss if determinable and material would be disclosed.

Loss contingencies considered to be remote by management are generally
not disclosed unless they involve guarantees, in which case the
guarantee would be disclosed.

Reserve for Merchant Credit Losses
----------------------------------
The Company establishes reserves for merchant credit losses, which
arise as a result of, among other things, cardholder dissatisfaction
with merchandise quality or merchant services. Such disputes may not be
resolved in the merchant's favor. In these cases, the transaction is
"charged back" to the merchant and the purchase is refunded to the
customer by the merchant. If the merchant is unable to grant a refund,
the Company or, under limited circumstances, the Company and the
processing bank, must bear the credit risk for the full amount of the
transaction. The Company estimates its potential loss for chargebacks
based primarily on historical experience. Obtaining collateral from
merchants considered higher risk often mitigates the risk of loss. At
December 31, 2003 and December 31, 2002, the Company had aggregate
collateral classified as merchant loss reserves of $2,778 and $19,465
respectively.

ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2003 AND 2002

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------

Estimates
---------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates. Significant estimates include
collectibility of accounts receivable, accounts payable, sales returns
and recoverability of long-term assets.

Allowance for Doubtful Accounts
-------------------------------
The Company has made an allowance for doubtful accounts for trade
receivables.

Fixed Assets
------------
Property and equipment are stated at cost less accumulated
depreciation. Expenditures for major additions and improvements are
capitalized, and minor replacements, maintenance and repairs are
charged to expense as incurred. Depreciation is provided on the
straight-line method over the estimated useful lives of the assets, or
the remaining term of the lease, as follows:

Furniture and Fixtures 5 years
Equipment 5 years
Hardware and Software 3 years

Leasehold Improvements
----------------------
Amortization of leasehold improvements is computed using the
straight-line method over the shorter of the remaining lease term or
the estimated useful lives of the improvements.

Capital Leases
--------------
Assets held under capital leases are recorded at the lower of the net
present value of the minimum lease payments or the fair value of the
leased asset at the inception of the lease. Depreciation is computed
using the straight-line method over the shorter of the estimated useful
lives of the assets or the period of the related lease.

Concentration of Credit Risk
----------------------------
Concentration of credit risk with respect to trade accounts receivable
is not diversified. As of December 31, 2003 87% of the trade
receivables are from Chase Merchant Services, LLC. The loss of Chase
Merchant Services to our Company would be severely detrimental and
could result in the termination and liquidation of our Company. Our
Company actively evaluates the creditworthiness of Chase Merchant
Services, LLC and is confident that the failure of the firm is neither
likely nor imminent.

ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2003 AND 2002

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------------------

Advertising
-----------
Advertising costs are expensed in the year incurred.

Stock-Based Compensation
------------------------
The Company accounts for stock-based employee compensation arrangements
in accordance with the provisions of Accounting Principles Board
Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees," and
complies with the disclosure provisions of Statement of Financial
Accounting Standards ("SFAS") 123, "Accounting for Stock-Based
Compensation." Under APB 25, compensation cost is recognized over the
vesting period based on the difference, if any, on the date of grant
between the fair value of the Company's stock and the amount an
employee must pay to acquire the stock.

NOTE C - STOCK AND STOCK WARRANTS
------------------------

The Company has two classes of capital stock: Preferred Stock and
Common Stock. Holders of common stock are entitled to one vote for each
share held. Preferred stock holders are not entitled to voting
privileges and are convertible into Common Stock under certain
circumstances on a share-for-share basis.

At December 31, 2003, the Company has 25,000,000 common shares
authorized and 18,971,230 shares issued and outstanding. The Company
had 5,000,000 preferred shares authorized and 1,055,600 shares issued
and outstanding.

Net Integrated Systems, Ltd. ("NIS") acquired shares as a result of a
series of transactions and agreements consummated on or about December
14, 2001. Those agreements were terminated effective October 15, 2002.
NIS and another stockholder who had received stock in accordance with
the agreements, returned their common shares (5,192,735) to be
cancelled in 2003.

In addition, our Company had outstanding at December 31, 2003, warrants
convertible into common shares at various prices ranging from $0.34 to
$7.50, with expirations dates through November 2006.

Weighted Average Weighted Average
Exercise Price Range Amount Contractual Life Exercise Price
$0.01 - $0.34 80,000 21 months $0.34
$0.71 - $0.81 312,223 46 months $0.78
$5.25 - $6.00 90,000 23 months $5.96

Reconciliation of stock warrants from December 31, 2002 to December
31, 2003 is as follows:

Balance at December 31, 2001 1,772,223
Warrants expired or exercised (1,290,000)
Warrants issued 0
Balance at December 31, 2002 482,223
Warrants expired or exercised 0
Warrants issued 0
Balance at December 31, 2003 482,223

NOTE D - LOSS PER SHARE
--------------

In February 1997, the Financial Accounting Standards Board (FASB)
issued SFAS No. 128" Earings Per Share" which requires the Company to
present basic and diluted net earnings, for all periods presented. The
computation of loss per common share (basic and diluted)is based on the
weighted average number of common shares outstanding during the period.
The Company has no common stock equivalents, which would dilute
earnings per share.

ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2003 AND 2002

NOTE E - FIXED ASSETS
------------

Fixed assets consist of the following:
December 31, December 31,
2003 2002
---------- ----------
Office equipment $ 740 $ 0
Computer hardware and software 816,099 631,922
Leasehold improvements 2,064 2,064
---------- ----------
818,903 633,986
Accumulated depreciation and disposal (727,804) (455,847)
---------- ----------
Total $ 91,099 $ 178,139
========== ==========

For the years ended December 31, 2003 and 2002, our Company
recorded depreciation of $271,957 and $221,743, respectively.

NOTE F - INCOME TAXES
------------

The components of the deferred tax assets are as follows:

December 31, December 31,
2003 2002
-------------- --------------
Deferred tax assets:
Net operating loss carry-forwards $ 5,032,000 $ 3,791,000
Depreciation and amortization 1,192,000 1,520,000
Other temporary differences 25,000 199,000
Valuation allowance $ (6,249,000) $ (5,510,000)
-------------- --------------

Net deferred tax assets $ -- $ --
============== ==============

The Company had available approximately $12,640,000 of unused Federal
and state net operating loss carry-forwards at December 31, 2003. that
may be applied against future taxable income. These net operating loss
carry-forwards begin to expire for Federal purposes in 2017. There is
no assurance that the Company will realize the benefit of the net
operating loss carry-forwards.

SFAS No. 109 requires a valuation allowance to be recorded when it is
more likely than not that some or all of the deferred tax assets will
not be realized. At December 31, 2003 and 2002, valuations for the full
amount of the net deferred tax asset were established due to the
uncertainties as to the amount of the taxable income that would be
generated in future years.

Reconciliation of the differences between the statutory tax rate and
the effective income tax rate is as follows:

December 31, December 31,
2003 2002
------------- -------------
Statutory federal tax (benefit) rate (34.0)% (34.0)%
Statutory state tax (benefit) rate (5.83)% (5.83)%
------------- -------------
Effective tax rate (39.83)% (39.83)%
Valuation allowance 39.83 % 39.83 %
------------- -------------
Effective income tax rate 0.00 % 0.00 %
============= =============

ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2003 AND 2002

NOTE G - LITIGATION AND CONTINGENCIES
----------------------------

ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2003 AND 2002

NOTE G - LITIGATION AND CONTINGENCIES (CONTINUED)
----------------------------------------

BAS MULDER - This is a lawsuit filed by the former owner and employee
of Black Sun Graphics, Inc. ("BSG"), claiming damages in excess of
$430,000 related to the purchase of BSG by the Company. During 2003 the
Company entered into a structured settlement agreement calling for
payments totaling $45,000 payable over 20 months and has begun making
these payments.

FOSTER TEPPER - This is an action recently brought by a former attorney
for the Company for approximately $63,000 in legal fees, which are
allegedly due and payable. The Company has accrued $37,000 for this
matter. Trial is scheduled to start August 30, 2004

BENTLEY V. WILLIAM R. BARBER, ET AL. - On March 22, 2002, James Bentley
("Plaintiff"), a shareholder of the Company, filed a shareholder
derivative lawsuit against the Company and several individual
defendants for breach of contract, breach of fiduciary duty,
misappropriation of trade secret, recovery of personal property,
imposition of a constructive trust, unfair competition in violation of
Business and Profession Code Section 17200, conversion, unfair business
practices, and usurpation of corporate opportunity. On several
occasions, Plaintiff also sought provisional remedies with the Court,
including multiple applications for preliminary injunction and the
appointment of a receiver. To date, none of Plaintiff's requests for
provisional relief have been granted. On June 26, 2002, the parties to
the action executed a Settlement Agreement. Plaintiff purported to
rescind the Settlement Agreement in early December 2002. Plaintiff
thereafter filed an ex parte application for temporary restraining
order, which the court denied on December 24, 2002. The Court set a
hearing for Plaintiff's application for preliminary injunction in late
January 2003. Plaintiff thereafter continued the hearing on the
application for preliminary injunction on several occasions.
Ultimately, after Defendant's opposition to the preliminary injunction
request was filed; Plaintiff took his application for preliminary
injunction off calendar completely. A number of depositions and law and
motion were conducted during January and February 2003. On July 3, 2003
in a special meeting of the Board of Directors, the Directors received,
reviewed and considered the report of the findings of the Special
Litigation Committee ("the Committee").

ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2003 AND 2002

NOTE G - LITIGATION AND CONTINGENCIES (CONTINUED)
----------------------------------------

1) The action was previously settled, after both the plaintiff
and the court in the Bentley matter concluded the settlement
agreement was in the best interests of the Company, so that
the Committee likewise concludes that the best interests of
the company are served by a dismissal of the action and the
enforcement of the settlement agreement previously approved by
the court:
2) That the allegations raised in the Bentley matter are without
merit;
3) That it is not in the Company's interests to pursue the
litigation, as the costs of prosecuting the litigation far
exceed any possible recovery to the Company, particularly
given the possible indemnity obligations of the Company;
4) The balance of the Company's corporate interests, including
its need to maintain its relationship with Chase, the need for
and ability to focus on obtaining new accounts, the need to
apply the Company's resources, management, and assets to the
payment and resolution of outstanding debts and the need to
repair the Company's reputation that has been damaged by this
litigation, warrants dismissal of the action, regardless of
the merits of the Bentley matter; and
5) The Company has new management and has carefully reviewed the
subject matter of the litigation and the accounting of the
assets of the Company and the handling of related party
transactions.

Based on the findings of the Committee, the Directors determined it to
be in the best interests of the company to cause the Bentley matter to
be dismissed. On July 3, 2003, the company's attorneys filed a motion
for summary judgment with the Orange County Superior Court, the motion
contends that: there is no merit to the charges, the suit is not being
prosecuted for the benefit of the shareholders or the company, but is a
vendetta by the a shareholder brought for its own purposes and that the
burdens of litigation are largely responsible for the fall in the
corporation's stock price since the case was filed. On July 3, 2003,
the Company's attorneys concurrently filed a motion for an indefinite
stay in discovery pending judgment on the motion for summary judgment.
On July 25, 2003, the court granted the Company's request for stay
pending ruling on the motion for summary judgment. On September 18,
2003, the Court denied the summary judgment motion, finding that there
were triable issues of material fact as to the Committee's
investigation. As of this writing, the Court has not entered a formal
order on this motion. The Company believes the Court's ruling is
incorrect and plans to seek further review once the written order is
issued. The Court's ruling also ended the stay of proceedings which had
been in effect since July 25, and the case - along with the Bentley
Promissory Note cases (see above), with which it has been consolidated
- is now set for trial on July 26, 2004. The Company continues to
fight this action vigorously. The Company has recorded no liability for
the potential of an adverse outcome of the action.

NOTE H - PAYROLL TAXES
-------------

The IRS has made formal demand of amounts due and unpaid for the period
of January 1 - December 31, 2000, including interest and penalties,
from the Company, and has appropriately filed tax liens against all
assets of the Company. The Company filed requests for an "Offer in
Compromise" for all amounts owed by the Company and its subsidiaries,
Processing Source International and Black Sun Graphics, all of which
are awaiting a response from the IRS. The Company has recorded its
liability in full to the IRS, including penalties and interest, on its
balance sheet. As of December 31, 2003, the Company has accrued
liability of approximately $1,310,000 to the IRS.

ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2003 AND 2002

NOTE I - COMMITMENTS
-----------

In October 2002, the Company entered into a Master Support Services
Agreement ("Agreement") with Merchants Billing Services ("MBS"). This
Agreement called for the payment of $180,000 per month for salaries,
office space & utilities, travel & entertainment, telecommunications,
professional services and a management fee, with a quarterly adjustment
of the payment based on actual expenses for the preceding three months
activity. The Agreement is for an initial period of one year. In March
2003, the Company received notification of MBS's intention to terminate
the agreement effective June 30, 2003. The termination was subsequently
amended to maintain MBS as the management over the Merchant Portfolio
only, effective June 1, 2003. As of October 1, 2003, with the reduction
in overhead costs, the Company amended the Agreement to reflect
reimbursement at actual cost only. The disinterested members of the
Board have accepted these amendments. There are no future minimum
payments under the amended Agreement and the management fee has been
discontinued. The Company paid MBS $55,000 and $110,000 for the years
ended December 31. 2003 amd 2002, respectively.

Associated with the original Agreement was the assignment of that
certain Agreement of Sublease ("Sublease") dated as of August 2002
between Veridian and the Company. Veridian and the landlord Carlsberg
Properties, Inc agreed upon the assignment of the Sublease.

Capital Leases - The Company leases certain machinery and equipment
under agreements that are classified as capital leases. The cost of
equipment under capital leases is included in the Balance Sheets as
fixed assets; see Note E regarding related amounts. Future minimum
payments under capital leases as of December 31, 2003, are as
follows:

Total minimum lease payment $ 632,072
Less amounts representing interest (54,434)
Present value of minimum lease payments 577,638
Current capital lease obligations $577,638

Operating lease expense for the years ended December 31, 2003 and
2002 was $117,157 and $230,453, respectively.

NOTE J - DEFERRED FINANCING COSTS
------------------------

In December 2001, the Company, in accordance with APB 21 and SAB 79 the
Company recorded a deferred financing cost asset of $6,326,381. This
amount is based on the number of shares that three shareholders
directly transferred to Net Integrated Systems, Inc. ("NIS") as an
inducement for NIS to enter into the Revolving Line of Credit
Agreement. In October 2002, the Revolving Line of Credit Agreement and
related Management Agreement with NIS, was terminated. This resulted in
the Company recording a write down on the deferred financing cost asset
of $3,756,927 in the year ended December 31, 2002.

The Company will amortize the remaining deferred financing cost over
the life of the line of credit, which is five years. For the year ended
December 31, 2003 and 2002 the Company recorded amortization expense of
$513,891 and $1,265,276 respectively.

NOTE K - RELATED PARTY TRANSACTIONS
--------------------------

The Company has entered into a number of relationships that fit the
definition provided by Statement of Financial Accounting Standards No.
57, "Related Party Disclosures". An entity that can control or
significantly influence the management or operating policies of another
entity to the extent one of the entities may be prevented from pursuing
its own interests. As of December 31, 2003, the following related party
relationships existed between the Company, its shareholders, officers
and directors:

MBS, partially owned by William P. Barber, President and Chief
Executive Officer of the Company and currently a Director of the
Company, is also an agent of the Company and sells the Company's
products and services through its own network of subagents and sales
personnel. As of December 31, 2003 under the terms of the agency
agreement with MBS, the Company paid $423,016 in residuals. The Company
paid $101,550 for the year ended December 31, 2002. Refer to Note I -
Commitments for further discussion of the operating arrangement between
the Company and MBS.

ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2003 AND 2002

NOTE L - GOING CONCERN
-------------

The accompanying financial statements, which have been prepared in
conformity with accounting principles generally accepted in the United
States of America, contemplates the continuation of the Company as a
going concern. However, the Company has sustained significant recurring
operating losses, has limited capital resources, is involved in several
pending lawsuits and has been assessed by the Internal Revenue Service
for unpaid payroll taxes. Continuation of the Company as a going
concern is contingent upon the ability of the Company to expand its
operations, generate increased revenues, secure additional sources of
financing and sell a portion of the merchant portfolio. However, there
is no assurance that the Company will realize the necessary capital
expansion.

Note M - DEBT
-----
At December 31, 2003 and 200, the Company had notes payable
outstanding in the aggregate amount of $415,000 and $984,460,
respectively. Payable as follows:
2003 2002
Note payable to an individual, interest at
5% per annum, due on demand $115,000 $115,000

Note payable to a corporation $250,000 payable
On execution of the settlement agreement (March,
2004)and $50,000 due in monthly installments
beginning April 1, 2004 300,000 0

Note payable to a corporation, interest at
8% per annum, due October 16, 2001,
convertible at the option of the holder into
common stock equal to the face value of
the note 0 450,000

Capitalized lease obligations, interest at
varying rates, payments through May 2004, 0 419,460
--------- ---------
$ 415,000 $ 984,460

Current portion $ 415,000 $ 984,460

Note N - EMPLOYEE STOCK OPTIONS AND BENEFIT PLANS
-----------------------------------------
In March 1999, our Company's stockholders approved the Accesspoint
Corporation 1999 Stock Incentive Plan ("the Plan"), which superseded
and incorporated, in all respects, the Accesspoint Corporation 1997
Stock Option Plan. Under the Plan, incentive or non-statutory stock
options may be granted to employees, directors, and consultants. The
options, option prices, vesting provisions, dates of grant and number
of shares granted under the plans are determined primarily by the
Board of Directors or the committee authorized by the Board of
Directors to administer such plans. The Plan also permits payment in
shares of our Company's common stock for options to be exercised. The
maximum number of shares of our Company's common stock available for
issuance under the Plan is six million (6,000,000) shares. Proceeds
received by our Company from exercise of stock options are credited
to common stock and additional-paid-in capital. Additional
information with respect to the Plan's stock option activity is as
follows:

Number of Weighted Average
Shares Exercise Price
Outstanding at December 31, 2001 3,629,000 $.59
Granted 0 0
Exercised 0 0
Cancelled (1,852,555) $.81
Outstanding at December 31, 2002 1,776,445 $.35
Granted 0 0
Exercised 0 0
Cancelled 0 0
Outstanding at December 31, 2003 1,776,445 $.35

Options exercisable at December 31, 2002 1,776,445 $.35

Stock options exercisable at December 31, 2003:

Range of Number of Weighted
Exercise Shares Average
Prices Exercisable Exercise Price
$0.32-0.37 1,776,445 $ .35

Our Company has elected to follow APB Opinion No. 25 (Accounting for
Stock Issued to Employees) in accounting for its employee stock
options. Accordingly, no compensation expense is recognized in our
Company's financial statements because the exercise price of our
Company's employee stock options equals or exceeds the market price of
our Company's common stock on the date of grant. If under Financial
Accounting Standards Board Statement No. 123 (accounting for Stock
Based Compensation) our Company determined compensation costs based on
the fair value at the grant date for its stock options, net earnings
and earnings per share would not have been reduced to any pro forma
amounts.

ITEM 8. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANT ON ACCOUNTING AND FINANCIAL
DISCLOSURES

As previously reported in our 10-KSB for the year ended December 31,
2002 on April 4, 2003, in an email addressed to the controller of our Company,
Lichter, Weil & Associates, independent auditors to the registrant, resigned.

The Audit Committee of the Board of Directors approved the change of
the accountant and on April 25, 2003, the registrant engaged the firm of Mendoza
Berger & Company, LLP, Certified Public Accountants, as the principal accountant
to audit the registrant's financial statements. The Audit Committee of the Board
of Directors approved the engagement of this firm as principal accountant and
they have audited the financial statements for the two years ended December 31,
2003 and 2002 included in this current 10-KSB report.

PART III

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

A. DIRECTORS AND EXECUTIVE OFFICERS

The following table and text sets forth the names and ages of all
directors and executive officers of our Company and the key management personnel
as of December 31, 2003. The Board of Directors of our Company is comprised of
only one class. All of the directors will serve until the next annual meeting of
stockholders, until their successors are elected and qualified, or until their
earlier death, retirement, resignation or removal. Executive officers serve at
the discretion of the Board of Directors, and are appointed to serve until the
first Board of Directors meeting following the annual meeting of stockholders.
Except as otherwise noted, there are no family relationships among directors and
executive officers. Also provided is a brief description of the business
experience of each director and executive officer and the key management
personnel during the past five years and an indication of directorships held by
each director in other companies subject to the reporting requirements under the
Federal securities laws.

DIRECTORS & EXECUTIVE OFFICERS

NAME AGE POSITION
---- --- --------
Eugene Valentine 54 Chairman of the Board of Directors
William B. Barber 59 CEO, President, Director
Joseph Byers 78 Director
Michael Savage 84 Director

Mr. Eugene C. Valentine, Chairman of the Board, Member of the Audit
Committee, Member of the Compensation Committee. Mr. Valentine joined the Board
in October 2002. Mr. Valentine is the founder and CEO of the Financial West
Group, based in Los Angeles. Mr. Valentine founded the Financial West Investment
Group, Inc. in 1985. A firm with over 300 registered sales representatives in 52
offices throughout the United States. Mr. Valentine's experiences included
serving for four years as Vice President of Marketing for Christopher Weil &
Co., a NASD registered broker/dealer, and he was director of Real Estate
Acquisitions for Windfarms, Ltd., an alternative energy subsidiary of Chevron
USA. He also served as a stockholder and officer of Horizon Realty, a real
estate brokerage firm located in San Francisco, following six years as a naval
officer. He is a NASD registered securities principal, received a BS degree from
Bethany College, and attended the University of Vienna, Austria. Mr. Valentine,
through the Financial West Group is a shareholder of Accesspoint. Mr. Valentine
is also the chairman of the Audit Committee. As an active participant in the
securities industry, we have determined that Mr. Valentine is a financial expert
and is independent as that term is used in Item 7(d)(3)(iv) of Schedule 14A
under the Exchange Act.

Mr. Michael Savage joined the Board in January 2003. Mr. Savage has
been the founder of more than 15 successful companies, including Capital Reserve
Corporation of Los Angeles. He has extensive business experience in equipment
leasing, technology and the development of new marketplaces. Mr. Savage is
expected to focus his energies on the development of our affinity cards. Mr.
Savage is not a shareholder of Accesspoint.

Mr. Joe Byers, Member of the Audit Committee, Member of the
Compensation Committee. Mr. Byers joined the Board in January 2002. Mr. Byers
has more than 40 years experience in the banking business and was most recently
Senior Vice President of First National Bank based in Los Angeles. Mr. Byers
focuses his time and attention on developing additional processing platforms and
financial relationships for us. Mr. Byers is not a shareholder of Accesspoint.

Mr. William Barber, President and Chief Executive Officer. Mr. Barber
has been a Director since October 2002. Mr. Barber has been actively involved
with the development of a number of start-up ventures. He has experience in a
wide variety of fields of business and is an active investor in a number of
e-commerce companies. Mr. Barber served in the United States Marine Corps as a
gunnery sergeant for 23 years, retiring from active service in 1991. Mr. Barber
is a shareholder of Accesspoint.

B. COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

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 a
registered class of our equity securities, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of common stock and other equity securities of Accesspoint. Officers,
directors and greater than ten percent stockholders are required by SEC
regulations to furnish us with copies of Section 16(a) forms they file.

To our knowledge, based solely on review of the copies of such reports
furnished to us, we believe that, during the year ended December 31, 2002, all
of our officers, directors and greater-than-ten percent stockholders complied
with all Section 16(a) filing requirements.

ITEM 10. EXECUTIVE COMPENSATION

The following table sets forth information regarding compensation
earned for our Company's fiscal year ended December 31, 2003, by our Chief
Executive Officer and other covered persons:

SUMMARY COMPENSATION TABLE

Restricted
Name and Principal Salary Bonus Other Stock
Position Year ($) ($) ($) Award(s)($)
-------- ---- ------ ----- ----- -----------

William B. Barber 2003 $ 0 $ 0 $ 0 $ 0
CEO & President 2002 $4,000 $ 0 $ 0 $ 0

A. INDIVIDUAL EXECUTIVE COMPENSATION

There were no options granted to the Named Executive Officers during the year
2003.

There were no options exercised by the Named Executive Officers during 2003:

There were no awards made to the Named Executive Officers by us of stock options
under any Long-Term Incentive Plan during the year 2003.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information as of December 31, 2003
with respect to (i) the beneficial ownership of our Common Stock by each
beneficial owner of more than 5% of the outstanding shares of our Common Stock
of our Company, each director, each executive officer and all executive officers
and directors as a group, (ii) the number of shares of Common Stock owned by
each such person and group and (iii) the percent of our Common Stock so owned.
Share ownership is based upon 24,163,995 shares of common stock issued and
outstanding on December 31, 2003.

Name of Beneficial Owner Address Shares held Percentage
--------------------------- --------------------------------- ----------------- ---------------

Tom Djokovich 23332 Vista Carillo Laguna 3,608,257 19%
Niguel, Ca 92677

Access Holdings LP 26482 Valpariso, Mission Viejo, 1,905,037 10%
(2) Ca. 92677

William Barber, CEO and (1) 56,085 *
Director

Eugene Valentine, Director (1) -

Joseph Byers, Director (1) -

Michael Savage (1) -

All Directors and
Executive officers as a
group (4 persons) 56,085

--------------
* less than 1%

1. The address 3030 S Valley View Blvd., Ste 190 Las Vegas, NV 89102

2 Benefiting James W. Bentley and Mary Ann Bentley and family.

A. OUTSTANDING OPTIONS AND WARRANTS

As of December 31, 2003, we had granted a total of 3,629,000 options
under our 1999 Plan, of which 2,578,106 are outstanding as of December 31, 2003.
Of the options outstanding, 1,776,445 qualified options were issued to employees
to purchase shares of our Common Stock under our 1999 Plan. In addition to the
options granted to employees, we had issued 792,286 qualified options, 9,375
non-qualified options and 482,223 warrants to consultants and non-employee
Directors.

B. COMPENSATION OF DIRECTORS

We pay no compensation to our Directors. Only William R. Barber is a
Director and also an officer. With the exception of Mr. Barber, we lease all our
employees from MBS, which pays the employees for services.

C. DESCRIPTION OF SECURITIES

Our authorized capital stock as of December 31, 2003 consists of
30,000,000 shares divided into 25,000,000 shares of Common Stock, par value
$0.001 per share and 5,000,000 shares of Preferred Stock, par value $0.001 per
share. There were 24,163,995 Common Shares issued and outstanding as of December
31, 2003. There were 1,055,600 shares of Preferred Stock issued and outstanding
as of December 31, 2003.

Common Stock has equal voting rights and, when validly issued and
outstanding are entitled to one vote per share in all matters to be voted upon
by shareholders. The shares of Common Stock have no preemptive, subscription,
conversion or redemption rights and may be issued only as fully-paid and
non-assessable shares. Cumulative voting in the election of directors is not
permitted, which means that the holders of a majority of the issued and
outstanding shares of Common Stock represented at any meeting at which a quorum
is present will be able to elect the entire Board of Directors if they so choose
and, in such event, the holders of the remaining shares of Common Stock will not
be able to elect any directors. In the event of liquidation of our Company, each
shareholder is entitled to receive a proportionate share of our assets available
for distribution to shareholders after the payment of liabilities and after
distribution in full of preferential amounts, if any. All shares of our Common
Stock issued and outstanding are fully-paid and nonassessable. Holders of the
Common Stock are entitled to share pro rata in dividends and distributions with
respect to the Common Stock, as may be declared by the Board of Directors out of
funds legally available therefore.

D. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Except for acts or omissions which involve intentional misconduct,
fraud or known violation of law or for the payment of dividends in violation of
Nevada Revised Statutes, there shall be no personal liability for our directors
or officers to Accesspoint or its stockholders for damages for breach of
fiduciary duty as a director or officer. We may indemnify any person for
expenses incurred, including attorneys fees, in connection with their good faith
acts if they reasonably believe such acts are in and not opposed to the best
interests of us and for acts for which the person had no reason to believe his
or her conduct was unlawful. We may indemnify the officers and directors for
expenses incurred in defending a civil or criminal action, suit or proceeding as
they are incurred in advance of the final disposition of the action, suit or
proceeding, upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount of such expenses if it is ultimately determined by a
court of competent jurisdiction in which the action or suit is brought that such
person is not fairly and reasonably entitled to indemnification for such
expenses which the court deems proper.

a) Statutes Regarding Indemnification of Directors, Officers, Employees
and Agents

So far as permitted by the Nevada Business Corporation Act, we may
indemnify our directors and officers against expenses and liabilities they incur
to defend, settle or satisfy any civil or criminal action brought against them
on account of their being or having been Company directors or officers unless,
in any such action, they are adjudged to have acted with gross negligence or to
have engaged in willful misconduct.

Section 78.751(1) of the Nevada Revised Statutes ("NRS") authorizes a
Nevada corporation to indemnify any director, officer, employee, or corporate
agent "who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, except an action by or in the right
of the corporation" due to his or her corporate role. Section 78.751(1) extends
this protection "against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he acted in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful."

Section 78.751(2) of the NRS also authorizes indemnification of the
reasonable defense or settlement expenses of a corporate director, officer,
employee or agent who is sued, or is threatened with a suit, by or in the right
of the corporation. The party must have been acting in good faith and with the
reasonable belief that his of her actions were not opposed to the corporation's
best interests. Unless the court rules that the party is reasonable entitled to
indemnification, the party seeking indemnification must not have been found
liable to the corporation.

To the extent that a corporate director, officer, employee, or agent is
successful on the merits or otherwise in defending any action or proceeding
referred to in Section 78.751(1) or 78.751(2), Section 78.751(3) of the NRS
requires that he or she be indemnified "against expenses, including attorneys'
fees, actually and reasonably incurred by him in connection with the defense."

Section 78.751(4) of the NRS limits indemnification under Section
78.751(1) and 78.751(2) to situations in which either (i) the stockholders; (ii)
the majority of a disinterested quorum of directors; or (iii) independent legal
counsel determine that indemnification is proper under the circumstances.

Pursuant to Section 78.175(5) of the NRS, the corporation may advance
an officer's or director's expenses incurred in defending any action or
proceeding upon receipt of an undertaking. Section 78.751(6)(a) provides that
the rights to indemnification and advancement of expenses shall not be deemed
exclusive of any other rights under any bylaw, agreement, stockholder vote or
vote of disinterested directors. Section 78.751(6)(b) extends the rights to
indemnification and advancement of expenses to former directors, officers,
employees and agents, as well as their heirs, executors, and administrators.

Regardless of whether a director, officer, employee or agent has the
right to indemnity, Section 78.752 allows the corporation to purchase and
maintain insurance on his or her behalf against liability resulting from his or
her corporate role.

Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to officers, directors or persons controlling Accesspoint
pursuant to the foregoing, we have been informed that in the opinion of the U.S.
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is therefore unenforceable.

E. ARTICLES OF INCORPORATION

Article Twelve of the Articles of Incorporation provides that "No
director or officer of the Corporation shall be personally liable to the
Corporation or any of its stockholders for damages for breach of fiduciary duty
as a director or officer involving any act or omission of any such director or
officer; provided however, that the foregoing provision shall not eliminate or
limit the liability or a director or officer (I) for acts or omissions which
involve intentional misconduct, fraud or a knowing violation of law, or (ii) the
payment of dividends in violation of Section 78.300 of the Nevada Revised
Statues. Any repeal or modification of this Article by the stockholders of the
Corporation shall be prospective only and shall not adversely affect any
limitation on the personal liability of a director or officer of the Corporation
for acts of omissions prior to such repeal or modification."

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We have entered into a number of relationships that fit the definition
provided by Statement of Financial Accounting Standards No. 57, "Related Party
Disclosures". An entity that can control or significantly influence the
management or operating policies of another entity to the extent one of the
entities may be prevented from pursuing its own interests.

Mr. William R. Barber, President and Chief Executive Officer and
Director, was appointed as an officer and director in November 2002. The
transactions described below occurred both before and after Mr. Barber commenced
to serve as an officer and director.

Mr. Barber is the principal owner of Ameropa, Inc. ("Ameropa"), a
Bahamas corporation. Ameropa owned two Bermuda corporations, Internet Online
Services, Inc. ("IOS") and Network Integrated Systems, Ltd. ("NIS"). Mr. Barber
and two colleagues agreed to provide funding to Accesspoint. Although IOS and
Ameropa advanced funds from time to time, Mr. Barber and his colleagues decided
to consolidate the funding agreements in NIS. Accordingly we entered into a
written Secured Loan Agreement and associated Revolving Line of Credit Secured
Promissory Note (together "Line of Credit") with NIS on December 14, 2001.
Concurrently, on December 14, 2001, we also entered into a written Management
Agreement with NIS. Under the Line of Credit NIS agreed to advance to us from
time to time as we requested advances not to exceed $5,000,000. All outstanding
balances would bear interest at six percent (6%) per annum. NIS has the right to
call the loan at any time. The Line of Credit is secured by a blanket security
interest in all of our assets. Under the Line of Credit, we have granted to NIS
certain powers of attorney for the protection and perfection of NIS's security
interest in the collateral. Notwithstanding the rights that we granted to NIS,
NIS may demand payment from us and have access to our collateral only after NIS
has exhausted other sources of repayment. In connection with the Line of Credit,
three of our shareholders, Tom M. Djokovich, Access Holdings Limited
Partnership, and Alfred Urcuyo (together "Option Shareholders"), granted to NIS
an option to purchase a total of 7,131,688 shares of our common stock at $2.00
per share. If NIS elects to exercise its option, then the Option Shareholders
have the right whether to contribute the option proceeds to us for repayment of
the Line of Credit. If the Option Shareholders elect to contribute the proceeds
to us, then NIS may not have recourse to our assets as a source of repayment.
However, if we do not receive such option proceeds, then NIS may proceed against
the collateral. Further, after 18 months, the Option Shareholders have the right
to "call" the options. If NIS exercises the options, then the Option
Shareholders are obligated to contribute the proceeds to us for repayment of the
Line of Credit. If NIS refuses to exercise the options, then the options expire
and NIS would have recourse to our assets for repayment of the Line of Credit.

We also entered into a Management Agreement, dated December 14, 2001,
with NIS. We appointed NIS as our general manager, with the duty and authority
(subject to the approval of our board of directors) to manage the day-to-day
operations of the business, including our financial affairs. Under this
Management Agreement, we are obligated to pay NIS $10,000 per month, but this
"fee shall accrue and only be payable to the extent the Company shall have
current operating profits reasonably sufficient to pay such fee." In addition,
if we terminate the Management Agreement without cause, then we are obligated to
pay NIS all amounts then owing, plus the sum of $1.0 million. However, we also
have the right to terminate the Management Agreement for cause. The term "cause"
includes the "filing of a voluntary or involuntary application for or
appointment of a receiver" for NIS. Mr. Barber owns 50% of Net Integrated
Systems ("NIS") and serves as one of its three directors.

NIS appointed Ameropa as its agent to manage the relationship between
NIS and us under the terms of the Line of Credit. In February 2002, Ameropa
began to provide cash management services to us by sweeping our operating
accounts on a daily basis and funding the same accounts as items were presented
for payment. Through October 2002 we dealt exclusively with Ameropa for the
funding of the Line of Credit. During the year ended December 31, 2002 there
were more than 300 such transactions, none of a material size, between Ameropa
and our various operating accounts. As of December 31, 2003 and 2002 we were
indebted to NIS under the Line of Credit in the amount of $1,379,277 and
1,260,789, respectively. We have made no payments on this balance. During the
period in which Ameropa managed the relationship between NIS and us, Mr. Barber
did not have an operational role with us and he was not an officer or a member
of the Board of Directors.

In October 2002, Mr. Barber, as a Director of NIS and 50% owner, placed
NIS into receivership in Bermuda. Thereupon, we terminated the Management
Agreement with NIS. NIS is currently in receivership in Bermuda and we have not
received any indication from the receiver on behalf of NIS, of an intention to
assert a claim against us. However we cannot guarantee that a claim will not be
asserted in the future. On February 4, 2003, the Supreme Court of Bermuda
entered an Order that NIS "be wound up". On the same day, the Supreme Court of
Bermuda entered an Order consenting to the withdrawal by the other two directors
of NIS of a challenge to the appointment of a receiver for NIS.

In October 2002, we entered into a Master Support Services Agreement
("Services Agreement") with Merchants Billing Services, Inc. ("MBS"). The
Agreement calls for MBS to provide underwriting, administrative support,
customer support and technical support services as well as a source of
financing, liquidity and cash management services to us. MBS is a Nevada
corporation majority owned by Mr. Barber. On November 1, 2002 MBS assumed
responsibility for the payment of all of our employees as well as the assumption
of their related accrued vacation and sick time. On November 1, 2002 MBS
established a series of control accounts for the receipt and management of our
cash. These control accounts are designated "For the Benefit Of" and are
segregated from the operating accounts of MBS. Authority to move and withdraw
funds from these accounts resides exclusively with us.

PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

A. EXHIBITS

The following Exhibits are incorporated herein by reference or are
filed with this report as indicated below.

Exhibit No. Description
----------- -----------
21.0 *List of Subsidiaries
22.0 *MBS Master Support Services Agreement
23.0 *MBS Revolving Line of Credit
24.0 *MSB Secured Loan Agreement
25.0 *Assignment and Agreement of Sublease
26.0 *Sublease
27.0 *Settlement and Mutual Release Agreement

31 CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AND CHIEF FINANCIAL OFFICER PURSUANT
TO SECTION 302 OF THE SARBANES-OXLEY ACT

32 CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AND CHIEF FINANCIAL OFFICER PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT

* Previously filed with the Commission

(b) Reports on Form 8-K. No reports on Form 8-K were filed during the
fourth quarter ended December 31, 2003.

ITEM 14. CONTROLS AND PROCEDURES

The Company has disclosure controls and procedures (as defined in Rules
13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended) to
ensure that material information contained in its filings with the Securities
and Exchange Commission is recorded, processed, summarized and reported on a
timely and accurate basis. The Company's principal executive officer and
principal financial officer have reviewed and evaluated the Company's disclosure
controls and procedures within 90 days prior to the filing date of this report.
Based on such evaluation, the Company's principal executive officer and
principal financial officer have concluded that the Company's disclosure
controls and procedures are effective at ensuring that material information is
recorded, processed, summarized and reported on a timely and accurate basis in
the Company's filings with the Securities and Exchange Commission. Since such
evaluation there have not been any significant changes in the Company's internal
controls, or in other factors that could significantly affect these controls.

ITEM 15. PRINCIPAL FEES AND SERVICES.

Set forth below are fees paid to the Company's independent accountants for the
past two years for the professional services performed for the Company.

Audit Fees: During 2003 and 2002 the Company accrued or paid Mendoza Berger &
Company LLP a total of $22,000 and $40,360 for professional services rendered in
connection with performance of our independent audits for the years ending
December 31, 2003 and 2002, respectively.

All Other Fees: During 2003 and 2002 the Company paid Mendoza Berger & Company
LLP a total of $32,923 for professional services rendered in
connection with the reviews of the March 31, 2003,June 30, 2003 and September
30, 2003, Forms 10-QSB.

Tax Fees: The Company paid Mendoza Berger & Co. LLP $1,800 and $4,750 for tax
related services for the years ended December 31, 2003 and 2002,
respectively

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Dated: March 23, 2004 ACCESSPOINT CORPORATION

By /S/ WILLIAM R. BARBER
------------------------------
William R. Barber,
Chief Executive Officer, President
And Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1934, this report has
been signed by the following persons in the capacities and on the dates
indicated:

Signature Title Date
------------------------- ---------------------------------- ---------------

/S/ GENE VALENTINE Chairman of the Board of Directors March 23, 2004
-------------------------
Gene Valentine

/S/ JOE BYERS Director March 23, 2004
-------------------------
Joe Byers

/S/ MIKE SAVAGE Director March 23, 2004
-------------------------
Mike Savage

/S/ WILLIAM R. BARBER Director March 23, 2004
-------------------------
William R. Barber