U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________________ TO ________________________
Commission File Number: 000-29217
ACCESSPOINT CORPORATION
----------------------------------------------
(Name of Small Business Issuer in its Charter)
Nevada 95-4721385
-------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
6171 W. Century Blvd.
Suite 200
Los Angeles, California 90045
-------------------------------- ------------------------------------
(Address of Principle Executive (Zip Code)
Offices)
(310) 846-2500
------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE EXCHANGE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE EXCHANGE ACT:
Common Stock, $0.001 Par Value
The number of the Company's shares of Common Stock outstanding as of March 31,
2003 was 24,163,965.
1
Transitional Small Business Disclosure Format (check one): Yes [ ] No [ X ]
Accesspoint Corporation
Form 10-QSB QUARTERLY Report
AS OF AND FOR THE QUARTER ENDED MARCH 31, 2002
TABLE OF CONTENTS
Forward-Looking Statements
PART I
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis or Plan of Operation
PART II
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
2
SPECIAL NOTE REGARDING Forward-Looking Statements
This Form 10-QSB 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-QSB, 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
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The reviewed consolidated financial statements for the periods ended March
31, 2003 and March 31, 2002 are filed herewith.
3
ACCESSPOINT CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003
TABLE OF CONTENTS
Consolidated Balance Sheets 5
Consolidated Statements of Operations 7
Consolidated Statements of Cash Flow 8
Notes to Consolidated Financial Statements 9-19
4
ACCESSPOINT CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
------
March 31, December 31,
2003 2002
------------ ------------
(unaudited)
Current Assets
Cash $13,471 $35,961
Accounts receivable, net 371,875 348,708
Receivable from a related party 70,212 157,172
Prepaid expenses 744 1,488
------------ ------------
Total Current Assets 456,302 543,329
------------ ------------
Fixed Assets
Furniture and equipment (net) 126,008 178,139
------------ ------------
Total Fixed Assets 126,008 178,139
------------ ------------
Other Assets
Deferred financing costs (net) 1,138,291 1,266,764
Portfolio Purchase 154,667 154,667
Deposits 280,108 280,108
------------ ------------
Total Other Assets 1,573,066 1,701,539
------------ ------------
Total Assets $2,155,376 $2,423,007
============ ============
5
Refer to notes to the financial statements
6
ACCESSPOINT CORPORATION
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
March 31, December 31,
2003 2002
------------ ------------
(unaudited)
Current Liabilities
Accounts payable $1,513,085 $1,527,457
Accrued payroll taxes and penalties 1,343,429 1,412,432
Accrued liabilities 650,124 560,707
Merchant loss reserve 19,465 19,465
Lines of credit 1,317,884 1,364,761
Capitalized leases 413,461 419,460
Notes payable 565,000 565,000
------------ ------------
Total Current Liabilities 5,822,448 5,869,282
Total Liabilities 5,822,448 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,
24,163,965 issued and
outstanding, respectively 24,164 24,164
Additional paid in capital 15,114,004 15,114,004
Retained (deficit) (18,806,296) (18,585,499)
------------ ------------
Total Stockholders' (Deficit) (3,667,072) (3,446,275)
------------ ------------
Total liabilities and
Stockholders' Equity $2,155,376 $2,423,007
============ ============
Refer to notes to the financial statements
7
ACCESSPOINT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended
------------------
March 31, March 31,
2003 2002
------------ ------------
Sales, net $3,390,275 $2,981,487
Cost of sales 2,616,291 2,218,823
------------ ------------
Gross profit 773,984 762,664
Selling expenses 4,624 1,000
General and administrative expenses 774,595 1,016,869
------------ ------------
Income (loss) from operations (5,235) (255,205)
------------ ------------
Other (Income) Expense
Interest income (1,943) (3,964)
Penalties 2,141 295
Amortization of deferred financing
costs 128,473 316,319
Gain on forgiveness of deferred
compensation 0 (221,477)
Bad Debt 36,912 143,357
Interest expense 49,979 55,434
------------ ------------
Total Other (Income) Expense 215,562 289,964
------------ ------------
Income (loss) before income
taxes (220,797) (545,169)
Provision for income taxes 0 2,400
------------ ------------
Net income (loss) (220,797) (547,569)
============ ============
Net loss per share
Basic ($0.01) ($0.02)
Weighted average number of shares
Basic 24,163,965 23,454,240
Refer to notes to the financial statements
8
ACCESSPOINT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended
-----------------------------
March 31, March 31,
2003 2002
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) ($220,797) ($547,569)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization 128,473 316,319
Depreciation 52,131 83,785
Gain on forgiveness of deferred
compensation (221,477)
Decrease (Increase) in
receivables (23,167) (128,895)
Decrease (Increase) in inventory 0 (2,038)
Decrease in other current assets 91,775 0
Decrease in prepaid expenses 744 773
Decrease in deposits 0 461
(Decrease) Increase in accounts
payable and accrued expenses 75,045 181,326
Increase in accrued payroll
taxes (69,003) (131,646)
Increase in accrued loss
contingencies 0 35,000
-------------- --------------
Total adjustments 255,998 133,608
-------------- --------------
Net cash contributed by
(used in) operations 35,201 (413,961)
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets 0 (15,095)
-------------- --------------
Net cash (used in) investing
activities 0 (15,095)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of notes payable 0 703,252
Payments on notes payable (201,250)
Payments on capital leases (5,999) (13,217)
Sale of stock 0 56,509
Payments on line of credit (46,877) 0
-------------- --------------
Net cash provided by
(used in)financing activities (52,876) 545,294
-------------- --------------
Net change in cash (17,675) 116,238
-------------- --------------
Cash at beginning of period 35,961 78,229
-------------- --------------
Cash at end of period $18,286 $194,467
============== ==============
Supplemental cash flows
disclosures:
Income tax payments $0 $2,400
-------------- --------------
Interest payments $0 $1,022
-------------- --------------
Refer to notes to the financial statements
9
ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2003 AND 2002
Note A - NATURE OF OPERATIONS
--------------------
Incorporated in the State of Nevada, Accesspoint Corporation ("the
Company") is a "C" Corporation as defined by the Internal Revenue Code.
As of March 31, 2003, the Company has combined its mature Internet
Application Services technology platform with its credit card and
check-processing platform to provide bundled payment acceptance,
processing and business management services. These programs provide
customers with multiple payment acceptance capabilities including
credit card and check transaction, a fully operational e-commerce and
business management Website, and a central Web based management system
for servicing both the brick-and-mortar and web based sides to each
business.
The Accesspoint advantage is full transaction processing, settlement
and software delivered as a bundled service for the cost of an industry
standard transaction fee. Furthermore, as a result of the Company's
systems, prospective clients can be approved in a short period, instead
of the several-day time frame typically implemented by the Company's
competition.
In November 2000, the Company launched its card processing division,
managed by its wholly owned subsidiary, Processing Source
International, Inc. and began earning card processing revenues in
addition to its check processing revenues through the underwriting and
processing of these electronic payment transactions in its growing
merchant base.
The Company has targeted the Independent Sales Organization (ISO) and
Independent Agent marketplace as a prime driver and sales channel for
its services. The Company's operating systems makes it simple for these
sale organizations to electronically submit a client's application,
track the progress of that application, monitor merchant service, and
even track commissions, all in real time via a private label portal
provided by the Company.
10
ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2003 AND 2002
Note B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Unaudited Interim Financial Information
---------------------------------------
The accompanying financial statements have been prepared by Accesspoint
Corporation, ("Accesspoint" or the "Company") pursuant to the rules and
regulations of the Securities and Exchange Commission (the "SEC") Form
10-QSB and Item 310 of regulation S-B, and generally accepted
accounting principles for interim financial reporting. These financial
statements are unaudited and, in the opinion of management, include all
adjustments (consisting of normal recurring adjustments and accruals)
necessary for a fair presentation of the balance sheets, operations
results, and cash flows for the periods presented. Operating results
for the three months ended March 31, 2003 are not necessarily
indicative of the results that may be expected for the year ending
December 31, 2003, or any future period, due to seasonal and other
factors. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting policies have been omitted in accordance with the rules and
regulations of the SEC. These financial statements should be read in
conjunction with the audited consolidated financial statements and
accompanying notes, included in the Company's Annual Report for the
year ended December 31, 2002.
Revenues, expenses, assets and liabilities can vary during each quarter
of the year. Therefore, the results and trends in these interim
consolidated financial statements may not be the same as those for the
full year.
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.
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.
11
ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2003 AND 2002
Note B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
------------------------------------------------------
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
March 31, 2003 and March 31, 2002, the Company had aggregate collateral
classified as merchant loss reserves of $19,465 and $99,465,
respectively.
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
12
ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2003 AND 2002
Note B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
------------------------------------------------------
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.
Inventory
---------
Inventory is valued at the lower of cost or market. Cost is determined
on the weighted average method. As of March 31, 2003 there was no
inventory. As of March 31, 2002, inventory consisted only of finished
goods.
Concentration of Credit Risk
----------------------------
Concentration of credit risk with respect to trade accounts receivable
is not diversified. As of March 31, 2003 91% of the trade receivable
were 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
Advertising
-----------
Advertising costs are expensed in the year incurred.
Earnings Per Share
------------------
Earnings per common share amounts are computed by dividing net income
amounts by weighted-average common stock and common stock equivalents
shares (when dilutive) outstanding during the period. Diluted earnings
per share were not presented because they were considered to be
anti-dilutive.
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.
13
ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2003 AND 2002
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 March 31, 2003, the Company has 25,000,000 common shares authorized
and 24,163,965 shares issued and outstanding. The Company had 5,000,000
preferred shares authorized and 1,055,600 shares issued and
outstanding.
At March 31, 2003, the Company does not have enough common stock
reserved for the possible exercise of options and warrants which could
total:
Exercise of common stock warrants 482,223
Exercise of employee stock options 1,776,445
---------
2,258,668
=========
The Company intends to increase the authorized number of shares by
proxy of its shareholders subsequent to March 31, 2003.
Note D - LOSS PER SHARE
--------------
Basic net loss per share is computed using the weighted average number
of common shares outstanding. The dilutive effect of earnings per share
were not presented because they were considered to be anti-dilutive.
The computations of basic net loss per share as of March 31, 2003 and
2002 are as follows:
2003 2002
---- ----
Net (loss) from operations $(220,797) $(547,569)
----------- -----------
Basic weighted average shares 24,163,965 23,454,240
Net (loss) per share from
continuing operations:
Basic ($0.01) ($0.02)
14
ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2003 AND 2002
Note E - LITIGATION AND CONTINGENCIES
----------------------------
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 March 31, 2003 the
Company has accrued for the liability in full on its Balance Sheet. No
payments have been made.
Roycap - As of March 31, 2003 the Company was in default on its loan
agreement with Roycap for repayment of a $450,000 loan, plus accrued
interest, which was due on October 16, 2001. In June 2002, Roycap filed
formal suit on its claim. The Company has recently entered into a
settlement agreement wherein it stipulated to a $730,000 judgment. The
entire settlement amount has been accrued.
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.
Merchants Warehouse.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.
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) seeks to recover damages of
$300,000 for alleged breach of the contact to purchase, while the
second case (arbitration) claims that NWS has 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. The Company has accrued the
entire amount of the judgment. The Company continues to vigorously
defend itself against the lawsuit.
EAB Leasing Corp. - This action by an equipment lessor on a defaulted
lease was settled. Pursuant to the settlement, a stipulated judgment
was entered in the amount of $72,000, which has been fully accrued. The
Company is paying this off at the rate of $3,000 per month.
15
ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2003 AND 2002
Note E - LITIGATION AND CONTINGENCIES (CONTINUED)
----------------------------------------
Moceri Leasing Co. - This is an action by an equipment lessor on a
defaulted lease. The Company is vigorously defending itself against
this claim. The total amount, estimated to be $25,000, of any potential
judgment for the value of the equipment, has been fully accrued.
Leverage Leasing Co. - This is an action by an equipment lessor on a
defaulted lease. An out-of-state judgment in the amount of $34,000 has
been made against the Company. The Company is paying this judgment off
at the rate of $2,000 per month and has paid $6,000. The total amount
of the remaining judgment for the value of the equipment has been
accrued.
CIT Communications Co. - This is an action by an equipment lessor on a
defaulted lease. The Company is vigorously defending itself 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.
Arden Realty, Inc. - This is an action brought by a former landlord of
PSI to recover unpaid rent. The Company has entered into a settlement
agreement with a stipulated judgment of $57,789. The Company has paid
$20,000 toward the satisfaction of this judgment. The remaining balance
has been accrued.
Floratos, Loll & Devine - This is a claim asserted by former attorneys
for the Company for services performed. The Company has entered into a
settlement agreement with a stipulated judgment in the approximate
amount of $85,000. The Company has made payments totaling $20,000
against the judgment. The remaining amount has been accrued.
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
intends to vigorously defend this action. The Company has entered into
a verbal agreement to settle the action and has satisfied part of the
terms of the verbal agreement. No trial date has been set. An accrual
has been made for the potential of an adverse outcome.
16
ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2003 AND 2002
Note E - LITIGATION AND CONTINGENCIES (CONTINUED)
----------------------------------------
Bentley v. William R. Barber, et al. - On March 22, 2002, James Bentley
("Plaintiff"), a shareholder and former employee and director 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 occasion, 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. Trial has been
set for October 20, 2003. The Company will vigorously contest
Plaintiff's allegations and contention, including vigorously pursuing
discovery in the case to obtain all information necessary to conduct a
proper defense. The Company has recorded no liability for the potential
of an adverse outcome of the action.
PC Connection - This is an action by an equipment lessor. The parties
signed a stipulation judgment in January 2003 in the amount of $15,660.
This amount has been accrued.
Other Litigation - The Company is currently involved in other
litigation regarding breach on capital lease agreements. The total
amount being sought is $27,000, with full credit for interest and
attorney's fees. It is likely the plaintiffs will prevail and the
company has set up an allowance to cover any unfavorable outcomes.
Note F - PAYROLL TAXES
-------------
The Company is currently in negotiations with the United States
Department of the Treasury, Internal Revenue Service ("IRS") in regards
to unpaid employment taxes. The IRS has made formal demand of amounts
due and unpaid, including interest and penalties, from the Company, and
has appropriately filed tax liens against all assets of the Company.
The Company has filed a request for an "Offer in Compromise" of all
amounts owed by the Company. The IRS has recorded the request and any
other collection activity until it has had time to review the matter.
As of the date of this report the IRS has responded to the Company and
is reviewing the offer.
17
ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2003 AND 2002
Note F - PAYROLL TAXES (continued)
-------------------------
The Company has recorded its liability in full to the IRS, including
penalties and interest, on its balance sheet. As of March 31, 2003, the
Company has accrued liability of approximately $1,310,720 to the IRS.
The Company also owes unpaid employment taxes to the California
Employment Development Department ("EDD"). The Company has entered into
an installment agreement with the EDD and has been making all required
payments. The Company has recorded penalties and interest to the EDD as
a liability on its balance sheet. As of March 31, 2003, the Company has
remaining liability of approximately $32,709 to the EDD.
Note G - 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, but in
March 2003, the Company received notification of MBS's intention to
terminate the agreement effective June 30, 2003, this notification of
termination was subsequently amended to September 17, 2003. The
disinterested members of the Board have accepted this amendment.
Effective July 1, 2003, the Company resumed payments to employees and
vendors. While the Agreement remains in effect, the range of services
provided by MBS no longer includes payments to the Company's employees
and vendors. There are no future minimum payments under the Agreement.
For the three months ended March 31, 2003 the Company made payments
totaling $540,000 under the Agreement. As of March 31, 2003, the
Company owed MBS $3,342 which is included in accounts payable.
Associated with the 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.
Operating lease expense for the three months ended March 31, 2003 and
2002 was $30,000 and $526,580, respectively.
Note H - DEFERRED FINANCING COSTS
------------------------
In December 2001, the Company, in accordance with APB 21 and SAB 79 the
Company has 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 three
months ended March 31, 2003 and March 31, 2002 the Company recorded
amortization expense of $128,473 and $316,319 respectively.
18
ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2003 AND 2002
Note I - 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 March 31, 2003, the following related party
relationships existed between the Company, its shareholders, officers
and directors:
MBS, is jointly owned by Becky Takeda, President and Chief Executive
Officer of the Company and William R. Barber, 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 March 31, 2003, under the terms of the agency agreement with MBS,
the Company paid $123,202 in residuals. Refer to Note H Commitments for
further discussion of the operating arrangement between the Company and
MBS.
Note J - SUBSEQUENT EVENTS
-----------------
In June 2003, Mr. William Barber the Company's President and Chief
Executive Officer resigned, effective on the date of his notice. The
Board accepted his resignation. Ms. Becky Takeda, has been appointed
interim President and Chief Executive Officer until September 17, 2003.
She assumes this new position effective July 1, 2003. Ms. Takeda also
serves as the President of Merchants Billing Services, Inc., which
provides the Company with a range of administrative and support
services.
In June 2003, Merchants Billings Services, Inc. extended the
termination of its Master Support Services Agreement with the Company
through September 17, 2003, through a rescission of its prior
notification of termination of that same agreement. Effective July 1,
2003, the Company resumes payments to employees and vendors. While the
Agreement remains in effect, the range of services provided by MBS no
longer includes payments to the Company's employees and vendors. For
the period of April 1 - June 30, 2003, the Company paid MBS a total of
$180,000, due to the lower billing based on prior period actual
activity.
19
ACCESSPOINT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2003 AND 2002
Note K - 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.
ITEM 2. 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.
20
B. RESULTS OF OPERATIONS
Three Months Ended March 31, 2003 Compared With Three Months Ended March
31, 2002.
Revenues for the three months ended March 31, 2003 increased to $3,390,275
from $2,981,487 for the three months ended March 31, 2002. The increase of
$408,788, 14%, is due primarily to the increased revenues associated with credit
card processing which resulted in an overall increase in sales.
Cost of sales for the three months ended March 31, 2003 increased to
$2,616,291 from $2,218,823 for the three months ended March 31, 2002. The
increase of $397,468, 18%, resulted primarily from the increase in cost of sales
associated with credit card processing resulting from an overall increase in
sales.
Selling and marketing expenses for the three months ended March 31, 2003
increased to $4,624 from $1,000 for the three months ended March 31, 2002. This
increase of $3,624 resulted from the updating of the websites.
General and administrative expenses for the three months ended March 31,
2003 decreased to $774,595 from $1,016,869 for the three months ended March 31,
2002. The decrease of $242,274, or (24%), resulted primarily from a decrease of
salaries and wages, occupancy costs, and other operating efficiencies realized
through the consolidation of three offices into one.
Interest expense, net, for the three months ended March 31, 2003 was
$49,979, as compared to $55,434 for the three months ended March 31, 2002. The
decrease of $5,455, or 10%, resulted primarily from the Company's lower level of
indebtedness and reduced borrowing costs.
Other (Income) Expense, net of Interest expense was $165,583 for the three
months ended March 31, 2003, as compared to $234,530 for the three months ended
March 31, 2002. These decrease of $68,947, or 29% resulted primarily from the
amortization of deferred financing costs for the three months ended March 31,
2003, as compared to the three months ended March 31, 2002.
Net losses for the three months ended March 31, 2003 were ($220,797), as
compared to ($547,569) for the three months ended March 31, 2002. The difference
in loss of $326,772, or 64%, was primarily related to increased revenues and a
reduction of salaries and other operating efficiencies.
C. LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents at March 31, 2003 were $13,471, compared to
$35,961 at December 31, 2002, a decrease of ($22,490), which represented a
decline of 63%.
Net Cash used in operations decreased $449,162 for the three months ended
March 31, 2003 to a contribution of $35,201 or 108%. This efficiency was
primarily accomplished by increased effectiveness in operations.
Net Cash used in investing activities decreased from $15,095 as of March
31, 2002 to $0 as of March 31, 2003. This decrease of $15,095, was due to the
lack of funds available for investment..
During the three months ended March 31, 2003, the Company used net cash of
$52,876 for financing activities as compared to the generation of $545,294 for
the three months ended March 31, 2002. The decrease of $598,170, or 110%
resulted from the cessation of all private placement fundraising activities and
the associated payment of outstanding obligations.
We had, at March 31, 2003, negative working capital. We believe that cash
generated from operations will not be sufficient to fund the current and
anticipated cash requirements. 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.
21
D. NET OPERATING LOSS
For federal income tax purposes, we have net operating loss carryforwards
of approximately $13,833,000 as of March 31, 2003 and $10,760,000, as of March
31, 2002. These carryforwards will expire at various dates through the year
2015. The use of such net operating loss carryforwards to be offset against
future taxable income, if achieved, may be subject to specified annual
limitations.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are subject to various claims and legal proceedings covering a wide
range of matters that arise in the ordinary course of the business activities.
We describe below only those matters that we consider to be material.
Citicorp - During 2001 we vacated office facilities we had leased under
an operating lease agreement in Chicago, Illinois. The lessor subsequently filed
suit against us for the remaining amount of unpaid rent and other various
expenses. A judgment was filed against us in the amount of $95,000. As of March
31, 2003 we have accrued for the liability in full on the Balance Sheet. No
payments have been made.
Roycap - As of March 31, 2003 we were in default on the loan agreement
with Roycap for repayment of a $450,000 loan, plus accrued interest, which was
due on October 16, 2001. In June 2002, Roycap filed formal suit on its claim. We
have recently entered into a settlement agreement, stipulating to a $730,000
judgment. As of March 31, 2003 we have accrued for the liability in full on the
Balance Sheet. No payments have been made.
Bentley Promissory Notes - Various family trusts related to James W.
Bentley, a former director, have filed three related actions seeking to collect
in excess of $500,000 in promissory notes allegedly due. We believe these claims
were settled by the June 26, 2002 Settlement. Pursuant to the terms of that
Settlement, Net Integrated Systems, Inc. assumed the repayment of the Bentley
notes and contributed the total indebtedness to the Company as a capital
contribution in September 2002. We continue to fight these actions vigorously.
Merchants Warehouse.com ("MWC") - MWC filed a claim against PSI for
breach of an independent sales agent agreement. We dispute the claim. The matter
was submitted to arbitration and was heard by the arbitrator. The arbitrator
made in interim award of $296,720 in favor of MWC and denied the counterclaim.
The arbitrator directed us to pay the agent residuals according to the terms of
the agreement with the agent. We have made all payments to the agent since the
date of the award. The amount of the award has been accrued.
22
Northwest Systems, LLC ("NWS") - NWS filed two inter-related claims,
one lawsuit and one arbitration claim arising out of a dispute over a contract.
PSI had agreed to purchase certain merchant accounts from NWS. In the lawsuit,
NWS seeks to recover damages for alleged breach of the contact to purchase NWS.
In the arbitration, NWS claims that NWS has not been paid all residual payments
due it under its agency contract with PSI. We are vigorously defending against
these claims. In May 2003, an award in the arbitration claim in the amount of
$149,000 was made for the benefit of the plaintiff. The Company has accrued the
entire amount of the judgment. The Company continues to vigorously defend itself
against the lawsuit. We have accrued all potential residual payments due to
Northwest Systems, LLC.
EAB Leasing Corp. ("EAB") - We settled a lawsuit by EAB over an
equipment lease. Pursuant to the settlement, we stipulated to a judgment in the
amount of $72,000. We are paying this off at the rate of $3,000 per month.
Moceri Leasing Co. ("Moceri") - Moceri, 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 in the amount of $25,000.
Leverage Leasing Co. ("LLC") - LLC, 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 in the amount of $32,977. The Company is paying this judgment off
at the rate of $2,000 per month and has paid $6,000. The total amount of the
remaining judgment for the value of the equipment has been accrued.
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. ("GAN") - GAN, an equipment lessor, claims
that we defaulted on an equipment lease. We are vigorously defending itself
against this claim. In April 2003, the matter was settled for $16,900. No
payments have been made. The total amount of any potential judgment for the
value of the equipment has been accrued.
Arden Realty, Inc. ("Arden") - Arden is a former landlord of PSI. Arden
brought this action to recover unpaid rent. The Company has entered into a
settlement agreement with a stipulated judgment of $57,789. We have paid $20,000
toward the satisfaction of this judgment. We are making monthly payments of
$5,000. The remaining balance has been accrued.
Floratos, Loll & Devine ("FLD") - The former attorneys have made a
claim for services performed. We have entered into a settlement agreement with a
stipulated judgment in the approximate amount of $85,000. We have accrued this
liability. $20,000 in payments have been made.
Bas Mulder ("Mulder") - Mulder is the former owner and employee of
Black Sun Graphics, Inc. ("BSG"). Mulder claims damages in excess of $430,000
related to the purchase of BSG. We intend to vigorously defend this action. We
have entered into a verbal agreement to settle the action. We have satisfied
part of the terms of the verbal agreement. No trial date has been set. An
accrual has been made for the potential of an adverse outcome
23
Bentley v. William R. Barber, et al. - On March 22, 2002, James Bentley
("Plaintiff"), a shareholder and former employee and director 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 occasion, 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. Trial has been set for October 20, 2003. The
Company will vigorously contest Plaintiff's allegations and contention,
including vigorously pursuing discovery in the case to obtain all information
necessary to conduct a proper defense. The Company has recorded no liability for
the potential of an adverse outcome of the action.
PC Connection - This is an action by an equipment lessor. The parties
signed a stipulation judgment in January 2003 in the amount of $15,660. This
amount has been accrued.
Other Litigation - The Company is currently involved in other
litigation regarding breach on capital lease agreements. The total amount being
sought is $27,000, with full credit for interest and attorney's fees. It is
likely the plaintiffs will prevail and the company has set up an allowance to
cover any unfavorable outcomes.
For a similar discussion of Legal Proceedings, please refer to Note F,
Litigation and Contingencies, attached as a part of the financial statements
filed herewith and incorporated hereby.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
24
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 quarter ended March 31, 2003.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. 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
----------- -----------
21.00 *List of Subsidiaries
* Incorporated by reference from the exhibit to the Annual Report on Form
10-KSB filed by us on April 16, 2001
B. REPORTS ON FORM 8-K
None.
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, in the City of Los Angeles, State
of California, on the 27th day of June, 2003.
Dated: June 30, 2003 ACCESSPOINT CORPORATION
By
/s/_Becky_Takeda__________________
Becky Takeda,
Chief Executive Officer, President
By
/s/_Lawrence_C._Early_____________
Lawrence C. Early
Controller
25
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
--------------------- ----------------------------------- -------------
Director June 30, 2003
/s/_Joe_Byers________
Joe Byers
Director June 30, 2003
/s/_Mike_Savage______
Mike Savage
Director June 30, 2003
/s/_Wiliam_R._Barber_
William R. Barber
Chairman of the Board of Directors June 30, 2003
/s/_Gene_Valentine___
Gene Valentine
26
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES OXLEY ACT OF 2002
CERTIFICATIONS*
---------------
I, Becky Takeda, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Accesspoint
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: June 30, 2003
/s/_Becky_Takeda__________________
Becky Takeda
Chief Executive Officer, President
27
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES OXLEY ACT OF 2002
CERTIFICATIONS*
---------------
I, Lawrence Early, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Accesspoint
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: June 30, 2003
/s/_Lawrence_C._Early_____________
Lawrence C. Early
Controller
28