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

                                   FORM 10-KSB

                                   (MARK ONE)

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

                  FOR THE FISCAL YEAR ENDED: DECEMBER 31, 2002

                                       OR

           [ ] 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
        ----------------------------------------------------------------
                 (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, CA                                              90045
------------------------------------------        -------------------------
 (Address of Principle Executive Offices)                  (Zip Code)

                                 (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

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 the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]


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Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is 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 issuer's revenues for its most recent fiscal year were $13,264,318.

The aggregate market value of the voting stock held by non-affiliates of the
issuer on May 27, 2003 based upon the average bid and asked prices of such stock
on that date ($0.13) was $3,141,315. The number of issuer's shares of Common
Stock outstanding as of December 31, 2002 was 24,163,965.

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


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                             ACCESSPOINT CORPORATION
                            FORM 10-KSB ANNUAL REPORT
                 AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2002
                                TABLE OF CONTENTS

Forward-Looking Statements

PART I

Item 1.  Description of Business
Item 2.  Description of Property
Item 3.  Legal Proceedings
Item 4.  Submission of Matters to a Vote of Security Holders

PART II

Item 5.  Market for Common Equity and Related Stockholder Matters
Item 6.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations or Plan of Operation
Item 7.  Financial Statements
Item 8.  Changes In and Disagreements with Accountants on Accounting and
         Financial Disclosure

PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act
Item 10. Executive Compensation
Item 11. Security Ownership of Certain Beneficial Owners and Management
Item 12. Certain Relationships and Related Transactions
Item 13. Exhibits and Reports on Form 8-K
Item 14. Controls and Procedures

Signatures


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                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

     The key factors that are not within our control and that may have a direct
bearing on operating results include, but are not limited to, the acceptance by
customers of our products and services, our ability to develop new products and
services cost-effectively, our ability 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 we are 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.





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                                     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.



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     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. SIGNIFICANT DEVELOPMENTS

     In the first quarter of 2002, we acquired the credit card processing
merchant portfolio of Northwest Systems, LLC. We believed the acquisition would
allow us the opportunity to maximize the profitability of this portfolio by
lowering the agent expenses, cross-selling our other services and products and
increasing rates and fees on the accounts. Due to an inordinately high attrition
rate after the acquisition, coupled with misrepresentations on the part of the
seller, we withheld full payment for the acquisition. The parties to the
transaction are in litigation. Please refer to Item 3, Legal Proceedings. In
February 2002, we sold a portfolio of merchants to the agent and recorded
non-operating income related to the sale. In March 2002, we were named in a
series of lawsuits ("Bentley suits") by the Bentley family and related entities
(collectively "Bentley Family"). Please refer to Item 3, legal Proceedings.
     In the second quarter of 2002, our Company settled the litigation with the
Bentleys under the terms of a Settlement and Mutual Release Agreement dated June
26, 2002.
     In the third quarter of 2002, we consolidated our operations into a single
shared facility located at 6171 W. Century Blvd. Suite 200 Los Angeles.


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     In the fourth quarter of 2002, the Bentley Family claimed to rescind the
June 26, 2002 Settlement and Mutual Release Agreement and reinitiated its
actions against us and our officers. In October 2002, we were informed that Net
Integrated Systems, a primary source of funding for our Company's operations was
in receivership and would no longer provide a source of financing, liquidity or
cash. The Board of Director terminated the management agreement in place with
Net Integrated Systems at that time. We entered into a new management agreement
with Merchants Billing Services ("MBS") on October 15, 2002. Pursuant to the
terms of the management agreement, MBS provides to us cash management, a source
of financing, liquidity, underwriting, administrative, customer support and
technical support services to our Company. We reimburse MBS up to $170,000 per
month for the costs incurred in managing our business and pay a $10,000
management fee per month. On November 1, 2002, we transferred all employees,
except officers and control parties, to the payroll of MBS. We lease employees
from MBS pursuant to the terms of the management agreement.


     D. 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.

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     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. Processing services
support all major credit cards, including consumer, corporate and procurement
cards and enable real-time processing of added transaction information such as
items sold, discount control, stored value and loyalty benefits. Our system
provides support for enterprise-wide transaction management and processing
across multiples sales channels such as call center, order desk, Internet and
field authorizations. The system also provides support for fraud control, order
processing and fulfillment compliance features mandated within the
Visa/MasterCard system. Additionally, account management and reporting features
support both retail (in-store) and Internet point of sale transactions.

     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.


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     F. 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.



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     G. 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").

     We have been effective in signing new merchant clients through direct sales
efforts by our employees, bank alliance partner employees and ISOs.

     H. 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.

I. 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.

     J. EMPLOYEES

     As of December 31, 2002, 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. We expect to decrease the number of leased
employees in 2003. 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.


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ITEM 2.  DESCRIPTION OF PROPERTY

     We do not own any real property. As of December 31, 2002, we pay $5,000 per
month to 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

           We are subject to various claims and legal proceedings covering a
wide range of matters that arise in the ordinary course of our 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
December 31, 2002 we have accrued for the liability in full on our Balance
Sheet. No payments have been made.

           Roycap - As of December 31, 2002 we were in default on our 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 December 31, 2002 we have accrued for the liability in
full on our 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. In any event, we believe the sums
due are substantially less than claimed. 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 our counterclaim.
The arbitrator directed us to pay the agent residuals according to the terms of
our 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.

           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.

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           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.

           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.

           Arden Realty, Inc. ("Arden") - Arden is a former landlord of PSI.
Arden brought this action to recover unpaid rent. Our 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") - Our 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. No 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 our purchase of BSG. We intend to vigorously defend this action. We
have entered into a verbal agreement to settle the action. The terms of
settlement include completion of predecessor entity's tax returns for the year
2000, 2001 and 2002 and payment of all tax liabilities owed on behalf of BSG. We
have satisfied part of the terms of the verbal agreement. No trial date has been
set.



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           Bentley v. William R. Barber, et al. - On March 22, 2002, James
Bentley ("Bentley"), a shareholder and former employee and director, filed a
shareholder derivative lawsuit against us 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, Bentley also sought provisional remedies with the Court,
including multiple applications for preliminary injunction and the appointment
of a receiver. To date, none of Bentley's requests for provisional relief have
been granted. On June 26, 2002, the parties to the action executed a Settlement
Agreement. Bentley purported to rescind the Settlement Agreement in early
December 2002. Bentley thereafter filed an ex parte application for temporary
restraining order, which the court denied on December 24, 2002. The Court set a
hearing for Bentley's application for preliminary injunction in late January
2003. Bentley thereafter continued the hearing on the application for
preliminary injunction on several occasions. Ultimately, after we filed our
opposition to the preliminary injunction request, Bentley withdrew his
application for preliminary injunction. A number of depositions were conducted
and motions filed during January and February 2003. Currently the parties have
agreed to a short stay of discovery pending the outcome of ongoing settlement
negotiations, although Bentley has recently re-noticed several depositions. No
trial date has been set. To the extent that settlement negotiations are not
successful, we will vigorously contest Bentley's allegations and contention,
including vigorously pursuing discovery in the case to obtain all information
necessary to conduct a proper defense. We have 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.

           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.



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For a similar discussion of Legal Proceedings, please refer to Note O,
Litigation and Contingencies, attached as a part of the financial statements
filed herewith and incorporated hereby.

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, 2002.



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                                     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.


                                      2002
                         -------------------------------
                          HIGH                      LOW
     ---------------------------------------------------

     1st Quarter         $ 1.45                   $ 0.60
     ---------------------------------------------------

     2nd Quarter         $ 1.00                   $ 0.33
     ---------------------------------------------------

     3rd Quarter         $ 0.83                   $ o.33
     ---------------------------------------------------

     4th Quarter         $ 0.43                   $ 0.20
     ---------------------------------------------------


                                      2001
                         -------------------------------
                          HIGH                      LOW
     ---------------------------------------------------

     1st Quarter         $ 3.94                   $ 0.88
     ---------------------------------------------------

     2nd Quarter         $ 2.00                   $ 1.08
     ---------------------------------------------------

     3rd Quarter         $ 1.64                   $ 0.18
     ---------------------------------------------------

     4th Quarter         $ 1.70                   $ 0.26
     ---------------------------------------------------



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     A. NUMBER OF HOLDERS

     As of December 31, 2002, we had 1,283 common shareholders of record, not
including approximately 1,000 common shareholders holding their shares in street
name in brokerage accounts. On May 27, 2003, the last reported sales price of
our common stock on the OTCBB was $0.13 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.



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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 OUR COMPANY'S
PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS. THESE STATEMENTS INVOLVE RISKS
AND UNCERTAINTIES. THEY ARE MADE AS OF THE DATE OF THIS REGISTRATION STATEMENT,
AND WE ASSUME NO OBLIGATION TO UPDATE THEM.

     A.  Summary of Financial Data

     The following summary financial data should be read together with the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements included herein.


                            STATEMENT OF OPERATIONS

                            YEARS ENDED DECEMBER 31
                           -------------------------

                                                  2002              2001

Revenues.....................................$ 13,264,318       $ 6,344,643
Cost of sales and services.....................11,176,910         4,045,880
Selling and marketing...........................   13,595           290,914
General and administrative..................... 3,166,032         5,333,756
Profit (loss) from operations ................ (1,092,219)       (3,325,907)
Other expense, net ..........................   5,751,933           587,155
Extraordinary expense................................  0                 0
Income taxes expense  ............................. 2,400             2,400
                                            ------------       -----------
Net profit (loss)...........................$ (6,846,552)      $(3,906,462)
                                             ============       ===========
Net loss per Common Share:
     Basic:.................................$      (0.29)      $     (0.20)

Weighted average number of Common Shares:
     Basic:....................................23,826,300        19,509,000



                                       17
<PAGE>




                         CONSOLIDATED BALANCE SHEET
                           YEARS ENDED DECEMBER 31
                          -----------------------------

                                                2002              2001


Cash...........................................$ 35,961           $ 78,229
Accounts receivable, net........................505,880            255,873
Other current assets............................  1,488             20,173
Fixed assets, net (1)...........................178,139            401,685
Other assets..................................1,701,539          6,581,025
                                             ------------       -----------
  Total assets................................2,423,007          7,336,985
                                             ============       ===========

Total current liabilities.....................5,869,282          4,632,601
Long term liabilities................................ 0                  0
                                              ------------       -----------
  Total liabilities                           5,869,282          4,632,601
                                              ------------       -----------

Common stock.....................................24,164             23,375
Preferred stock...................................1,056              1,056
Additional paid in capital...................15,114,004         14,418,900
Retained earnings (deficit).................(18,585,499)       (11,738,947)
                                              ------------       -----------
  Total shareholders' equity (deficit)...... (3,446,275)          2,704,384
                                              ============       ===========
  Total liabilities and stockholders' equity.$2,423,007         $ 7,336,985
                                              ============       ===========
------------------

1    Includes net accumulated depreciation of $455,847 and $936,497 in 2002 and
     2001, respectively.


     B. OVERVIEW

     Our primary revenue is derived from the processing of credit card
transactions for more than 5,000 merchants. As of December 31, 2002 more than
90% of our revenue is derived from the processing of credit card transactions
through Chase Merchants Services, LLC. 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
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 our software products.


                                       18
<PAGE>



     We have incurred losses since the inception of our operations. At December
31, 2002, we had an accumulated deficit of ($18,585,499). In the past, we have
relied substantially on private placement offerings of debt and equity to offset
our losses and to fund our ongoing operations, research and development programs
and business activities. We are currently cashflow neutral, having enough
operating inflows to support our ongoing operations on a monthly basis.
Regrettably, the slim margin of profitability associated with our core business
provides no opportunity, in the short- or long-term to repay our approximate
$6,000,000 in debt. With ongoing litigation with the Bentleys draining our slim
resources, the only viable option for our future is the sale of a part of the
merchant portfolio to a third party. By using the proceeds from the sale of the
portfolio to reduce debt, we could plan for the future. Without the sale of the
merchant portfolio, our reorganization or liquidation is imminent.


     C. RESULTS OF OPERATIONS

     Year Ended December 31, 2002 Compared With Year Ended December 31, 2001

     Revenues for the year ended December 31, 2002 increased to $13,264,318 from
$6,344,643 for the year ended December 31, 2001. The increase of $6,919,675, or
110% is due to increased revenues associated with the addition of more than
3,000 new merchants and the resultant increase in credit card processing
transaction volume of our merchant portfolio.

     Cost of sales for the year ended December 31, 2002 increased to $11,176,910
from $4,045,880 for the year ended December 31, 2001. The increase of
$7,131,030, or 177%, resulted from the increase in credit card processing
transaction fees associated with the increase in credit card processing volume.

     Selling and marketing expenses for the year ended December 31, 2002
decreased to $13,595 from $290,914 for the year ended December 31, 2001. This
decrease of $277,319, or 96% resulted from the termination of advertising
efforts for acquisition of credit card processing accounts.

     General and administrative expenses for the year ended December 31, 2002
decreased to $3,166,032 from $4,547,880 for the year ended December 31, 2001.
The decrease of $1,381,848, or 31% resulted primarily from a decrease in
headcount and our associated wages and related employee benefit costs,
consolidation of three offices into a single shared office environment, cellular
and telecommunication costs, as well as a keen concentration on the reduction of
all operating costs of our Company.

     Interest expense, net, for the year ended December 31, 2002 was $529,646,
as compared to $162,164 for the year ended December 31, 2001. The increase of
$367,482 or 227% in interest expense resulted primarily from the accelerated
interest costs of the Roycap and IRS debt as well as the carrying cost of the
Secured Revolving Line of Credit due to Net Integrated Systems, Inc.



                                       19
<PAGE>




     Other Expense, net of Interest expense was $5,751,933 for the year ended
December 31, 2002 compared to $1,364,031 that represents an increase of
$4,387,902 or 322%. This increase is attributable to more than $1,200,000 in new
amortization expense of the deferred financing cost other asset, recognition of
$3,757,000 in write down costs associated with the deferred financing cost asset
as well as growing litigation settlement expenses. We benefited from the
forgiveness of almost $500,000 of debt by Net Integrated Systems.

     Net losses for the years ended December 31, 2002 and December 31, 2001 were
($6,846,552) and ($3,906,462), respectively. The increase in loss of $2,940,090
or 76% was completely attributable to the recognition of the impairment loss on
the deferred financing cost asset, amortization of the same item and increased
litigation costs.


     D. LIQUIDITY AND CAPITAL RESOURCES

     Cash at December 31, 2002 were $35,961, compared to $78,229 at December 31,
2001 a decrease of $42,268, which represented a decline of 54%. We are without
operating capital and we have no known sources of funding at our disposal.
Management is actively pursuing the sale of our assets to pay off debt and fund
future operations.

     Net Cash used in operations decreased to $1,321,050 for the year ended
December 31, 2001 from $2,110,447 for the year ended December 31, 2001 or a
resulted efficiency in cash of $789,397 or 38%. This efficiency was primarily
accomplished by increased effectiveness in operations. By reducing headcount,
office spaces and an increased focus on cost containment we were able to operate
leaner than in prior years.

     Net Cash used in investing activities increased to $200,000 as of
December 31, 2002 from $54,606 as of December 31, 2001. This increase of
$145,394 or 267% was primarily due to the acquiring of merchant portfolios in
the marketplace for processing through our credit card processing platform.

     During the year ended December 31, 2001, we generated net cash of
$2,211,328 from financing activities as compared to $1,478,782 for the year
ended December 31, 2002. The decrease of $732,546 resulted from a decrease in
private placement fundraising activities.

     As of December 31, 2002, we share office spaces with Merchants Billing
Services under a sublease held by Merchants Billing Services. We pay Merchants
Billing Services $5,000 per month for its share of the space and related utility
usage. We do not anticipate moving in the year 2003.



                                       20
<PAGE>



     We had at December 31, 2002, negative working capital. We believe that cash
generated from operations will not be sufficient to fund our current and
anticipated cash requirements. We believe that our current operational plans for
the next twelve months will be curtailed or delayed because of the lack of
sufficient financing. We are currently cashflow neutral, having enough operating
inflows to support our ongoing operations on a monthly basis. Regrettably, the
slim margin of profitability associated with our Company's core business
provides no opportunity, in the short- or long-term to repay our Company's
almost $6,000,000 in debt. With ongoing litigation with the Bentleys draining
our Company's slim resources, the only viable option for our future is the sale
of a part of our merchant portfolio to a third party. By using the proceeds from
the sale of the portfolio to reduce debt, we could plan for the future. Without
the sale of the merchant portfolio, our reorganization or liquidation is
imminent.

     E. NET OPERATING LOSS

     For federal income tax purposes, we have net operating loss carry forwards
of approximately $13,833,000 as of December 31, 2002 and $10,900,000, as of
December 31, 2001. These carryforwards will expire at various dates through the
year 2016. The use of such net operating loss carryforwards to be offset against
future taxable income, if achieved, may be subject to specified annual
limitations (see "Risks of Our Business Limitations on Net Operating Loss Carry
Forward").


ITEM 7.  FINANCIAL STATEMENTS

  Our audited consolidated financial statements for the periods ended December
31, 2002 and December 31, 2001 are filed herewith.





                                       21
<PAGE>




                          INDEPENDENT AUDITORS' REPORT


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

We have audited the accompanying consolidated balance sheet of Accesspoint
Corporation and Subsidiaries (a Nevada Corporation) as of December 31, 2002, and
the related consolidated statements of operations, stockholders' equity and cash
flows for the year 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 audit. The
consolidated financial statements of Accesspoint Corporation and Subsidiaries as
of December 31, 2001 were audited by other auditors, whose report dated April 4,
2002, on those consolidated financial statements, included an explanatory
paragraph that described the Company's recurring losses and limited capital
resources that raise substantial doubt about its ability to continue as a going
concern as discussed in Note R to the consolidated financial statements.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit 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 audit
provides 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, 2002, and the
consolidated results of its operations and cash flows for the year 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 R 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 R. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

Mendoza Berger & Company, L.L.P.


May 26, 2003
Irvine, CA

                                       22
<PAGE>

                             ACCESSPOINT CORPORATION
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS


                                                December 31,        December 31,
                                                   2002                2001
Current Assets
           Cash                                           $35,961        $78,229
           Accounts receivable, net                       348,708        255,873
           Receivable from a related party                157,172              0
           Inventory                                            0          6,366
           Prepaid expenses                                 1,488         13,807

                     Total Current Assets                 543,329        354,275

Fixed Assets
           Furniture and equipment (net)                  178,139        401,685

                     Total Fixed Assets                   178,139        401,685

Other Assets
           Deferred financing costs (net)               1,266,764      6,288,967
           Portfolio Purchase                             154,667              0
           Deposits                                       280,108        292,058

                     Total Other Assets                $1,701,539     $6,581,025

           Total Assets                                $2,423,007     $7,336,985



                   Refer to notes to the financial statements

                                       23
<PAGE>




                             ACCESSPOINT CORPORATION
                           CONSOLIDATED BALANCE SHEETS

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                       December 31, December 31,
                                                          2002          2001
Current Liabilities
           Accounts payable                             $1,527,457    $1,467,688
           Accrued payroll taxes and penalties           1,412,432     1,091,080
           Accrued liabilities                             560,707       338,233
           Deferred compensation                                 0       221,477
           Merchant loss reserve                            19,465        99,465
           Lines of credit                               1,364,761             0
           Capitalized leases                              419,460       303,158
           Notes payable                                   565,000     1,111,500

           Total Current Liabilities                     5,869,282     4,632,601

           Total Liabilities                             5,869,282     4,632,601

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

           Common stock, $.001 par value,
           25,000,000 shares authorized,
           24,163,965 and 23,375,208 issued
           and outstanding, respectively                 24,164          23,375

           Additional paid in capital                15,114,004      14,418,900
           Retained deficit                         (18,585,499)    (11,738,947)

           Total Stockholders' (Deficit) Equity      (3,446,275)      2,704,384

           Total liabilities and
           Stockholders' Equity                      $2,423,007      $7,336,985



                   Refer to notes to the financial statements

                                       24
<PAGE>




                             ACCESSPOINT CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                              Years Ended
                                                     December 31,  December 31,
                                                        2002          2001

Sales, net                                           $13,264,318     $6,344,643

Cost of sales                                         11,176,910      4,045,880

           Gross profit                                2,087,408      2,298,763

Selling expenses                                          13,595        290,914

General and administrative expenses                    3,166,032      5,333,756

           Income (loss) from operations              (1,092,219)    (3,325,907)

Other (Income) Expense
           Interest income                               (15,634)       (17,105)
           Penalties                                     221,052         90,137
           Loss on disposal of assets                    153,477         45,216
           Miscellaneous                                 (95,926)        (3,165)
           Loss contingencies and legal
           settlements                                   224,998        307,500
           Amortization of deferred financing
           costs                                       1,265,276         37,414
           Write down of deferred financing costs      3,756,927              0
           Debt forgiveness                             (287,883)       (44,006)
           Interest expense                              529,646        162,164

           Total Other (Income) Expense                5,751,933        578,155

           Income (loss) before income
           taxes                                      (6,844,152)    (3,904,062)

Provision for income taxes                                 2,400           2,400

           Net income (loss)                          (6,846,552)   ($3,906,462)

           Net loss per share (basic and diluted)
                     Basic                                ($0.29)        ($0.20)


           Weighted average number of shares
                     Basic                            23,826,300     19,509,000



                   Refer to notes to the financial statements

                                       25
<PAGE>





                             ACCESSPOINT CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                             Years Ended
                                                   December 31,     December 31,
                                                       2002            2001

CASH FLOWS FROM OPERATING ACTIVITIES
           Net income (loss)                        ($6,846,552)   ($3,906,462)

Adjustments to reconcile net loss to net
cash used in operating activities:

           Amortization                               1,265,276         37,414
           Depreciation                                 221,743        326,872
           Merchant portfolio purchase write down        45,333              0
           Write down of deferred financing costs     3,756,927              0
           Loss on disposal of assets                   153,477         45,216
           Services paid by stock issuance                    0        426,518
           Decrease (Increase) in receivables           (92,835)       (55,249)
           Decrease (Increase) in inventory               6,366         (4,455)
           Decrease (Increase) in other current
           assets                                      (157,172)        16,682
           Decrease (Increase) in prepaid
           expenses                                      12,319         12,622
           Decrease (Increase) in deposits               11,950        121,738
           (Decrease) Increase in accounts
           payable and accrued expenses                  59,769         47,351
           (Decrease) Increase in accrued payroll
           taxes                                        321,352        386,109
           (Decrease) Increase in accrued
           liabilities                                  222,474        338,233
           (Decrease) Increase in merchant loss
           reserve                                      (80,000)        99,465
           (Decrease) Increase in deferred
           compensation                                (221,477)        (2,500)

           Total adjustments                         5,525,502_      1,796,016

           Net cash used in operations               (1,321,050)    (2,110,447)



                   Refer to notes to the financial statements

                                       26
<PAGE>





                             ACCESSPOINT CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                              Years Ended
                                                      December 31,  December 31,
                                                         2002           2001

CASH FLOWS FROM INVESTING ACTIVITIES
           Purchase of merchant portfolio              (200,000)             0
           Purchase of fixed assets                           0        (54,606)

           Net cash used in investing
           activities                                  (200,000)       (54,606)

CASH FLOWS FROM FINANCING ACTIVITIES
           Issuance of notes payable                          0        119,000
           Payments on capital leases                   (32,281)      (191,536)
           Line of credit                             1,361,670              0
           Sale of stock                                149,393      2,283,864

           Net cash provided by financing
           activities                                 1,478,782      2,211,328

           Net change in cash                           (42,268)        46,275

           Cash at beginning of year                     78,229         31,954
           Cash at end of year                          $35,961        $78,229

           Supplemental cash flows disclosures:
                     Income tax payments                     $0         $2,400

                     Interest payments                       $0       $100,338

                     Non cash investing and Financing
                      activities:

                        Stock issued for services            $0       $426,518
                        Conversion of notes payable   ($546,500)            $0
                        Common stock transfer                $0     $6,326,381



                   Refer to notes to the financial statements

                                       27
<PAGE>





                             ACCESSPOINT CORPORATION
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                                                             Years Ended
                                                      December 31,  December 31,
                                                         2002          2001

Retained (deficits)
           Balance at beginning of period             ($11,738,947) ($7,832,485)
           Net Income (loss)                            (6,846,552)  (3,906,462)

           Balance at end of year                      (18,585,499) (11,738,947)

Preferred stock, $.001 par value (thousands of shares)
           Balance at beginning of period                    1,056            0
           Issuance of preferred stock                           0        1,056

           Balance at end of year                            1,056        1,056

Common stock, par value $.001 (thousands of shares)
           Balance at beginning of period                   23,375       16,558
           Issuance of common stock                            789        6,817

           Balance at end of year                           24,164       23,375


Additional paid in capital
           Balance at beginning of period               14,418,900    5,390,011
           Issuance of common stock                        148,604    2,702,508
           Conversion of notes payable                     546,500            0
           Transfer of common stock                              0    6,326,381

           Balance at end of year                       15,114,004   14,418,900

Total stockholders' equity                             ($3,446,275)  $2,704,384



                   Refer to notes to the financial statements

                                       28
<PAGE>

                             ACCESSPOINT CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001


Note A - NATURE OF OPERATIONS

           Incorporated in the State of Nevada, Accesspoint Corporation ("our
           Company") is a "C" Corporation as defined by the Internal Revenue
           Code. As of December 31, 2002, our 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 our
           Company's systems, prospective clients can be approved in a short
           period, instead of the several-day time frame typically implemented
           by our Company's competition.

           In November 2000, our 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.

           Our Company has targeted the Independent Sales Organization (ISO) and
           Independent Agent marketplace as a prime driver and sales channel for
           its services. Our 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 our Company.



                                       29
<PAGE>





                             ACCESSPOINT CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001


Note B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

           Revenue Recognition
           Our 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, licensure of its software products. Revenue from software
           and hardware sales and services are recognized as products are
           shipped, downloaded, or used.

           Our 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 our Company. All material
           intercompany accounts, transactions and profits have been eliminated
           in consolidation.

           Risks and Uncertainties
           Our 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.

           Reserve for Merchant Credit Losses
           Our 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, our Company or, under limited circumstances, our Company and
           the processing bank, must bear the credit risk for the full amount of
           the transaction. Our 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, 2002 and 2001, our Company had
           aggregate collateral classified as merchant loss reserves of $19,465
           and $99,465, respectively.



                                       30
<PAGE>






                             ACCESSPOINT CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001


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 our Company but which will
           only be resolved when one or more future events occur or fail to
           occur. Our 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 our Company or unasserted
           claims that may result in such proceedings, our 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 our 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.

           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
           reserve for merchant losses.

           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


                                       31
<PAGE>



                             ACCESSPOINT CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001


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 December 31, 2001,
           inventory consisted only of finished goods. There was no inventory as
           of December 31, 2002.

           Concentration of Credit Risk
           Concentration of credit risk with respect to trade accounts
           receivable is not diversified. As of December 31, 2002 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.

           Reclassification
           Certain reclassifications have been made to the 2001 consolidated
           financial statements to conform with the 2002 presentation.


                                       32
<PAGE>


                             ACCESSPOINT CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001


Note B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

           Earnings Per Common 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
           Statement of Financial Accounting Standards ("SFAS") No. 148, "
           Accounting for Stock Based Compensation - Transition and Disclosure
           (An amendment of FASB Statement No. 123)", established accounting and
           reporting standards for stock based employee compensation plans (See
           Note H). As permitted by the standard, our 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 SFAS ("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 our Company's stock
           and the amount an employee must pay to acquire the stock. Our Company
           has never accounted for awards of stock-based employee compensation
           under the intrinsic value method of APB No. 25.

           Impairment of Long-Lived Assets
           Our Company evaluates long-lived assets for impairment whenever
           events or changes in circumstances indicate that the carrying value
           of an asset may not be recoverable. If the estimated future cash
           flows (undiscounted and without interest charges) from the use of an
           asset were less than the carrying value, a write-down would be
           recorded to reduce the related asset to its estimated fair value.
           There have been no write-downs for the years ended December 31, 2002
           and 2001.



                                       33
<PAGE>



                             ACCESSPOINT CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001

Note C - CASH

           Our Company maintains its cash balances at various banks in the
           United States. The balances are insured by the Federal Deposit
           Insurance Corporation up to $100,000. As of December 31, 2002 and
           2001, there were no uninsured balances held at these banks.

Note D - FIXED ASSETS

Fixed assets consist of the following:
                                                   2002           2001
      Furniture and fixtures                    $       0        $71,364
      Office equipment                                  0        244,623
      Computer hardware and software              631,922      1,022,195
      Leasehold improvements                        2,064              0
                                                  633,986      1,338,182
      Accumulated depreciation and disposal
                                                 (455,847)      (936,497)
      Total                                     $ 178,139     $  401,685


           For the years ended December 31, 2002 and 2001, our Company recorded
           depreciation of $221,743 and $326,872, respectively.


Note E- COMMITTMENTS

           Capital Leases - Our 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 D regarding related amounts. Future minimum
           payments under capital leases as of December 31, 2002, are as
           follows:


                              2003      $ 415,886
                              2004          3,574
                                        $ 419,460

               Total minimum lease payments                419,460
               Less amount representing interest           (62,919)
               Present value of minimum lease payments     356,541
Less current maturities of capital lease obligations      (356,541)
Long-term capital lease obligations                             $0


                                       34
<PAGE>


                             ACCESSPOINT CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001


Note E - COMMITMENTS (CONTINUED)

           Operating Leases - In October 2002, our Company entered into a Master
           Support Services Agreement ("Agreement") with Merchants Billing
           Services ("MBS"). This Agreement calls 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. Associated
           with the Agreement was the assignment of that certain Agreement of
           Sublease ("Sublease") dated as of August 2002 between Veridian and
           our Company. Veridian and the landlord Carlsberg Properties, Inc
           agreed upon the assignment of the Sublease. The Agreement is for an
           initial period of one year, but was terminated effective June 30,
           2003. Future minimum service payments under the Agreement are:


                     2003                                     $    960,000


           Operating lease expense for the years ended December 31, 2002 and
           2001 was $230,453 and $526,580, respectively.

NOTE F - STOCK AND STOCK WARRANTS

           Our 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, 2002, our Company has 25,000,000 Common Shares
           authorized and 24,163,965 shares issued and outstanding, of this
           amount 18,687,491 were restricted pursuant to Rule 144 of the
           Securities Act of 1933. Our Company had 5,000,000 Preferred Shares
           authorized and 1,055,600 issued and outstanding.



                                       35
<PAGE>



                             ACCESSPOINT CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001


NOTE F - STOCK AND STOCK WARRANTS (continued)

           In addition, our Company had outstanding at December 31, 2002,
           482,223 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, 2001 to December
           31, 2002 is as follows:

Balance at December 31, 2000     1,735,000
Warrants expired or exercised     (275,000)
Warrants issued                    312,223
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


           At December 31, 2002, our Company does not have enough common stock
           authorized 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

           Our Company intends to increase the authorized number of shares by
           vote of its shareholders subsequent to December 31, 2002.



                                       36
<PAGE>


                             ACCESSPOINT CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001


Note G - 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 earnings per share for
           2002 and 2001 are as follows:


                                                 2002             2001

           Net (loss) from operations        $(6,846,552)     $(3,906,462)

           Basic weighted average shares      23,826,300       19,509,000

           Net (loss) per share from continuing operations:
              Basic                               ($0.29)          ($0.20)



                                       37
<PAGE>


                             ACCESSPOINT CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001


Note H - 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, 2000            3,842,000        $.81
Granted                                       264,000        $.72
Exercised                                      (1,000)       $.43
Cancelled                                    (476,000)      $2.50
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

Options exercisable at December 31, 2001    3,629,000        $.55
Options exercisable at December 31, 2002    1,776,445        $.35



                                       38
<PAGE>


                             ACCESSPOINT CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001


Note H - EMPLOYEE STOCK OPTIONS AND BENEFIT PLANS (continued)

           Stock options exercisable at December 31, 2002:

           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 have been reduced
           to the following pro forma amounts:

                                                    2002             2001
           Net earnings (loss):
              As reported                 $(6,846,552)         $(3,869,048)
              Pro forma                   $(6,846,552)         $(4,172,954)

           Basic (loss) per share:
              As reported                      ($0.29)              ($0.20)
              Pro forma                        ($0.29)              ($0.21)



                                       39
<PAGE>




                             ACCESSPOINT CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001


Note H - EMPLOYEE STOCK OPTIONS AND BENEFIT PLANS (continued)

           The weighted average estimated fair value of stock options granted
           during 2002 and 2001 was $0.00 and $0.08 per share, respectively.
           These amounts were determined using the Black-Scholes option-pricing
           model, which values options based on the stock price at the grant
           date, the expected life of the option, the estimated volatility of
           the stock, the expected dividend payments, and the risk-free interest
           rate over the expected life of the option. The assumptions used in
           the Black-Scholes model were as follows for stock options granted in
           2002 and 2001:

                                                    2002       2001
           Risk-free interest rate                  4.50%      5.50%
           Expected volatility of stock              300%       350%
           Dividend yield                            0.0%       0.0%
           Expected life of options               36 months 36 months

           The Black Scholes option valuation model was developed for estimating
           the fair value of traded options that have no vesting restrictions
           and are fully transferable. Because option valuation models require
           the use of subjective assumptions, changes in these assumptions can
           materially affect the fair value of the options, and our Company's
           options do not have the characteristics of traded options, the option
           valuation models do not necessarily provide a reliable measure of the
           fair value of its options.

Note I - DEBT

           At December 31, 2002 and 2001, our Company had notes payable
           outstanding in the aggregate amount of $984,460 and $1,414,658,
           respectively. Payable as follows:
                                                       2002       2001
Note payable to the trust of a related party,
interest at 12% per annum, due on demand                 $0   $100,000

Note payable to a partnership, 10% per annum,
due December 6, 2002, to a related party                  0    160,000

Note payable to a corporation, interest at 5%
per annum, due on demand                                  0    167,500
Note payable to an individual, interest at
5% per annum, due on demand                         115,000    115,000

Various notes payable to a related party,
interest rates from 8-10% per annum, due in 2002          0    119,000


                                       40
<PAGE>


                             ACCESSPOINT CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001

Note I - DEBT (continued)

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, currently in default                        450,000    450,000

Capitalized lease obligations, interest at
varying rates, payments through May 2004,             419,460    303,158
currently in default.
                                                      984,460  1,414,658

            Current portion                          $984,460 $1,414,658


Note J - COMPENSATED ABSCENSES

           As of December 31, 2002 our Company had no employees. Under the terms
           of the Master Support Services Agreement, Merchants Billing Services
           assumed accrued vacation liability for employees. As of December 31,
           2002 the total vacation liability assumed by MBS was $29,602. As of
           December 31, 2001 the total vacation liability was $73,466.

Note K - RELATED PARTY TRANSACTIONS

           Our 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.

                                       41
<PAGE>


                             ACCESSPOINT CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001


Note K- RELATED PARTY TRANSACTIONS (continued)

         MBS is also an agent of our Company and sells our Company's products
         and services through its own network of subagents and sales personnel.
         As of December 31, 2002, under the terms of the agency agreement with
         MBS, our Company paid $101,558 in residuals.

         Pursuant to the terms of that certain Settlement and Mutual Release
         Agreement dated June 26, 2002, all liabilities as of the date of the
         settlement agreement owing and payable to James Bentley et. al., former
         directors, officers and current shareholders of our Company, were
         assigned to NIS for repayment. NIS contributed the obligation to the
         Company as capital. The Company recorded the conversion of the
         obligations previously outstanding as a credit to Stockholders Equity -
         Additional Paid in Capital in the amount of $420,250.

Note L - INCOME TAXES

         Total Federal and State income tax expense for the years ended December
         31, 2002 and 2001 amounted to $2,400 and $2,400, respectively. This
         represent the minimum annual tax liability under California tax code
         for the year 2001. No future benefit for the realization of an
         operating loss carry-forward, in the form of an asset, has been
         recognized due to the ongoing nature of the losses and the potential
         inability for our Company to ever realize their benefit. For the years
         ended December 31, 2002 and 2001, there is no material difference
         between the federal statutory tax rate and the effective tax rate. At
         years ended December 31, 2002 and 2001 our Company had available net
         operating loss carry-forwards of approximately $13,833,000 and
         $10,900,000 respectively, after adjusting for limitation, to be offset
         against future taxable income. The operating loss carry forwards will
         expire at various dates through the year 2016.


                                       43

<PAGE>

                             ACCESSPOINT CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001

Note M - FAIR VALUE OF FINANCIAL INSTRUMENTS

         The carrying amounts of cash, accounts receivable, deposits and
         accounts payable approximate their fair value because of the short
         maturity of those instruments.

         The carrying amounts of our Company's long-term debt and capital lease
         obligations approximate their fair value because of the short maturity
         and/or interest rates which are comparable to those currently available
         to our Company on obligations with similar terms.

Note N - NET INTEGRATED SYSTEMS, INC.

         On December 20, 2001 our Company entered into several agreements with
         Net Integrated Systems, Inc. ("NIS") in conjunction with a Five Million
         Dollar ($5,000,000) Secured Revolving Line of Credit. On October 15,
         2002, in a verbal report delivered by Mr. William R. Barber, a Director
         of NIS, the Board of Directors was informed that NIS had been placed in
         receivership and would no longer provide a source of financing,
         liquidity or management services to our Company. Upon that date, the
         Board of Directors, by unanimous decision, voted to terminate all
         agreements with NIS, revoke any warrants, option or voting rights
         extended pursuant to those agreements, and demand return of the stock
         issued to NIS in consideration for extension of that certain Secured
         Revolving Line of Credit to our Company's treasury. In May 2003, the
         proxies and voting powers of the shares were assigned to the
         disinterested members of the Board of Directors.


Note O - LITIGATION AND CONTINGENCIES

         Our 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 our Company by management and its counsel.

         Citicorp - During 2001 our Company vacated office facilities it had
         leased under an operating lease agreement in Chicago, Illinois. The
         lessor subsequently filed suit against our Company for the remaining
         amount of unpaid rent and other various expenses. A judgment was filed
         against our Company in the amount of $95,000. As of December 31, 2002
         our Company has accrued for the liability in full on its Balance Sheet.
         No payments have been made.

                                       44

<PAGE>


                             ACCESSPOINT CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001


Note O - LITIGATION AND CONTINGENCIES (continued)

         Roycap - As of December 31, 2002 our 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. Our 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 our Company, have filed three related
         actions seeking to collect in excess of $500,000 in promissory notes
         allegedly due. Our 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. Our 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 in interim award of $296,720 and denied our Company's
         counterclaim. Our Company is directed to pay the agent residuals
         according to the terms of our Company's agreement with the agent. Our
         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. Our
         Company is paying this off at the rate of $3,000 per month.

         Moceri Leasing Co. - This is an action by an equipment lessor on a
         defaulted lease. Our 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.

                                       45

<PAGE>

                             ACCESSPOINT CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001


Note O - LITIGATION AND CONTINGENCIES (continued)

         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 total amount of any potential
         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. Our 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.

         Arden Realty, Inc. - This is an action brought by a former landlord of
         PSI to recover unpaid rent. Our Company has entered into a settlement
         agreement with a stipulated judgment of $57,789. Our 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 our Company for services performed. Our Company has entered into a
         settlement agreement with a stipulated judgment in the approximate
         amount of $85,000. The total 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 our Company. Our Company
         intends to vigorously defend this action. Our 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.

                                       46

<PAGE>


                             ACCESSPOINT CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001


Note O - 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 our
         Company, filed a shareholder derivative lawsuit against our 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. Currently the
         parties have agreed to a short stay of discovery pending the outcome of
         ongoing settlement negotiations, although Plaintiff has recently
         re-noticed several depositions. No trial date has been set. To the
         extent that settlement negotiations are not successful, our 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. Our 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.

                                       47

<PAGE>


                             ACCESSPOINT CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001


Note P - PAYROLL TAXES

         Our Company is currently in negotiations with the Internal Revenue
         Service ("IRS") in regards to employment taxes not paid by former
         management during the year 2000. The IRS has made formal demand of
         amounts due and unpaid, including interest and penalties, from our
         Company, and has filed tax liens against all assets of our Company. Our
         Company has filed a request for an "Offer in Compromise" of all amounts
         owed by our Company. The IRS has recorded the request and halted all
         other collection activity until it has had time to review the matter.
         As of the date of this report the IRS has not responded to our Company.

         Our Company has recorded its liability in full to the IRS, including
         penalties and interest, on its Balance Sheet. At December 31, 2002 the
         approximate amounts owed by each Company are as follows:

                  Accesspoint                        $    592,543
                  PSI                                     718,177
                  BSG                                      48,602
                                                       $1,359,322

         Our Company also owes unpaid employment taxes to the California
         Employment Development Department ("EDD"). Our Company has entered into
         an installment agreement with the EDD and has been making all required
         payments. Our Company has recorded in full, including penalties and
         interest, its liability to the EDD as a liability on its Balance Sheet.
         At December 31, 2002 the remaining amount owed to the EDD is
         approximately $53,000.

                                       48

<PAGE>


                             ACCESSPOINT CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001


Note Q - DEFERRED FINANCING COSTS

         In December 2001, our Company, in accordance with APB 21 and SAB 79 our
         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.

         Our Company will amortize the deferred financing cost over the life of
         the line of credit, which is five years. For the years ended December
         31, 2002 and December 31, 2001 the Company recorded amortization
         expense of $1,265,276 and $37,414, respectively.

         As described in Note N to the financial statements, 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.

NOTE R - 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.

                                       49

<PAGE>


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

         On April 4, 2003, in an email addressed to the controller of our
Company, Lichter, Weil & Associates, independent auditors to the registrant,
resigned.


         During the past two years the audited financial statements of the
registrant prepared by Lichter, Weil & Associates contained an adverse opinion
that expressed that certain conditions indicated the Company might be unable to
continue as a going concern. The prior principal accountant's report on the
financial statement for either of the past two years did not contain a
disclaimer of opinion, nor were the opinions qualified or modified as to
uncertainty, audit scope, or accounting principles.


         During the past two years, and the interim period since the date of the
last audit, December 31, 2001, there has been no disagreement with the former
accountant on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope of procedure.

            The Audit Committee of the Board of Directors has 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 has approved the engagement of this firm as principal
accountant.

         During the registrant's two most recent fiscal years, or any subsequent
interim period, the registrant has not consulted the newly engaged accountant
regarding the application of accounting principles to a specified transaction,
or the type of audit opinion that might be rendered on the registrant's
financial statements nor has it consulted the newly engaged accountant regarding
any matter that was either the subject of a disagreement or a reportable event.

         In March 2003, the former accountant advised the registrant of the need
to expand the scope of its audit, that information had come to the accountant's
attention during the time period covered by the audit then under way, that if
further investigated, may have caused it to question management's
representations or the information contained within its financial statements.
Due to the accountant's resignation on April 4, 2003, concurrently with the
preliminary assessments of, and the commencement of, the additional work
required for an investigation, the accountant did not expand the scope of its
audit or conduct such further investigation beyond such preliminary steps.

                                       50

<PAGE>

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, 2002. 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       52           Chairman of the Board of Directors
William B. Barber      57           CEO, President, Director
Christine Crocker      36           Secretary
Joseph Byers           76           Director
William Devore         62           Director
Michael Savage         82           Director

                            KEY MANAGEMENT PERSONNEL

      NAME             AGE          POSITION

Lawrence C Early       37           Controller

                                       51

<PAGE>

         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. William DeVore joined the Board in January 2003. Mr. DeVore is an
international businessman focusing exclusively on China for more than 30 years.
Mr. DeVore provides trade financing for exports to North America from the
Chinese marketplace. Mr. DeVore intends to focus his energies in the development
of our international opportunities. Mr. DeVore 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.

                                       52

<PAGE>

     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.

                                       53

<PAGE>

                                    PART III

ITEM 10. EXECUTIVE COMPENSATION

     The following table sets forth information regarding compensation earned
for our Company's fiscal year ended December 31, 2002, by our Chief Executive
Officer and other covered persons:


                           SUMMARY COMPENSATION TABLE

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

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


     A. INDIVIDUAL EXECUTIVE COMPENSATION


There were no options granted to the Named Executive Officers during the year
2002.

There were no options exercised by the Named Executive Officers during 2002:

There were no awards made to the Named Executive Officers by us of stock options
under any Long-Term Incentive Plan during the year 2002.

                                       54

<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information as of December 31, 2002
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, 2002.

TITLE           NAME OF       ADDRESS OF BENEFICIAL
OF CLASS       BENEFICIAL     OWNER
                 OWNER

Common    Net Integrated      Sofia House                  4,332,735
           Systems, Ltd.(2)   48 Church Street             18%
                              Hamilton HM GX,
                              Bermuda
------------------------------------------------------------------------

Common    * Tom Djokovich     23332 Vista Carillo          3,605,257
                              Laguna Niguel, CA 92677      15%
------------------------------------------------------------------------

Common    Access Holdings LP  26482 Valpariso              1,905,037
               (3)            Mission Viejo, CA 92677      8%
------------------------------------------------------------------------

Common    * Alfred Urcuyo     22729 Baltar St.             1,621,124
                              West Hills, CA 91304         7%
------------------------------------------------------------------------

Common    All Directors &                                  11,464,153
          Executive Officers                               48%
          as a group
------------------------------------------------------------------------


2 Net Integrated Systems, Ltd. ("NIS") acquired its 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. We are currently
awaiting the return of stock issued in consideration for the entrance of NIS
into the aforementioned agreements.

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


                                       55

<PAGE>

     A. OUTSTANDING OPTIONS AND WARRANTS

     As of December 31, 2002, we had granted a total of 3,639,000 options under
our 1999 Plan, of which 2,578,106 are outstanding as of December 31, 2001. 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. Early and 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, 2001 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, 2002.
There were 1,055,600 shares of Preferred Stock issued and outstanding as of
December 31, 2002.

     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.

                                       56

<PAGE>

     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.

                                       57

<PAGE>

     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."

                                       58

<PAGE>

                                     PART IV

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.

                                       59

<PAGE>

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, 2002 we were indebted to
NIS under the Line of Credit in the amount of $1,506,790. 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. For the year ended December 31, 2002, there were more than 50 such
transactions, none of a material size, between MBS and us. As of December 31,
2002, we were indebted to MBS for $150,990.

                                       60

<PAGE>

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

     B. REPORTS ON FORM 8-K


ITEM 14.    CONTROLS AND PROCEDURES

         Within the 90 days prior to the date of this report, we carried out an
evaluation, under the supervision and with the participation of our management,
including our Company's Chief Executive Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures. Based upon that
evaluation, our Company's Chief Executive Officer concluded that our Company's
disclosure controls and procedures are effective in causing information to be
recorded, processed, summarized, and reported to ensure that the quality and
timeliness of our public disclosures complies with our SEC disclosure
obligations. We have also taken into account the letter of resignation, dated
December 31, 2002, but transmitted and received January 15, 2003, of Ms. Marcia
Allen, a former director of Accesspoint, in which she criticized our internal
processes and information flow. Her letter was filed as an exhibit to Form 8-K
filed on January 17, 2003. There have been no significant changes in internal
controls or in other factors that could significantly affect these controls
subsequent to the date of the evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

                                       61

<PAGE>

                                   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 15th day of April, 2003.


Dated:  May 27, 2003                    ACCESSPOINT CORPORATION


                                          By:
                                          ----------------------------
                                          William R. Barber
                                          CEO, President and Director



     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
         ---------                     -----               ----


                        President & Director May 27, 2003
----------------------
William R. Barber

                                       62

<PAGE>


                    CONSENT OF Mendoza Berger & Company, LLP
                    INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We consent to the incorporation by reference and use in the Annual Report on
Form 10 KSB A-1, under the Securities Exchange Act of 1934 of our report on the
consolidated financial statements of Accesspoint Corporation for the year ended
December 31, 2002.




-----------------------------
Mendoza Berger & Company, LLP
Irvine, California

Dated: May 30, 2003





                     CONSENT OF Lichter Weil and Associates
                    INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We consent to the incorporation by reference and use in the Annual Report on
Form 10 KSB A-1, under the Securities Exchange Act of 1934 of our report on the
consolidated financial statements of Accesspoint Corporation for the year ended
December 31, 2001.




-------------------------
Lichter Weil & Associates
San Diego, California

Dated: May 29, 2003



                                       63