Terry Drayton at the Count Me In offices today

Embarrassed. Apologetic. Hopeful. Those were just a few of the emotions expressed today by an effusive Terry Drayton as the embattled CEO of Count Me In described how the Bellevue company lost nearly $5 million in registration fees and donations for 220 non-profits and youth sports organizations across the country.

In his first interview since news broke earlier this month about troubles at the online registration company, Drayton apologized for his lack of financial oversight and pledged that he would continue working until the outstanding funds were repaid.

He also admitted that the donations and registration fees collected on behalf of youth sports programs were comingled with the operating funds of Count Me In, a mistake that Drayton now fully acknowledges. Even more illuminating was the admission by Drayton that Count Me In did not keep basic financial records until recently.

"I take responsibility for it -- full stop," said Drayton.

Asked how an experienced executive could operate a company for so long without basic accounting procedures in place, Drayton said that he's always been an innovator who focuses on the big picture.

"I suck at details," he said.

In past businesses, Drayton said he was always surrounded by a detail-oriented executive who could keep track of the books. That didn't happen at Count Me In.

"How we got into this situation was not all that complicated," said Drayton, who returned to Count Me In as full time CEO in May. "We had some issues with people, we had some issues with systems, we had some issues with lack of financial oversight, and as a result we have a small deficit in the amount of money we have handled over the years."

Frustrated youth sports directors from organizations such as Carlsbad Youth Baseball, Eastlake Little League and Patriot Lacrosse have expressed outrage in recent weeks as news spread online about the troubles at Count Me In. A New Jersey soccer club filed a lawsuit alleging that Count Me In failed to pay more than $100,000 in registration fees. The Washington State Attorney General's office had received more than 30 complaints as of December 16.

The financial problems accumulated over a number of years in small dollar amounts, with Drayton saying they became aware of the situation about two years ago. "It took us a long time just to figure out what the magnitude of the number was," he said. 

The company, which hired a CFO and re-keyed all financial results for the first seven years, discovered that it owed about $5 million. That's about three percent of the $175 million it has collected since 2000, Drayton said.

"At the heart of it, it is a lack of oversight more than anything else," he said. "All the money is in the business, all of the money can be accounted for and all of that sort of stuff." Some of the funds collected on behalf of the non-profits went to pay employee salaries, purchase equipment and build the product, Drayton said.

The situation certainly has taken a personal toll on the 48-year-old technology executive, who notes that his kids' college funds and other personal investments are tied up in Count Me In. As the largest investor, Drayton says that he has a lot to lose financially.

"My kids are going to state schools now," he said. "I mean this is our biggest investment that we've ever made by a huge stretch, much more than we have done in any other business ever. And I've done a lot of businesses.... If the business goes out of business, the largest loser by a factor of probably 20 is moi. It's like we've got everything in here. So that is probably the one kind of thing ... that got me the most upset that somehow we have benefited in any way from this, because the complete opposite is the truth."

At one point during the 90 minute interview, Drayton held back tears when discussing the "phone tree" of support he's received from the technology elite in town who count Drayton as friends. But Drayton  -- best known for co-founding HomeGrocer.com -- also said that he's received death threats. And he said the remaining staff of 12 employees was temporarily moved to another location after angry customers banged on doors and windows at the offices.

In one recent episode, Drayton said someone broke into the company's offices and stole several computers.

Drayton says that customers have every right to be mad at him and the company. But he said he's doing everything he can to resolve the situation, noting several deals that are in the works which would essentially repay the outstanding $5 million.  

"I am focusing all of my efforts on getting clients paid off. That is all I am doing That is the priority," said Drayton.

Reports in the media -- including TechFlash -- have hurt some of the company's prospects in terms of raising outside capital. He regrets the timing of the cover story in Seattle Business Monthly and says he probably should have spoken out sooner in the media about some of the misinformation floating around. "The media frenzy that kind of happened, all it has done has made it harder for me to get the investors in," said Drayton, adding that legal counsel encouraged him to keep quiet.

Also not helping matters are the lawsuits, said Drayton.

"I can totally understand the anger. And I can even understand people filing lawsuits," he said. "The lawsuits are unfortunate, they don't help. We lost a deal at the 11th hour because of a lawsuit. It would have gotten everyone paid off in full." If lawsuits continue to mount, Drayton said that the company could be forced into Chapter 11 bankruptcy. And that, he said, would hurt the chances of clients receiving their money.

What's next for Count Me In?

Drayton continues to hold out hope that he can find a buyer, noting that several good leads are on the table. Drayton said his confidence has been weakened in recent months, but he added that he's a "relentless guy" who never gives up. "I will keep banging away at this until I get them paid, one way or another," he said.

In the interim, the company has shut down credit card processing for its existing clients and is moving to a system by which clients can receive funds directly.

"We are getting out of the business of handling our clients' money, that is one of our great 20-20 hindsights," said Drayton. "It is a whole bunch of work. It is a whole bunch of effort. The simplest thing is to send the money directly to the clients."

In hindsight, Drayton said they should have set up one bank account for operating capital and one for client funds. But Drayton said he's not spending his time thinking about past mistakes, instead looking for ways to repair the damage.

"I am the founder. I am the CEO. It is my responsibility. It happened on my watch, and it is my job to fix it, full stop," he said.

COMING TOMORROW: Extended excerpts from the interview with Terry Drayton