UNITED STATES
                SECURITIES AND EXCHANGE COMMISSION
                      Washington, D.C. 20549

                           FORM 10-KSB

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

           For the fiscal year ended December 31, 2003

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

                Commission file number:  000-26731

                      PACIFIC WEBWORKS, INC.
      (Exact name of registrant as specified in its charter)

      Nevada                                           87-0627910
(State of incorporation)                 (I.R.S. Employer Identification No.)

180 South 300 West, Suite 400, Salt Lake City, Utah           84101
(Address of principal executive offices)                    (Zip code)

Issuer's telephone number, including area code: (801) 578-9020

Securities registered pursuant to Section 12(b) of the Act: None.

Securities registered pursuant to Section 12(g) of the Act: Common Stock

The issuer (1) filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 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 [ ]

Disclosure of delinquent filers in response to item 405 of Regulation S-B is
not contained herein, and will not 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. [ ]

State issuer's revenue for its most recent fiscal year:   $2,237,197

As of March 16, 2004 the registrant had 24,587,622 shares of common stock
outstanding.  The aggregate market value of the 23,492,311 shares of voting
stock held by non-affiliates as of that date was approximately $3,523,847.

Documents incorporated by reference:  None

Transitional Small Business Disclosure Format: Yes [ ] No [X]

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                        TABLE OF CONTENTS

                              PART I

Item 1.  Description of Business............................................3
Item 2.  Description of Property............................................9
Item 3.  Legal Proceedings..................................................9
Item 4.  Submission of Matters to a Vote of Security Holders................9

                             PART II

Item 5.  Market for Common Equity, Related Stockholder Matters and
         Issuer Purchase of Securities.....................................10
Item 6.  Management's Discussion and Analysis..............................11
Item 7.  Financial Statements..............................................16
Item 8.  Changes in and Disagreements with Accountants on Accounting
         and Financial Disclosure..........................................42
Item 8A. Controls and Procedures...........................................42

                             PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons,
         Compliance with Section 16(a) of the Exchange Act.................42
Item 10. Executive Compensation............................................43
Item 11. Security Ownership of Certain Beneficial Owners and Management
         and Related Stockholder Matters...................................44
Item 12. Certain Relationships and Related Transactions....................46
Item 13. Exhibits and Reports on Form 8-K..................................46
Item 14. Principal Accountant Fees and Services............................46
Signatures.................................................................47







                    FORWARD LOOKING STATEMENTS

In this annual report references to "Pacific WebWorks," "we," "us," and "our"
refer to Pacific WebWorks, Inc. and its subsidiaries.

This annual report contains certain forward-looking statements and for this
purpose any statements contained in this annual report that are not statements
of historical fact may be deemed to be forward-looking statements.  Without
limiting the foregoing, words such as "may," "expect," "believe,"
"anticipate," "estimate" or "continue" or comparable terminology are intended
to identify forward-looking statements.  These statements by their nature
involve substantial risks and uncertainties, and actual results may differ
materially depending on a variety of factors, many of which are not within
Pacific WebWorks' control.  These factors include, but are not limited to,
economic conditions generally and in the industries in which Pacific WebWorks
may participate; competition within Pacific WebWorks' chosen market, including
competition from much larger competitors; technological advances in these
industries and failure by Pacific WebWorks to successfully develop business
relationships.


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                              PART I

                 ITEM 1.  DESCRIPTION OF BUSINESS

Historical Development

The company was incorporated in the state of Nevada on May 18, 1987, as
Asphalt Associates, Inc. and changed its name to Pacific WebWorks, Inc. in
January 1999.  Pacific WebWorks has four wholly-owned subsidiaries,
Intellipay, Inc., TradeWorks Marketing, Inc., FundWorks, Inc, which are
Delaware corporations, and World Commerce Network, LLC.  Intellipay
specializes in providing online, secure and real-time payment processing
services for businesses of all sizes.  We refer to its products and services
as the Intellipay payment system.  TradeWorks Marketing was incorporated in
Delaware on July 17, 2003, to mass market our products and services.
FundWorks, Inc. was incorporated on August 5, 2003, to provide operating lease
arrangements for certain TradeWorks' customers.  World Commerce Network, LLC
is a non-operating, discontinued operation.

Pacific WebWorks' Business

Pacific WebWorks is an application service provider and software development
firm that develops business software technologies and services for business
merchants and organizations using Internet and other technologies.  We
specialize in turn-key applications allowing small- to medium-sized businesses
to expand over the Internet.  Our product family provides tools for web site
creation, management and maintenance; electronic business storefront hosting
and Internet payment systems for the small- to medium-sized business and
organization.

We initially focused entirely on virtual retailing software solutions, meaning
merchants that do not have a physical store location and would exist only on
the Internet.  Due to requests in the marketplace, we expanded our
technologies to include features for small- to medium-sized physical "brick
and mortar" entities, in addition to our virtual merchants. This is expected
to give these businesses and other organizations a complete solution for all
physical store and Internet concerns and at the same time reduce the costs of
operations and introduce new profit centers for them.

     Products

Even though small business, including small office/home office, typically
understands how traditional brick and mortar businesses operate, we believe
they need assistance in order to replicate business processes effectively and
economically using the Internet.  Pacific WebWorks assists small businesses in
succeeding online through our Visual WebTools(TM) software, the Intellipay
payment systems, education and hosting services.

We provide a comprehensive one-stop solution that incorporates our integrated
suite of e-commerce software tools, plus hosting, site management, web design
services, and education.  By leveraging a shared commerce platform across many
customers, we bring economies of scale to our customers.  We believe this
structure allows our customers to focus on their business instead of
technology, enabling them to achieve a much faster return on investments made
in technology and to experience more success on the Internet.

Visual WebTools Version 4.1 ("V4.1") -  V4.1 is a suite of software programs
that fit together to perform the basic business functions we believe are the
most effective on the Internet.  The following products are included as part
of this suite.

..     WebWizard  is an easy-to-use web page design program that possesses a
      simple user interface and templates for the novice, yet it has a very
      powerful additional functionality for web design professionals.  It
      incorporates sophisticated site components like tables, frames, flash
      and other multimedia capabilities in a straightforward, menu driven
      process.  No complicated programming skills are required to use the
      WebWizard tool.  Our customers can manipulate their sites' layout,
      colors, contents, tables, and graphics easily. WebWizard includes a
      library of hundreds of graphics which are freely accessible by our
      customers.  WebWizard allows our customers to quickly and easily create,
      update, modify, and enhance their web sites.  Changes can be uploaded to
      our servers within minutes 24 hours a day, 7 days a week from any
      Internet connected Microsoft Windows  computer.



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..     ClipOn Commerce(TM) is an e-storefront and product management system,
      complete with shopping cart technology.  ClipOn Commerce allows our
      customers to build an Internet storefront.  They can create a complete
      product catalog, organize and search products by unlimited categories
      and import/export to and from their database.  ClipOn Commerce is
      designed to function with a third party merchant account and is
      integrated with our Intellipay payment system, which allows our clients
      to accept all major credit cards online.  ClipOn Commerce has support
      for QuickBooks  accounting software so that our customers may update
      between their accounting records and Internet storefront.  ClipOn
      Commerce also features UPS shipping integration.

..     WebContacts is a contact management program.  Companies that use our
      system can utilize WebContacts to organize information about all the
      entities they do business with, including customers, suppliers,
      distributors, potential customers, etc.  WebContacts will also enable
      them to capture information about people who visit their website, if
      those visitors elect to supply contact information at the site.  This
      database functionality enables our customers to be more effective when
      using the web as a marketing and communications tool.

..     WebChannels is an e-mail distribution program that enables our customers
      to send customized e-mails in either plaintext or HTML format to their
      WebContacts database of visitors.  Since email is the most popular
      activity on the web, and one of the most effective forms of Internet
      marketing, WebChannels provides our customers with a practical tool with
      which to promote their businesses.  For example, by using WebChannels, a
      client could easily send out a weekly newsletter, coupons or special
      offers to an entire customer base, certain visitor types or to a segment
      of their customers

..     Web profiling tool is a form and survey creation tool that helps capture
      feedback and valuable demographic information from customers and web
      site visitors.  Our clients can create customizable forms, surveys and
      interactive questionnaires. The web profiling tool includes a catalog of
      pre-designed questions, such as education level, hobbies, satisfaction
      level, etc.  The profiling forms may also be custom created by our
      customers.

..     WebStats enables our customers to analyze visitor activities on their
      websites in order to track pages viewed, hits, time of access, etc.
      WebStats is a statistics program that provides detailed reports and
      graphs related to referring pages, geographic location of visitors,
      browsers and the operating systems web site visitors are using, what web
      pages generate hits, and what pages are the most popular.  WebStats can
      produce reports of business information, including year-long trends and
      the effectiveness of the clients' sites.

..     Auction Connection is a module that allows Visual WebTools customers to
      list inventory items with Ebay at the click of a button.

Intellipay Payment System - This group of products offers payment technologies
for business-to-business and business-to-customer uses on the Internet and in
physical store locations.  They allow our customers to accept real time credit
card payments from their web site, Internet appliances, kiosks, or at the
physical point of sale.  The Intellipay products use the same standards used
by all major commerce sites, industry standard security components and
methods, and has been tested under strict banking network procedures.
Point-of-sale professionals provide technical support and ePayment
professionals can even help the business locate an Internet-approved merchant
account if needed.  Once customers enter the necessary data in a secure form,
Intellipay quickly processes the transaction in real-time (2 - 5 seconds) and
returns the customer back to the business site.  Intellipay also provides
methods for enterprise-level businesses to link Intellipay products, services
and features into their ecommerce web sites and transmit transactional data
for use in back-office systems.

..     ePayment System  supports all major card types including Visa,
      MasterCard, American Express, Discover, Diners Club and JCB.  Also,
      support is provided for Visa and MasterCard debit (check) cards and
      Level Two corporate/commercial cards through various bank networks.
      Transaction types include industry


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      standard transactions such as normal authorizations, pre-authorizations
      intended for delayed settlement, the so-called "force" allowing a
      transaction authorized offline (possibly a voice authorization) to be
      settled, credits for refunds and Intellipay's innovative address
      verification system allows merchants to retrieve a score and verify the
      account validity.

      This Intellipay product allows our customers to control transaction
      level behavior depending on AVS scores, duplicate transaction attempt
      detection, and more.  Intellipay also automatically settles merchant
      batches nightly so our customers are freed from forcing settlement via
      manual or programmatic methods, which also helps reduce our customer's
      costs by settling within the 24-hour window mandated by most merchant
      accounts.  The Intellipay system is fully transportable meaning that a
      customer can switch web site hosting companies, move between most
      e-commerce software programs or change to or from many merchant account
      providers.  Our products can grow and change with our customer at little
      or no additional charges and with minimal technology issues.

..     ExpertLink(TM)is Intellipay's proprietary connection protocol for
      high-volume Internet businesses requiring reliable, high velocity
      real-time transaction authorizations linked to their own secure web site
      and/or back office systems. ExpertLink is a standards-based secure
      communications method allowing web-developers and application developers
      to build in the ePayment processing and various features, including
      batch management commands, duplicate transaction detection and
      management, and more.  Our customers usually purchase ExpertLink or
      LinkSmart, and both come with Smart Terminal and the Secure Account
      Management System.

..     LinkSmart(TM)  gives our online customers the ePayment features with
      minimal technical installation on their side. With LinkSmart, our
      customer does not need to pay for installation and maintenance of
      expensive secure servers since LinkSmart serves the secure, customizable
      payment pages for them.  LinkSmart offloads many expensive
      mission-critical e-commerce tasks from the merchant.

..     Smart Terminal(TM)  allows our customers to securely log into their
      Intellipay account from any Internet browser and authorize manual
      transactions and orders they have received through offline methods.
      Smart Terminal supports industry-standard transactions including normal
      authorizations, authorization-only for delayed settlement, settlement
      for non-Intellipay authorized transactions, credits, partial credits and
      more. Most clients receive Smart Terminal along with LinkSmart or
      ExpertLink, but Smart Terminal can also be purchased as a stand alone
      product.

..     Secure Account Management System ("SAMS") allows Intellipay customers to
      securely log into Intellipay's Secure Account Management System from any
      web browser to configure and control various Intellipay components and
      behaviors. They can manage today's authorized transaction batches,
      control passwords, enforce transaction data components, control various
      features such as our new duplicate transaction detection and management
      system, control email transaction receipts, access Smart Terminal,
      control LinkSmart payment page contents, target returning live data
      streams, configure Visa-required invoice numbering, and more.  Customers
      can also view transaction histories for any day in the past 180 day
      period.

Education Services -  We provide more than our software, we also assist our
customers with education and site design services.  We believe this
information helps our clients understand how to use the Internet more
effectively.

..     Coaching Services are personalized electronic/telephonic instruction on
      the use of our product technologies.  These services are directed
      towards assisting clients in making virtual operations successful. We
      recommend eight to twelve, one-half hour training sessions for our new
      customers.

..     Retreats are workshops that are held one to two times per year for
      certain TradeWork's customers for informative direction on Internet
      marketing strategies.

Rent-a-Pro offers custom web site design services to clients who elect to hire
Pacific WebWorks to build their web site for them rather than building it
themselves.


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Technical Support is offered via online chat or e-mail from 8 a.m. to 6 p.m.
(MST), or by phone from 8 a.m. to 5 p.m. (MST).

Hosting Infrastructure allows us to host our customers' web sites on behalf of
our clients, therefore eliminating the cost of hardware investment and
maintenance for them.

Place-to-Vacation is a marketing tool that helps our users attract Internet
traffic to their web sites by giving away a chance to win a free vacation.

Domain Names are offered to customers online at retail prices.  These include
".com," ".org," ".biz," ".net," ".us" and ".info."

     Sales and Marketing

In July 2003 we incorporated TradeWorks Marketing to conduct marketing events
in metropolitan locations. TradeWorks Marketing's product offerings include
Intellipay Virtual Terminal Software, Pacific WebWorks Visual WebTools Web
site manager and builder, including integration with ebay(TM).com and
training.  TradeWorks Marketing also has entered into factoring arrangements
with an outside leasing company with recourse for certain sales of e-commerce
software and merchant accounts.

In August 2003 we incorporated FundWorks, Inc. to provide operating lease
arrangements for certain TradeWorks' customers.  The operating lease
agreements were for the purchase of e-commerce software and merchant accounts
over 36 months for the price of $59.95 per month.  The customers relying on
these operating lease agreements have a higher credit risk.

We do not believe that our competitors are effectively targeting our market
niche: A totally Internet based, end-to-end business solution for small- and
medium-sized businesses.  We believe that our products will allow businesses
to generate leads, sell products, run sales promotions, capture demographic
information about web site visitors, communicate with web site visitors, and
obtain intelligent information about who is visiting their web sites and what
they are doing while they are there.  Our products allow our customers to stay
in complete control of their web sites and provide tools which can facilitate
a successful Internet experience for them.

We market and sell our products primarily through reseller channels, our own
internal sales force and strategic partnerships.  We sell our products to
partners at wholesale, the partners then market the products up and sell them
at retail.  We also sell our products through resellers who are paid a
commission for each merchant who purchases our products and subsequent
services.  Each merchant must sign a purchase agreement with the reseller,
which the reseller must in turn provide to us. We then provide software to the
resellers' customers, allowing them to create Internet web sites and/or
complete e-business solutions. We provide the initial reseller with training
in the use of the software.

We believe we may be able to develop a substantial presence in our target
market through a combination of broad channels of distribution, marketing
strategy, unique proprietary technology, technical expertise, and early entry
into our target market.  It is our opinion that in the past, businesses which
have attempted to maintain interactive web sites and conduct business on the
Internet have either developed technical expertise themselves, paid employees
to create and maintain their web sites, or retained contract "web
professionals" to do so.  We believe our products allow small businesses, at a
relatively small cost, to participate in Internet commerce by creating and
managing their own Internet web sites and storefronts.


     Competition

Our market is quickly evolving, very competitive and subject to rapid
technological change.  We expect competition to persist, increase, and
intensify in the future as the markets for our products and services continue
to develop and as additional companies enter our markets.  A number of
companies are now providing Internet services to small businesses.  They
include organizations like Microsoft, Yahoo!, Bigstep, Zyweb, Register.com,
GoDaddy, Bizfinity, MeZine.com and many others.  Our success in our target
market will depend upon our ability to build name brand recognition and to
provide quality, cost-effective products and services to our customers.

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At the present time, we have not identified any other companies that are using
an identical approach to ours.  Nonetheless, it is probable that larger
interests will choose to enter the market we are developing or that a new
market may emerge.  Although we feel the market is vast and should accommodate
many technology providers, we may not be able to compete effectively with
current and future competitors.

Currently, in our estimation, few major competitors offer products comparable
to the Visual WebTools(TM) product family.  We believe that "Yahoo! Store" is
our most significant competitor, with its brand name recognition and
significantly greater financial, technical, marketing, and managerial
resources. Yahoo! Store has significantly higher sales and customers than we
do and has entered into a significantly higher number of license agreements
with third parties.  We believe that our product provides a comparable service
for a lower price than that provided by Yahoo! Store.  In addition, because we
have focused our efforts on small businesses, including providing Internet
tools which allow businesses to develop their own Web sites, we believe that
the generality of the Yahoo! Store may be inadequately addressing potential
customer needs and that we will be able to address their site development
needs.

Our Intellipay payment system competes with AuthorizeNet products and certain
VeriSign products, along with other companies that provide e-commerce
solutions.

Our ability to successfully compete, in turn, will depend upon a number of
factors, including:
..    our ability to successfully maintain and sell existing products;
..    our ability to conceive, develop, improve, and market new products;
..    our ability to identify and take advantage of emerging technological
     trends within our target markets;
..    our ability to respond effectively to technological changes or new
     product announcements by competitors and,
..    our ability to recruit resellers who can market and sell our products and
     services in significant volumes to the market.
We believe that we will need to make significant expenditures for research and
development and marketing in the future to compete effectively.

     Major Customers

Our client base includes approximately 6,500 active paying customer accounts.
We rely on the efforts of third party resellers to add accounts to our
customer base.  A significant portion of our customer accounts were provided
by previous Pacific WebWorks and Intellipay resellers who no longer resell our
products and services.  While we continue to add additional and significant
resellers, we are dependent upon these resellers.  If we lose them, then we
expect our revenues to be adversely affected due to attrition in our customer
account portfolios if there is not immediate replacement.  During the year
ended December 31, 2003, we experienced continuing declines in hosting and
gateway revenues due to the loss of resellers and general attrition.  We
expect to see the decline in hosting and gateway revenues to flatten through
the first quarter of 2004.

     Trademark, Licenses and Intellectual Property

On October 9, 1998 Utah WebWorks filed a trademark application for Visual
WebTools(TM) which we acquired and became responsible for upon our merger with
Utah WebWorks.  In December of 1998 the United States Patent and Trademark
Office assigned Serial No. 567,136 to this mark.  In addition we have
trademarks for   Pacific WebWorks(TM) and ClipOn Commerce(TM).

On October 25, 2002 we received notice of acceptance and acknowledgment from
the U.S. Department of Commerce Patent and Trademark Office validating our
registration of a trademark for Intellipay through October 29, 2006.  The mark
may be renewed one year prior to its expiration.

Our success will depend, in part, on our ability to obtain and protect our
trademark and trade secrets and operate without infringing upon the
proprietary rights of others in the United States and other countries.  If we
were to become involved in a dispute regarding our intellectual property, it
may become necessary for us to participate in interference proceedings before
the United States Patent and Trademark Office to determine whether we have a
valid claim to the rights involved.  We could also be forced to seek a
judicial determination concerning the rights in

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question.  These proceedings could be costly and time consuming, even if we
were to eventually prevail.  Should we not prevail, we could be forced to pay
significant damages, obtain a license to the technology in question, or stop
marketing one or more of our products.

All of our core technology was developed internally by either our engineers or
by the engineers of Utah WebWorks and Intellipay.  Other than Internet
connectivity and other information technology infrastructure, the performance
of our products does not significantly rely on any third party technology,
although we continue to support as many third party technologies as possible.

We also rely upon trade secrets, proprietary know-how, and confidentiality
provisions in agreements with employees, consultants, and resellers to protect
our intellectual property rights.  There are risks that these other parties
may not comply with the terms of their agreements with us, and that we may not
be able to adequately enforce our rights against these parties.  We have
adopted a policy of requiring our employees and resellers to execute
confidentiality agreements when they commence employment with us or resell our
products.  These agreements generally provide that all confidential
information developed or made known to the employees or resellers during the
course of their relationship with us is to be kept confidential and not
disclosed to third parties, except under certain specific circumstances.  In
the case of employees, the agreements also provide that all inventions
conceived by the employees in the course of their employment will be our
exclusive property.

     Research and Development

We continue to improve our existing products and release new related products.
We recorded research and  development expenses of $304,909 for the year ended
December 31, 2002.  During the year ended December 31, 2003 we recorded
research and development expense of $164,999, primarily related to development
of our online auction connector product, Intellipay Desktop Terminal, and the
updating of our core products.

     Material Contracts

We are a party to the following material contract:

We initially entered into an informal agreement with Electric Lightwave, Inc.
for telecommunications and Internet access in January 1998.  We formalized the
agreement in February 1998 and negotiated an extension in November 2001, which
terminated in January 2004.  As of the date of this filing, this contract is
on a month-to-month basis.  The extension agreement requires that we pay
approximately $4,300 per month for a dedicated DS3 Internet and telephone
connection, and a redundant T-1.

     Employees

As of the date of this filing we have 18 employees.  We have six employees in
administration, two in sales/marketing, five in operations and five
development engineers.  Our employees are not presently covered by any
collective bargaining agreement.  We have not experienced any work stoppages
and believe that our relations with our employees are good.

                 ITEM 2.  DESCRIPTION OF PROPERTY

Our principal offices are located in the Westgate Business Center, which is
located in Salt Lake City, Utah.  This property serves as our main office and
data center.  We believe this property will be adequate for our near term
needs.  We lease approximately 8,000 square feet of commercial office space
and pay approximately $8,000 per month under the lease which expires December
30, 2006.

                    ITEM 3.  LEGAL PROCEEDINGS

On October 3, 2002, Pacific WebWorks and World Commerce Network, a
discontinued operation, each received a summons filed in the Commonwealth of
Massachusetts, Superior Court Department, County Middlesex.  The complaints
allege that Pacific WebWorks and World Commerce Network, separately breached
individual contracts


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with Leasecomm Corporation related to customer financing with recourse.  In
November 2002, Pacific WebWorks settled its claim with Leasecomm for $40,000
in cash and $500 per month through November 2003, which has been paid in full
at December 31, 2003.  World Commerce has accrued an estimated liability
sufficient for the probable judgment.

On April 16, 2001, One Source, a corporation, filed a complaint in the Third
District Court, Sandy Department, State of Utah, naming World Commerce
Network, LLC and Mat Dastrup, its former CFO, as defendants.  One Source
alleged default under a certain Application for Credit and Personal Guaranty
and One Source seeks the sum of $64,353, together with 18% interest, from
November 15, 2000.  On May 1, 2002, we received notice to appoint counsel
within twenty days.  In October 2002 counsel for One Source accepted the
amount of $5,000 into escrow for settlement of this claim; however, One Source
failed to execute the settlement agreement and the $5,000 has been returned.

On February 12, 2001, Pacific WebWorks received notice of Charge No. A1-0184
filed with the State of Utah Labor Commission regarding an allegation of
racial discrimination charged by a former employee.  The former employee
claims that he was forced to resign as our sales manager due to demotions and
pay cuts based on alleged prejudicial treatment based on his race and color.
We responded to the request for information from the Labor Commission and
stated that we believed the former employee was treated fairly while under our
employ.  On January 18, 2002, an informational hearing was conducted with the
State of Utah Labor Commission and on February 28, 2002, in a letter from the
State of Utah Labor Commission, Pacific WebWorks was dismissed of all charges
related to the matter.  In June 2002 an additional conference with the State
of Utah Labor Commission took place related to the former employee's appeal of
Pacific WebWorks' dismissal in this matter.  The administrative law judge
advised the parties to retain counsel due to the appeal moving to the trial
court level.

No discovery was made prior to the date of this filing and the former employee
had not stated an amount of any claimed damages as of December 31, 2003.  The
former employee was ordered to further his appeal by January 15, 2004 and
failed to do so.  We anticipate that we will be dismissed from this matter.

We are involved in various disputes and legal claims arising in the normal
course of our business.  Except for the actions discussed above, in the
opinion of management, any resulting litigation from these disputes and claims
will not have a material effect on our financial position and results of
operations.

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

We have not submitted a matter to a vote of our shareholders during the fourth
quarter of the 2003 fiscal year.

                             PART II

 ITEM 5.  MARKET FOR COMMON EQUITY,  RELATED STOCKHOLDER MATTERS
                AND ISSUER PURCHASE OF SECURITIES

Market Information

The principal market for our common stock is the NASD OTC Bulletin Board and
our common shares are traded over-the-counter under the symbol "PWEB."  The
following table presents the range of the high and low bid of our common stock
for each quarter for the past two years, as reported by the OTC Bulletin Board
Historical Data Service.  These quotations represent prices between dealers
and may not include retail markups, markdowns, or commissions and may not
necessarily represent actual transactions.

             Year        Quarter Ended             High Bid   Low Bid
             ------     --------------            ---------- ---------
              2002           March 31              $ 0.51     $ 0.17
                              June 30                0.26       0.18
                         September 30                0.19       0.07
                          December 31                0.12       0.06


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              2003           March 31              $ 0.14     $ 0.06
                              June 30                0.15       0.08
                         September 30                0.45      0.125
                          December 31                0.32       0.15

Our shares are subject to Section 15(g) and Rule 15g-9 of the Securities and
Exchange Act, commonly referred to as the "penny stock" rule.  The rule
defines penny stock to be any equity security that has a market price less
than $5.00 per share, subject to certain exceptions.  The rule provides that
any equity security is considered to be a penny stock unless that security is:
registered and traded on a national securities exchange meeting specified
criteria set by the SEC; authorized for quotation from the NASDAQ stock
market; issued by a registered investment company; excluded from the
definition on the basis of price (at least $5.00 per share) or the issuer's
net tangible assets.  If our shares are deemed to be a penny stock, trading in
the shares will be subject to additional sales practice requirements on
broker-dealers who sell penny stocks to persons other than established
customers and accredited investors.  Accredited investors, in general, include
certain institutional investors and individuals 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, broker-dealers must make a special
suitability determination for the purchase of our securities and must have
received the purchaser's written consent to the transaction prior to the
purchase.  Additionally, for any transaction involving a penny stock, the
rules require the delivery, prior to the first transaction, of a risk
disclosure document relating to the penny stock.  A broker-dealer also must
disclose the commissions payable to both the broker-dealer and the registered
representative, and current quotations for the security.  Finally, monthly
statements must be sent to the purchaser disclosing recent price information
for the penny stocks.  Consequently, these rules may restrict the ability of
broker-dealers to trade or maintain a market in our common stock and may
affect the ability of shareholders to sell their shares.

Holders

As of March 16, 2004 we had approximately 382 stockholders of record of our
common stock.

Dividends

We have not paid cash or stock dividends and have no present plan to pay any
dividends.  Instead, we intend to retain any earnings to finance the operation
and expansion of our business.  We are not presently subject to any
restriction on our present or future ability to pay any dividends, but the
payment of any cash dividends on our common stock is unlikely.

Recent Sales of Unregistered Securities

The following discussion describes all securities sold by Pacific WebWorks
during the past year.

On October 3, 2003 our board of directors approved the grant of options to
purchase 1,625,000 shares of common stock pursuant to our 2001 Equity
Incentive Plan.  The options were granted to employees and have an exercise
price of $0.225 and expire through October 3, 2008.  Of these options, options
to purchase 812,500 shares vested upon grant, options to purchase 406,250
shares vest in April 2004 and the remaining options to purchase 406,250 shares
vest in October 2004.  We relied on an exemption from registration for a
private transaction not involving a public distribution provided by Section
4(2) of the Securities Act.

Beginning in September 2003 our board of directors authorized the issuance of
an aggregate of 228,149 common shares to Universal Business Insurance in
consideration for insurance valued at $62,325.  Our board of directors
authorized the issuance of 151,654 shares on September 4, 2003  and 76,495 on
October 8, 2003 for this insurance.  We relied on an exemption from
registration for a private transaction not involving a public distribution
provided by Section 4(2) of the Securities Act.

In July 2003 our board of directors authorized the issuance of 1,000,000
common shares for $50,000 upon the exercise of warrants.  The exercise price
of the warrants was $0.05 per share.  We relied on an exemption from

                                10

<PAGE>


registration for a private transaction not involving a public distribution
provided by Section 4(2) of the Securities Act.

In connection with each of these isolated issuance's of our securities, we
believe that each purchaser:
..    was aware that the securities had not been registered under federal
     securities laws;
..    acquired the securities for his/its own account for investment purposes
     and not with a view to or for resale in connection with any distribution
     for purposes of the federal securities laws;
..    understood that the securities would need to be indefinitely held unless
     registered or an exemption from registration applied to a proposed
     disposition; and
..    was aware that the certificate representing the securities would bear a
     legend restricting their transfer.

Issuer Purchase of Securities

None.


          ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS

Executive Overview

During the past year management has focused on marketing and distribution
channels, which, while costly, are believed to be the most effective current
short term solution to declining sales.  Management is in the process of
diversifying our marketing and distribution strategy between several of our
product offerings and we are confident in the future success of these plans.

Our revenues for the 2003 year were primarily from the sale of access to our
software technology and continuing monthly service and hosting fees.
Additionally, we derive revenues for services related to web site design,
training, education and consulting.  Other sources of income have been related
to gains from discontinued operations.

Pacific WebWorks and IntelliPay have a great potential in the marketplace.
However, hurdles exist, such as identifying and implementing effective product
distribution channels, economic changes generally, gaining marketplace
acceptance and addressing shifting public attitudes for technology products
that could pose a threat to our success.  We also operate in a highly
regulated environment.  Such regulation over our marketing methods or our
responsibility to public investors could prove to have a negative and material
effect on our financial condition or operating performance.

Liquidity and Capital Resources

Our monthly cash outflow is mostly related to our marketing and operating
expenses and can exceed monthly cash inflows based on timing differences
between marketing campaigns and sales.  As such, in the short-term we rely on
operating cash flows to fund continued operations.  We are currently able to
support our recurring day-to-day cash operating expenses with recurring cash
inflows and existing cash balances.  However, we are dependent on the efforts
of our resellers and our in-house sales personnel to increases revenues and
thus, increase our cash balances.

We had negative working capital of $91,016 as of December 31, 2003, which
means we are currently unable to satisfy our total current liabilities,
including those of our discontinued operations, with current assets and must
continue to negotiate favorable settlements for these liabilities.  We plan to
address only the liabilities of our operating subsidiaries with our cash.  We
expect to continue to generate positive cash flows through further development
of business and sales.

We operate in a very competitive industry in which large amounts of capital
are required in order to continually develop and promote products.  Many of
our competitors have significantly greater capital resources than ours.  We
believe we may need an additional $1 to $2 million in 2004 to continue to keep
up with technological improvements and further our business development
strategies.  We believe we may need to raise additional capital, both
internally and externally, in order to successfully compete.


                                11

<PAGE>

Operations -   Net cash provided by continuing operating activities was
$399,659 for the 2002 year compared to $87,455 for the 2003 year.  Net cash
provided by investing activities for the year ended December 31, 2002 was
$75,495 compared to net cash used for investing activities of $219,060 for the
2003 year.  Investing activities for the 2002 year consisted primarily of the
purchase of a certificate of deposit and the purchase of the residual customer
portfolio.  In the 2003 year we sold the certificate of deposit and received
cash from the sale of our subsidiary.

Financing -  Net cash used by financing activities was $68,093 for the year
ended December 31, 2002, compared to $24,557 for the 2003 year.  Net cash used
by financing activities was primarily the payment on a note payable to our
largest reseller.  Historically, we have relied on the sale of our common
stock to provide additional funding.

Warrants granted as part of our equity transactions may provide an additional
source of funding.  As of December 31, 2003, we had outstanding warrants to
purchase 1,300,000 common shares which may result in maximum proceeds of
$650,000.  In July 2003 we received proceeds of $50,000 from the exercise of
warrants we granted in April 2001.  However, the holders of the warrants have
total discretion whether or not to exercise the warrants and, as of the date
of this filing, the exercise price is more than the trading price of our
common stock.  Thus, we cannot assure that all, or any, of the warrants will
be exercised before their expiration through April 2006.

Should external capital be required for operations or acquisitions, we may
structure private placements of our common stock pursuant to exemptions from
the registration requirements provided by federal and state securities laws.
The purchasers and manner of issuance will be determined according to our
financial needs and the available exemptions.  We also note that if we issue
more shares of our common stock our stockholders may experience dilution in
the value per share of their common stock.

We may not be able to obtain additional funds on acceptable terms.  If we fail
to obtain funds on acceptable terms, we might be forced to delay or abandon
some or all of our marketing or business plans and growth could be slowed,
which may result in declines in our operating results and common stock market
price.


Commitments and Contingent Liabilities

Our operating commitments and contingent liabilities consist primarily of
those related to our discontinued operations, operating leases and leases in
default.  At December 31, 2003 our future minimum lease commitments under
operating leases approximated $295,284 through December 2006.  Our operating
lease for our Salt Lake City office approximates $8,000 per month

In February 2002, in an effort to improve operational efficiencies, we closed
Intellipay's physical office located in Fremont, California, and moved its
technological infrastructure to Salt Lake City.  As a result of this move,
Intellipay defaulted on its operating lease in May 2002.  The Intellipay lease
required approximately $6,000 per month, plus late fees and interest, through
December 2003. As of December 31, 2003, future operating lease commitments
related to this lease have expired and we have an accrued liability of $83,364
related to lease defaults, less time that the property was leased by the
property manager to a third party.

Our total current liabilities as of December 31, 2003 were comprised of
accounts payable, accrued liabilities and deferred revenues and net current
liabilities from discontinued operations.  Accounts payable totaled $52,238
and were related to operating expenses.  Our accrued liabilities of $194,233
were primarily the result of payroll related liabilities, contingent reseller
commissions, estimated refunds and factoring obligations, and operating lease
defaults.  Deferred revenues include upfront fees and receipts for services
not yet performed and total $205,601 as of December 31, 2003.

Liabilities for Discontinued Operations

In prior periods, capital leases in default represented a large portion of our
net current liabilities from discontinued operations; however, management was
successful in negotiating settlements of a significant portion of these leases
in 2002.  These settlements related to our Logio subsidiary and were recorded
as gains from discontinued operations in 2002.  Logio was sold for $50,000 in
June 2003 and resulted in the realization of approximately $274,000 in gains

                                12
<PAGE>

from the sale of discontinued operations.

As of December 31, 2003 World Commerce's liabilities included estimated
contingent recourse obligations and attorneys fees approximating $95,000
related to a financing company, payables past due of $64,010 and other
liabilities of $56,000.  Total settlements and forgiveness for World Commerce
approximate $416,000 and have been recorded as a gain from discontinued
operations during the year ended December 31, 2002.

We continue to work through various matters related to liabilities and
disputes with a vendor and other creditors which may affect our cash position.
Management intends to negotiate resolutions for the liabilities and disputes
of our operating entities.

Off-balance Sheet Arrangements

None.

Critical Accounting Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts reported
in the consolidated financial statements and accompanying notes.  Estimates of
particular significance in our financial statements include goodwill and the
annual tests for impairment and liabilities accrued as estimates for probable
litigation and other contingencies.

Goodwill related to Intellipay is assessed annually for impairment by
comparing the fair values of Intellipay to its carrying amount, including
goodwill.  The fair value of Intellipay is estimated using both cash flow
information from internal budgets and multiples of revenue.  In the event that
an impairment indicator arises prior to our annual impairment test of
goodwill, we will provide a full test relative to the indicator in the period
that the indicator is present.

Our ability to avoid impairment of the goodwill related to Intellipay is
largely dependent on Intellipay's ability to further generate revenues and
cash flows in accordance with budgeted amounts.  We currently do not expect
impairment to occur for the Intellipay business unit in the near term;
however, if an impairment occurs it would have a material effect on our
financial condition by resulting in a net decrease in our consolidated assets
and consolidated net earnings.

Our consolidated financial statements include estimates for contingent
liabilities that are considered probable.  Material estimates for contingent
liabilities include approximately $123,000 for our operating companies and
approximately $151,000 in net current liabilities of our discontinued
operations.  From a liquidity standpoint, any settlement or judgment received
by us from pending or threatened litigation may have a direct affect on our
cash balances of $500,712 at December 31, 2003.  Any judgments that may be
received by us for pending or threatened litigation related to discontinued
operations may not have a direct affect on our assets as management does not
intend to satisfy such claims with the assets of our operating companies.
Management believes that all amounts estimated and recorded as contingent
liabilities approximate the amount of liabilities that will be owed to parties
in the form of settlement or in judgment.  Any settlements that might occur
below amounts accrued would result in a favorable impact to our earnings and
working capital.

Results of Operations

The following discussions are based on the consolidated financial statements
of Pacific WebWorks, Intellipay, TradeWorks Marketing, Fundworks and the
discontinued operations of World Commerce Network, LLC, a non-operating
company.  The financial statements also include the accounts of Logio, Inc., a
non-operating, development stage company, through the date of its sale in July
2003.  The following discussions are a summary of our financial statements for
the years ended December 31, 2002 and 2003 and should be read in conjunction
with the financial statements, and notes thereto, included with this report at
Item II, Part 7, below.


                                13

<PAGE>

        Comparison of 2002 and 2003 Fiscal Year Operations
      -----------------------------------------------------

                                                  2002          2003
                                              ------------- -------------
Revenues, net                                 $  2,572,576  $  2,237,197
Cost of sales                                      431,840       541,026

Gross profit                                     2,140,736     1,696,171

Total operating expenses                         2,145,918     2,050,161

Loss from operations                                (5,182)     (353,990)

Other income and (expense), net                     38,539         6,086

Net income (loss) from continuing operations        33,357      (347,904)

Total gain on discontinued operations              893,305       274,778

Net earnings (loss)                                926,662       (73,426)

Net earnings (loss) per share                 $       0.04  $       0.01


Sales decreased during the first half of 2003 primarily due to steady
attrition of our monthly hosting and payment processing service portfolios
with no significant replacement of monthly paying customers through December
31, 2003.  In addition, new marketing plans and strategies implemented in the
last quarter of 2003 resulted in the deferral of certain revenues until the
earnings process is complete.  We recognize hosting, gateway and transaction
service revenues in the period in which fees are fixed or determinable and the
related products or services are provided to the user.  Advance payments and
upfront fees from customers are recorded on the balance sheets as deferred
revenues.  Training and design revenues are recognized as the related services
are performed.

The increase in cost of sales for the 2003 year was primarily related to our
new marketing strategy and related increases in reseller fees.

Total operating expenses for the 2002 year decreased 4.5% compared to the 2003
year.  However, selling expenses nearly doubled while research and development
expenses decreased 45.9%, general and administrative expenses decreased 7.4%,
depreciation and amortization decreased 39.7% and compensation expense related
to options and warrants decreased 75.5%.  These compensation expenses relate
to warrants granted to consultants in 2001 and 2002, which expire through May
2004.  The compensation expense represents the fair market value of the
warrants, estimated on the date of grant.  The decrease in compensation
expense for 2003 was primarily a result of full recognition of the intrinsic
value of options charges over vesting periods through September 2001 and a
lower fair value of new warrants granted to consultants in 2002.

Net other income for the 2002 year related primarily to the abatement of tax
penalties previously assessed by the Internal Revenue Service on Intellipay.
The 2003 year net other income was from interest income earned on certificates
of deposit.

Our financial statements for the year ended December 31, 2003, include the
accounts of Logio, Inc., our former non-operating subsidiary, as discontinued
operations through the date of its sale on June 27, 2003.  We sold all of the
shares we held in Logio for $50,000 cash and the purchasers' assumption of
Logio's current liabilities.  The disposal resulted in the realization of
approximately $274,000 in gain from the sale of discontinued operations, which
was realized during the second quarter 2003.


                                14

<PAGE>

      Comparison of 2002 and 2003 Fiscal Year Balance Sheet
      -----------------------------------------------------

                                                       2002        2003
                                                 ------------- -------------

Cash and cash equivalents                        $    362,319  $    500,712

Total current assets                                  544,236       596,630

Total assets                                        3,855,141     3,762,015

Total current liabilities                             847,815       687,646

Accumulated deficit                               (12,164,974)  (12,238,400)

Total stockholders deficit                       $  3,007,326  $  3,074,369



Other than increasing cash and deferred revenue balances and the sale of
discontinued operations, we did not record significant changes in assets and
liabilities for the 2003 year compared to the 2002 year.

Factors Affecting Future Performance

We are currently dependent on the efforts of our resellers for our continued
growth.  Many of our significant resellers have become inactive or dormant.
We expect overall sales to remain down or flat during the 2004 year due to
inactive resellers and developing marketing activities. We are actively
recruiting and adding other additional resellers and sales channels to replace
these inactive or dormant resellers in order to continue acquisition and
growth of monthly recurring revenues, hosting and payment processing service
fees.  We must continue to recruit additional resellers and find other methods
of distribution to materially add to our portfolios of customers and cover
attrition.

We have introduced our products and services to markets using aggressive
marketing and sales methods.  These include seminar sales, operating lease
agreements with high credit risk customers and factoring arrangements for
certain of these operating leases.   Regulation over these types of marketing
and sales techniques are rigid and heavily enforced.  We may encounter
increased costs and other financial risks in order to obtain revenues,
including the resulting high customer return rates and other collections
factors from these markets.

We are dependent upon our merchant accounts to accept payment for services
from a large number of our customers.  If we were to lose these merchant
accounts, it would have an adverse affect on our ability to collect on sales,
which would reduce our working capital, cash inflow and earnings, or increase
losses.

Wide scale implementation of a new technology or payment methods, such as
stored-value cards, electronic cash equivalents or wireless communications,
could force us to modify our payment services or software to remain
competitive, and could potentially render one or more of our services or
products obsolete

We currently are unable to satisfy certain of our obligations through our
operating cash inflows.  Our revenues and operating results can be expected to
fluctuate somewhat for a variety of reasons beyond our control which may
result in our quarterly operating results from time to time being below the
expectations of public market analysts and investors.  In that case, we expect
that the price of our common stock would be materially and adversely affected.

We face intense competition that may slow our growth and force our prices
down.  We expect this competition to intensify in the future, with new
competitors, and competitive services and products regularly entering the
market.  If these competitors were to bundle competing products for their
customers, it could adversely affect our ability to market our services.

We may experience software defects and development delays, damaging customer
relations.  We may experience breakdowns or unauthorized entry into our
hosting services, infrastructure or payment processing system, harming our
business.  We would be unable to deliver our payment processing services or
hosting services if our system


                                15

<PAGE>

infrastructures break down or are otherwise interrupted or compromised.

Any breach of our e-commerce security measures could reduce demand for our
services.  The e-commerce industry is intensely focused on the need for
Internet security, particularly with respect to the transmission and storage
of confidential personal and financial data.  We are in the process of
becoming compliant with and certified with Visa and MasterCard security
programs.  We expect to obtain such certification by June 2004.  Any
compromise or elimination of our security could erode customer confidence in
our systems and could result in lower demand for our services.

We depend upon our proprietary rights, none of which can be completely
safeguarded against infringement.  Intellectual property rights, by their
nature, are uncertain and involve complex legal and factual questions.  We may
unknowingly infringe upon the proprietary rights of others, thereby exposing
us to significant liability and/or damages.  To the extent we rely upon
confidential information to maintain our competitive position, other parties
may independently develop the same or similar information.

We are dependent upon key personnel who provide the development and
maintenance of our software and services.  We do not enter into employment
agreements with our employees and these individuals could leave us at anytime.



                   ITEM 7: FINANCIAL STATEMENTS






                      Pacific WebWorks, Inc.

                       Financial Statements

                    December 31, 2003 and 2002



                                16


<PAGE>



                          CHISHOLM, BIERWOLF & NILSON
                          Certified Public Accountants
A Limited Liability        533 W. 2600 S., Suite 250     Office (801) 292-8756
     Company                Bountiful, Utah 84010           Fax (801) 292-8809

______________________________________________________________________________





                   INDEPENDENT AUDITOR'S REPORT


To the Board of Directors and Stockholders
of Pacific Webworks, Inc.

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

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

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





/s/ Chisholm, Bierwolf & Nilson

Chisholm, Bierwolf & Nilson
Bountiful, Utah
January 16, 2004

<PAGE> 17


             Pacific WebWorks, Inc. and Subsidiaries

                   CONSOLIDATED BALANCE SHEETS

                              ASSETS
                                                           December 31,
                                                       2002           2003
                                                  -------------- -------------
CURRENT ASSETS
  Cash and cash equivalents                       $     362,319  $    500,712
  Certificate of deposit                                101,536             -
  Receivables
   Trade, less allowance for doubtful
    receivables of $77,000 in 2002
    and $72,000 in 2003                                  36,063        29,649
  Prepaid expenses                                       44,318        66,269
                                                  -------------- -------------

    Total current assets                                544,236       596,630
                                                  -------------- -------------

PROPERTY AND EQUIPMENT, NET AT COST                     163,347        98,152

RESTRICTED CASH                                               -        50,951

OTHER ASSETS, NET                                     3,147,558     3,016,282
                                                  -------------- -------------

                                                  $   3,855,141  $  3,762,015
                                                  ============== =============

               LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Note payable - reseller                         $     112,297  $          -
  Accounts payable                                       51,195        52,538
  Accrued liabilities                                   151,959       194,233
  Deferred revenue                                       72,312       205,601
  Net current liabilities from
    discontinued operations                             460,052       235,274
                                                  -------------- -------------

    Total current liabilities                           847,815       687,646
                                                  -------------- -------------
STOCKHOLDERS' EQUITY
  Common stock - par value $0.001; authorized
    50,000,000; issued and outstanding 23,359,473
    shares in 2002 and 24,587,622 shares in 2003         23,360        24,588
  Additional paid-in capital                         15,148,940    15,288,181
  Common stock subscriptions                                  -             -
  Accumulated deficit                               (12,164,974)  (12,238,400)
                                                  -------------- -------------

    Total stockholders' equity                        3,007,326     3,074,369
                                                  -------------- -------------

                                                  $   3,855,141  $  3,762,015
                                                  ============== =============

 The accompanying notes are an integral part of these statements.

<PAGE> 18

             Pacific WebWorks, Inc. and Subsidiaries

              CONSOLIDATED STATEMENTS OF OPERATIONS

                                                           Year ended
                                                           December 31,
                                                       2002           2003
                                                  -------------- -------------
Revenues, net
  Software, access and license fees               $     157,959  $    149,373
  Hosting, gateway and maintenance fees               2,240,291     1,693,359
  Training, design and other                            174,326       394,465
                                                  -------------- -------------
                                                      2,572,576     2,237,197

Cost of sales                                           431,840       541,026
                                                  -------------- -------------

    Gross profit                                      2,140,736     1,696,171

Selling expenses                                        280,565       566,808
Research and development                                304,909       164,999
General and administrative                            1,296,294     1,199,925
Depreciation and amortization                           149,505        90,285
Compensation expense for options and warrants           114,645        28,144
                                                  -------------- -------------

    Total operating expenses                          2,145,918     2,050,161
                                                  -------------- -------------

    Net loss from operations                             (5,182)     (353,990)
                                                  -------------- -------------

Other income (expense)
  Loss on sale or abandonment of assets                  (7,500)            -
  Interest income                                         8,310         7,924
  Interest expense                                      (13,858)            -
  Penalties                                             (21,388)            -
  Abatement of penalties                                 42,036             -
  Other income (expense), net                            30,939        (1,838)
                                                  -------------- -------------
                                                         38,539         6,086
                                                  -------------- -------------
    Net income (loss) from continuing
     operations  before income taxes                     33,357      (347,904)
                                                  -------------- -------------
Income Taxes                                                  -           300
                                                  -------------- -------------

    Net income (loss) from continuing operations         33,357      (348,204)

Discontinued operations
  Gain (loss) from operations (net of income tax)       438,440             -
  Gain on disposal (net of income tax)                  454,865       274,778
                                                  -------------- -------------

    Total gain (loss) from discontinued operations      893,305       274,778
                                                  -------------- -------------

    NET EARNINGS (LOSS)                           $     926,662  $    (73,426)
                                                  ============== =============

Net earnings (loss) per common share - basic and dilutive

  Net income (loss) from continuing operations    $           -  $      (0.01)
  Gain (loss) from discontinued operations                 0.04          0.01
                                                  -------------- -------------
  Net earnings (loss)                             $        0.04  $          -
                                                  ============== =============

Weighted-average number of shares outstanding
  Basic                                              23,175,858    23,916,510
  Dilutive                                           23,175,858    24,008,185





 The accompanying notes are an integral part of these statements.

<PAGE> 19
<TABLE>
<CAPTION>


             Pacific WebWorks, Inc. and Subsidiaries

          CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

              Years ended December 31, 2002 and 2003




                                                                   Additional   Stock
                             Price per          Common Stock       Paid-in      Subscriptions Accumulated
                             share           Shares      Amount    Capital      Receivable    Deficit       Totals
                             ------------ ------------ ----------- ------------ ------------- ------------- ------------

                          <c>          <c>          <c>          <c>          <c>          <c>           <c>

Balances at
 January 1, 2002                  -         23,076,688  $  23,077  $14,998,150  $   (40,000)  $(13,091,636) $ 1,889,591

Issuance of stock for
  insurance policies         $0.12-$0.37       282,785        283       36,145            -              -       36,428

Cash received for stock
  subscription                    -                  -          -            -       40,000              -       40,000

Consulting compensation
  recognized for
  warrants granted                -                  -          -      114,645            -              -      114,645

Net earnings 2002                 -                  -          -            -            -        926,662      926,662
                                          ------------ ----------- ------------ ------------- ------------- ------------
Balances at
  December 31, 2002               -         23,359,473     23,360   15,148,940            -    (12,164,974)   3,007,326

Warrants exercised             $0.05         1,000,000      1,000       49,000            -              -       50,000

Issuance of stock for
  insurance policies           $0.27           228,149        228       62,097            -              -       62,325

Consulting compensation
  recognized for
  warrants granted                -                  -          -       28,144            -              -       28,144

Net loss 2003                     -                  -          -            -            -        (73,426)     (73,426)
                                          ------------ ----------- ------------ ------------- ------------- ------------

                                            24,587,622 $   24,588  $15,288,181  $         -   $(12,238,400) $ 3,074,369
                                          ============ =========== ============ ============= ============= ===========

     The accompanying notes are an integral part of this financial statement
</TABLE>
<PAGE> 20
<TABLE>
<CAPTION>





             Pacific WebWorks, Inc. and Subsidiaries

              CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                    For the
                                                                   year ended
                                                                   December 31,
                                                                2002         2003
                                                           ------------- -------------

                                                        <c>           <c>
Increase (decrease) in cash and cash equivalents
  Cash flows from operating activities
  Net earnings (loss)                                      $    926,662  $    (73,426)
  Less: Gain from discontinued operations (net of taxes)       (893,305)     (274,778)
                                                           ------------- -------------
     Earnings (loss) from continuing operations                  33,357      (348,204)

  Adjustments to reconcile net earnings (loss)
   to net cash used in operating activities
     Depreciation & amortization                                149,505        90,285
     Issuance of options and warrants for compensation          114,645        28,144
     Bad debt expense                                           359,598       380,532
     Loss on sale or abandonment of property and equipment        7,500             -
  Changes in assets and liabilities
     Receivables                                               (332,379)     (374,118)
     Prepaid expenses and other assets                          181,773       133,910
     Accounts payable and accrued liabilities                   (76,984)       43,617
     Deferred revenue                                           (37,356)      133,289
                                                           ------------- -------------

    Total adjustments                                           366,302       435,659
                                                           ------------- -------------

    Net cash provided by continuing operating activities        399,659        87,455
                                                           ------------- -------------
Cash flows from investing activities
  Purchases of property and equipment                           (57,524)      (25,090)
  Cash on reserve with bank                                           -       (50,951)
  Cash received for sale of subsidiary                                -        50,000
  Sale (purchase) of certificate of deposit                    (101,536)      101,536
  Purchase of residual portfolio                                (60,000)            -
                                                           ------------- -------------

    Net cash provided by (used in) investing activities        (219,060)       75,495
                                                           ------------- -------------
Cash flows from financing activities
  Payment on note payable to reseller                          (108,093)      (74,557)
  Proceeds on exercise of warrants                                    -        50,000
  Proceeds from stock subscription                               40,000             -
                                                           ------------- -------------

    Net cash used in financing activities                       (68,093)      (24,557)
                                                           ------------- -------------

    Net cash provided by continuing operations                  112,506       138,393
    Net cash used in discontinued operations                          -             -
                                                           ------------- -------------

    Net increase in cash and cash equivalents                   112,506       138,393

Cash and cash equivalents at beginning of period                249,813       362,319
                                                           ------------- -------------

Cash and cash equivalents at end of period                 $    362,319  $    500,712
                                                           ============= =============

Supplemental disclosures of cash flow information:
  Cash paid for interest                                   $      6,907  $      1,076
  Cash paid for income taxes                                        900           500

Non-cash financing activities:
  Issuance of stock for prepaid insurance policies               36,427        62,325
  Reseller note settlement                                            -        37,740
  Purchase of residual portfolio with note                      220,390             -
  Purchase of residual portfolio less net
    settlement of liabilities                                    48,030             -




 The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE> 21

             Pacific WebWorks, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2003

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of significant accounting policies consistently applied in the
presentation of the accompanying consolidated financial statements follows.

1. The Company
   -----------

Pacific WebWorks, Inc. and its subsidiaries (Company), engages in the
development and distribution of web tools software, electronic business
storefront hosting, and Internet payment systems for individuals and small to
mid-sized businesses.

The Company was organized under the laws of the state of Nevada on May 18,
1987 as Asphalt Associates, Inc.  On December 31, 1998, the board of directors
changed the name of the Company to Pacific WebWorks, Inc.  On January 11,
1999, the Company merged with Utah Webworks, Inc., a Utah corporation
organized April 10, 1997.  The share exchange with Utah Webworks was accounted
for as a reverse merger, therefore, all financial information prior to January
11, 1999 is that of the accounting survivor, Utah Webworks.

TradeWorks Marketing, Inc. and FundWorks, Inc. were organized in the state of
Delaware in July and August of 2003, respectfully.  TradeWorks began
operations in August 2003 and engages in the marketing and sales of Pacific
WebWorks and Intellipay products.  FundWorks began operations in December 2003
and provides operating leases for customers with higher credit risk.

2. Principles of Consolidation
   ----------------------------

The accompanying consolidated financial statements include the accounts of
Pacific WebWorks, Inc. and its wholly owned subsidiaries, Intellipay, Inc.,
TradeWorks Marketing, Inc., FundWorks, Inc. and the discontinued operations of
World Commerce Network, LLC. (a non-operating company).  The financial
statements also include the accounts of Logio, Inc. (a non-operating,
development company) through the date of its sale in July 2003.  All
significant intercompany accounts and transactions have been eliminated in
consolidation.

Certain prior period balances have been reclassified to conform with current
period presentation.

3. Use of Estimates
   ----------------

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts reported
in the consolidated financial statements and accompanying notes.  Management
believes that the estimates used in preparing the financial statements are
reasonable and prudent; however, actual results could differ from these
estimates.  Significant estimates include the allowance for doubtful accounts,
impairment assessments of goodwill, and certain accrued liabilities such as
contingent liabilities.

<PAGE> 22


             Pacific WebWorks, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2003

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4. Cash Equivalents
   ----------------

The Company considers all highly liquid instruments maturing in three months
or less when purchased to be cash equivalents.

5.  Depreciation and amortization
    -----------------------------

Depreciation of property and equipment is provided on the straight-line method
over the estimated useful lives of the assets.  Accelerated methods of
depreciation of property and equipment are used for income tax purposes.

6.  Goodwill
    ---------

The Company adopted SFAS No. 142, Goodwill and Other Intangible Assets, in
2002. Under SFAS No. 142, goodwill is no longer amortized, but is tested for
impairment at a reporting unit level on an annual basis and between annual
tests if an event occurs or circumstances change that would more likely than
not reduce the fair value of a reporting unit below its carrying amount.
Events or circumstances which could trigger an impairment review include a
significant adverse change in legal factors or in the business climate, an
adverse action or assessment by a regulator, unanticipated competition, a loss
of key personnel, significant changes in the manner of our use of the acquired
assets or the strategy for our overall business, significant negative industry
or economic trends or projected future results of operations. For purposes of
financial reporting and impairment testing in accordance with SFAS No. 142,
the Company's Intellipay business unit operates in one principal business
segment, a provider of online credit card gateway services.

In testing for a potential impairment of goodwill, the estimated fair value of
the business unit is compared with book value, including goodwill. If the
estimated fair value exceeds book value, goodwill is considered not to be
impaired and no additional steps are necessary. If, however, the fair value of
the Company is less than book value, then the carrying amount of the goodwill
is compared with its implied fair value. The estimate of implied fair value of
goodwill may require independent valuations of certain internally generated
and unrecognized intangible assets such as our paying monthly gateway
portfolio, software and technology and trademarks. If the carrying amount of
our goodwill exceeds the implied fair value of that goodwill, an impairment
loss would be recognized in an amount equal to the excess. In accordance with
SFAS No. 142, the Company performed a goodwill impairment test during 2003 and
concluded there was no impairment of goodwill.

7.  Fair value of financial instruments
    -----------------------------------

The fair value of the Company's cash and cash equivalents, receivables,
accounts payable, accrued liabilities and capital lease obligations
approximate carrying value based on their effective interest rates compared to
current market prices.



<PAGE> 23


             Pacific WebWorks, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2003

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

8. Revenue Recognition
   --------------------

The Company applies the provisions of SEC Staff Accounting Bulletin ("SAB")
No. 104, Revenue Recognition in Financial Statements, which provides guidance
on the recognition, presentation and disclosure of revenue in financial
statements filed with the SEC. SAB No. 104 outlines the basic criteria that
must be met to recognize revenue and provides guidance for disclosure related
to revenue recognition policies. In general, the Company recognizes revenue
related to monthly hosting, gateway, transaction fees, and training and design
services when (i) persuasive evidence of an arrangement exists, (ii) delivery
has occurred or services have been rendered, (iii) the fee is fixed or
determinable and (iv) collectibility is reasonably assured.

Hosting, gateway and transaction services revenues are recognized in the
period in which fees are fixed or determinable and the related products or
services are provided to the user. The Company's pay subscribers generally pay
in advance for their service by credit card, check or electronic check
payment, and revenue is then recognized ratably over the period in which the
related services are provided. Advance payments and upfront fees from
customers are recorded on the balance sheet as deferred revenue.  In
circumstances where payment is not received in advance, revenue is only
recognized if collectibility is reasonably assured.

Training and design revenues are recognized as the related services have been
performed. In determining whether an arrangement exists, the Company ensures
that a customer-specific agreement is in place. If it is determined that
collection is not reasonably assured, revenue is not recognized until
collection becomes reasonably assured, which is generally upon receipt of
cash.

9.  Cost of sales
    -------------

Cost of sales includes costs related to fulfillment, customer service, certain
royalties and commissions, amortization of purchased customer portfolios,
service personnel, telecommunications and data center costs.

10.  Sales and marketing costs
     -------------------------

Sales and marketing expenses include advertising expenses, seminar expenses,
commissions and personnel expenses for sales and marketing. The Company has
expended significant amounts on sales and marketing, including national
television, radio, and print advertising. Marketing and advertising costs to
promote the Company's products and services are expensed in the period
incurred.

11.  Research and development costs
     ------------------------------

Product development expenses include expenses for the maintenance of existing
software and the development of new or improved software and technology,
including personnel expenses for the product engineering department.  Costs
incurred by the Company to develop, enhance, manage, monitor and operate the
Company's technology services are generally expensed as incurred.

<PAGE>
<PAGE> 24

             Pacific WebWorks, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2003

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

12.  General and administrative costs
     --------------------------------

General and administrative expenses include personnel expenses for executive,
finance, and internal support personnel. In addition, general and
administrative expenses include fees for bad debt costs, professional legal
and accounting services, insurance, office space, banking and merchant fees,
and other overhead-related costs.

13.  Income Taxes
     ------------

The Company utilizes the liability method of accounting for income taxes.
Under the liability method, deferred income tax assets and liabilities are
provided based on the difference between the financial statement and tax bases
of assets and liabilities measured by the currently enacted tax rates in
effect for the years in which these differences are expected to reverse.
Deferred tax expense or benefit is the result of changes in deferred tax
assets and liabilities.

14.  Net Earnings (Loss) Per Share
     -----------------------------

The computation of net earnings (loss) per share of common stock is based on
the weighted average number of shares outstanding during each period
presented. The Company utilizes the treasury stock method to calculate
earnings (loss) per share.  Potentially issuable common shares totaling
4,783,695 related to options and 1,300,000 related to warrants were excluded
from the calculation of diluted loss per share because their effects were
anti-dilutive.

The following is the calculation for weighted average common shares used in
basic and dilutive net earnings (loss) per share:

                                                Year ended December 31,
                                                   2002          2003
                                              ------------- -------------

Common shares outstanding during the period     23,076,688     23,359,473
Weighted average common shares issued               99,170        557,037
                                              ------------- -------------
Weighted average common shares used
   in basic earnings (loss) per share           23,175,858     23,916,510
                                              ------------- -------------
Dilutive effects of potentially issuable
   common shares (warrants)                              -         91,675
                                              ------------- -------------
Weighted average number of common shares
   and dilutive potential common stock used
   in diluted earnings (loss) per share         23,175,858     24,008,185
                                              ============= =============

<PAGE> 25



             Pacific WebWorks, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2003

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

15. Recent Accounting Pronouncements
    --------------------------------

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation Transition and Disclosure an amendment of FAS 123. SFAS No. 148
amends SFAS No. 123, Accounting for Stock-Based Compensation, to provide
alternative methods of transition for an entity that voluntarily changes to
the fair value based method of accounting for stock-based employee
compensation. It also amends the disclosure provisions of SFAS No. 123 to
require prominent disclosure about the effects on reported net income of an
entity's accounting policy decisions with respect to stock-based employee
compensation. This Statement also amends APB Opinion No. 28, Interim Financial
Reporting, to require disclosure about those effects in interim financial
information. SFAS No. 148 is effective for annual and interim periods
beginning after December 15, 2002. The adoption of the interim disclosure
provisions of SFAS No. 148 did not have any impact on the Company's financial
position, results of operations or cash flows. The Company is currently
evaluating whether to adopt the fair value based method of accounting for
stock-based employee compensation in accordance with SFAS No. 148 and its
resulting impact on the Company's consolidated financial statements.


In January 2003, the Emerging Issues Task Force ("EITF") issued EITF Issue No.
00-21, Accounting for Revenue Arrangements with Multiple Deliverables. This
consensus addresses certain aspects of accounting by a vendor for arrangements
under which it will perform multiple revenue-generating activities,
specifically, how to determine whether an arrangement involving multiple
deliverables contains more than one unit of accounting. EITF Issue No. 00-21
is effective for revenue arrangements entered into in fiscal periods beginning
after June 15, 2003, or entities may elect to report the change in accounting
as a cumulative-effect adjustment.  The adoption of EITF Issue No. 00-21 did
not have a material impact on the Company's consolidated financial statements.

In January 2003, the FASB issued Interpretation ("FIN") No. 46, Consolidation
of Variable Interest Entities. Until this interpretation, a company generally
included another entity in its consolidated financial statements only if it
controlled the entity through voting interests. FIN No. 46 requires a variable
interest entity, as defined, to be consolidated by a company if that company
is subject to a majority of the risk of loss from the variable interest
entity's activities or entitled to receive a majority of the entity's residual
returns.  FIN No. 46 is effective for reporting periods ending after December
15, 2003.  The adoption of FIN No. 46 did not have any impact on the Company's
consolidated financial statements.




<PAGE> 26


              Pacific WebWorks, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2003

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

15. Recently Adopted Accounting Pronouncements - Continued
    ------------------------------------------------------

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities", which amends and clarifies
accounting for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities under SFAS
No. 133. SFAS No. 149 is effective for contracts entered into or modified
after June 30, 2003 and for hedging relationships designated after June 30,
2003. The adoption of SFAS No. 149 will not have an impact on our consolidated
financial statements.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150
changes the accounting guidance for certain financial instruments that, under
previous guidance, could be classified as equity or "mezzanine" equity by now
requiring those instruments to be reported as liabilities.  SFAS No. 150 also
requires disclosure relating to the terms of those instruments and settlement
alternatives. SFAS No. 150 is generally effective for all financial
instruments entered into or modified after May 31, 2003, and is otherwise
effective at the beginning of the first interim period beginning after June
15, 2003. The adoption of SFAS No. 150 did not have any impact on the
Company's consolidated financial statements.

In December 2003, the SEC issued SAB No. 104. SAB No. 104 revises or rescinds
portions of the interpretative guidance included in Topic 13 of the
codification of staff accounting bulletins in order to make this interpretive
guidance consistent with current authoritative accounting and auditing
guidance and SEC rules and regulations. It also rescinds the Revenue
Recognition in Financial Statements Frequently Asked Questions and Answers
document issued in conjunction with Topic 13. Selected portions of that
document have been incorporated into Topic 13. The adoption of SAB No. 104 in
December 2003 did not have any impact on the Company's financial position,
results of operations or cash flows.

NOTE B - PROPERTY AND EQUIPMENT

Property and equipment includes the following:
                                                               Estimated
                                              December 31,     useful
                                          2002          2003   life (years)
                                     ------------ ------------ ------------
   Computer Equipment                $   321,832  $   334,722      3-5
   Equipment                              95,271      102,197      2-10
   Software                               90,294       93,283      1-3
   Furniture and Fixtures                 85,257       86,087      3-10
   Leasehold Improvements                  3,143        4,598  Life of lease
                                     ------------ ------------
                                         595,797      620,887
   Less Accumulated Depreciation        (432,450)   ( 522,735)
                                     ------------ ------------
                                     $   163,347  $    98,152
                                     ============ ============
<PAGE> 27

             Pacific WebWorks, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2003

NOTE C - OTHER ASSETS

Other assets include the following:
                                                       December 31,
                                                    2002         2003
                                              -------------- -------------

     Goodwill                                 $   2,946,253  $  2,946,253
     Purchased customer portfolio                   232,360       232,360
     Other                                            7,672         7,672
                                              -------------- -------------

                                                  3,186,285     3,186,285
                                              -------------- -------------
     Accumulated amortization                       (38,727)     (170,003)
                                              -------------- -------------
                                              $   3,147,558  $  3,016,282
                                              ============== =============

In September 2002, Pacific WebWorks, Inc. entered into an agreement with a
reseller to purchase the remaining residual interest in a customer hosting
portfolio.  The portfolio was purchased for $60,000 in cash, a cash annuity of
$28,750 per month for eight months ($220,390 present value) and net settlement
of certain liabilities and receivables between the parties of $48,030.  This
intangible asset of $232,360 is being amortized over the period of expected
future cash flows estimated at two years and these charges are included in
cost of sales.

Goodwill relates to the Intellipay business unit and is tested annually for
impairment indicators.


NOTE D - ACCRUED AND OTHER LIABILITIES

Accrued liabilities consist of the following:
                                                        December 31,
                                                     2002          2003
                                                -------------- -------------
    Payroll related liabilities                 $      70,988  $     37,774
    Sales contractor commissions                            -         5,205
    Contingent reseller commissions                    39,790        39,790
    Operating lease in default                         36,491        83,364
    Refunds and factor                                      -        27,610
    Income tax payable                                      -           300
    Other                                               4,690           190
                                                -------------- -------------
                                                $     151,959  $    194,233
                                                ============== =============

Payroll related liabilities totaling $70,988 at December 31, 2002 include
approximately $14,000 in estimated taxes and interest past due from
Intellipay, Inc. to the Internal Revenue Service for periods prior to and
immediately after its acquisition by Pacific WebWorks, Inc.

<PAGE> 28


             Pacific WebWorks, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2003

NOTE E - OPERATING LEASE REVENUES

During third quarter 2003, certain customers of TradeWorks entered into
operating lease agreements that were assigned to FundWorks to purchase
e-commerce software and merchant accounts over 35 months for approximately
$59.95 per month.  The leases are non-cancelable and related revenue is
recorded monthly as earned.

Future annual minimum lease receipts for FundWorks operating leases as of
December 31, 2003 are as follows:

              2004               $   29,885
              2005                   29,885
              2006                   24,108
              Thereafter                  -
                                 ----------
                                 $   83,878
                                 ==========


Collectability of future minimum lease receipts cannot be assured as the
customers placed in operating leases are of a higher credit risk.

TradeWorks also enters into factoring arrangements for certain sales of
e-commerce software and merchant accounts to an outside leasing company with
recourse.  Estimated recourse amounts are reduced from the amount funded to
the company and netted against sales for reporting purposes as they are not
considered realizable.  Additional amounts due under the factoring
arrangements are estimated and recorded as an accrued liability (Note D).

NOTE F - STOCKHOLDERS' EQUITY

1. Equity Incentive Plan
   ---------------------

On March 8, 2001, the Board of Directors adopted the Pacific WebWorks, Inc.
2001 Equity Incentive Plan (the Plan). The Plan allows for the granting of
awards in the form of stock options, stock appreciation rights or restricted
shares to employees, independent directors and certain consultants. The
Company may grant awards representing up to 5,000,000 shares of the Company's
common stock under the Plan.  The Plan has not been approved by the Company's
shareholders as of December 31, 2003

Directors, officers, and employees have been granted options to acquire
4,696,302 shares of the company's common stock and 3,623,802 of the options
are exercisable as of December 31, 2003. The options were granted at exercise
prices ranging from $0.14 - $2.00 per share.  The options vest periodically
through October 2004 and expire through April 2011.



<PAGE> 29



             Pacific WebWorks, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2003

NOTE F - STOCKHOLDERS' EQUITY (CONTINUED)

1. Equity Incentive Plan  - Continued
   ----------------------------------

Fair market value of options granted

The Company has adopted only the disclosure provisions of Financial Accounting
Standard No. 123, "Accounting for Stock-Based Compensation" (FAS 123).
Therefore, the Company accounts for stock based compensation under Accounting
Principles Board Opinion No. 25, under which there have been no amounts
recognized in the years ended December 2002 and 2003 for compensation as
related options have been issued at exercise prices equal to the fair market
value of the Company's stock on the date of grant.  Had compensation cost for
the stock based compensation been determined based upon the fair value of the
options at the grant date consistent with methodology set forth by FAS 123,
the Company's net loss and loss per share would have increased to the
following pro forma amounts:

                                                  Year Ended December 31,
                                                      2002         2003
                                                ------------- --------------
Net earnings (loss) from continuing operations

                               As reported      $     33,357  $    (348,204)
                               Pro forma            (528,379)    (1,085,245)

Gain (loss) from discontinued operations

                               As reported      $    893,305  $     274,778
                               Pro forma             893,305        274,778
Net earnings (loss)
                               As reported      $    926,664  $     (73,426)
                               Pro forma             364,928       (810,467)

Net earnings (loss) per common share from
  continuing operations basic and fully diluted

                               As reported      $          -  $       (0.01)
                               Pro forma                   -          (0.05)

Gain (loss) from discontinued operations
   basic and fully diluted

                               As reported      $       0.04  $        0.01
                               Pro forma                0.04           0.01

Net earnings (loss) per common share

                               As reported      $       0.04  $           -
                               Pro forma                0.02          (0.04)


<PAGE> 30


             Pacific WebWorks, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2003


NOTE F - STOCKHOLDERS' EQUITY (CONTINUED)

1. Equity Incentive Plan  - Continued
   ----------------------------------

Fair market value of options granted - Continued

The fair value of these options was estimated at the date of grant using the
Black-Scholes American option-pricing model with the following
weighted-average assumptions for 2002 and 2003: expected volatility of 145
percent and 158 percent, respectively; risk-free interest rate of 4.25 percent
and 5.00 percent, respectively; and expected life of 3.5 and 3.25 years,
respectively.  The weighted-average fair value of options granted was $0.14
and $0.19 in 2002 and 2003, respectively.

Option pricing models require the input of highly sensitive assumptions,
including expected stock volatility.  Also, the Company's stock options have
characteristics significantly different from those of traded options, and
changes in the subjective input assumptions can materially affect the fair
value estimate.  Management believes the best input assumptions available were
used to value the options and that the resulting option values are reasonable.

Information with respect to the Company's stock options:
                                                                Weighted-
                                                                 average
                                Stock options  Exercise price exercise price
                                -------------- -------------- --------------
Outstanding at January 1, 2002      3,640,485   $0.75-3.53        $0.97
   Granted                            600,000      0.14            0.14
   Exercised                                -         -               -
   Forfeited                          395,076    0.14-3.53         1.59
                                -------------- -------------- --------------
Outstanding at December 31, 2002    3,845,409    0.14-3.44         0.78
                                -------------- -------------- --------------
   Granted                          1,625,000      0.23            0.23
   Exercised                                -         -               -
   Forfeited                          774,107    0.14-3.44         1.07
                                -------------- -------------- --------------
Outstanding at December 31, 2003    4,696,302  $0.14-$2.00        $0.54
                                ============== ============== ==============



<PAGE> 31










             Pacific WebWorks, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2003


NOTE F - STOCKHOLDERS' EQUITY (CONTINUED)

1. Equity Incentive Plan- Continued
   --------------------------------

Additional information related to stock options outstanding and exercised at
December 31, 2003:


Options outstanding

                                                          Weighted-
                     Number       Weighted-average    average remaining
Exercise price     outstanding      exercise price  contractual life (years)
------------------ -------------- ----------------- -----------------------
    2.00             100,000             2.00                 1
    1.75               8,500             1.75                 2
    1.06              50,000             1.06                 1
    0.87             105,302             0.87                 7
    0.75           2,287,500             0.75                 7
    0.23           1,625,000             0.23                 5
    0.14             520,000             0.14                 4
                   ----------
                   4,696,302
                   ==========



Options exercisable


                                                          Weighted-
                     Number       Weighted-average    average remaining
Exercise price      exercisable    exercise price   contractual life (years)
------------------ -------------- ----------------- -----------------------
    2.00             100,000             2.00                 1
    1.75               8,500             1.75                 2
    1.06              50,000             1.06                 1
    0.87             105,302             0.87                 7
    0.75           2,287,500             0.75                 7
    0.23             812,500             0.87                 5
    0.14             260,000             0.14                 4
                   ----------
                   3,623,802
                   ==========




<PAGE> 32





             Pacific WebWorks, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2003


NOTE F - STOCKHOLDERS' EQUITY (CONTINUED)

2.  Warrants for common stock
    -------------------------

As of December 31, 2003, warrants for the purchase of 1,300,000 shares of the
Company's common stock were outstanding and exercisable.

The warrants were granted on May 14, 2002 to Summit Resource Group, Inc. in
consideration for investor relations consulting services received over the
course of one year.  The exercise prices of the warrants are 600,000 at $0.30,
which vested immediately; 400,000 at $0.50, which vested on September 15,
2002; and 300,000 at $0.90, which vested on December 31, 2002. Consulting
charges related to this agreement approximate $84,000 and represent the fair
value of the warrants using the Black Scholes valuation model. The services
under this contract were performed through May 2003 and the fair value of the
warrants was recognized ratably over the service period.  Total compensation
expense from the issuance of these warrants totaled $56,285 and $28,143 for
the years ended December 31, 2002 and 2003, respectively.  The agreement
terminated in May 2003 when the services were completed.  The warrants expire
in May 2004.

3.  Issuance of stock
    -----------------

In March 2002, the Company issued a total of 9,816 shares of its common stock
as a prepayment for certain insurance services totaling $3,671.  The services
will be provided and related expenses will be recognized over the one-year
period in which the services are to be received by the Company.

In September 2002, the Company issued a total of 272,969 shares of its common
stock as a prepayment for certain insurance services totaling $32,756.  The
services will be provided and related expenses will be recognized over the
one-year period in which the services are to be received by the Company.

In July 2003, the Company's Board of Directors resolved to adjust the price
certain of the Company's warrants to purchase 1,000,000 shares of its common
stock from an exercise price $0.75 and $0.50 per share to an exercise price of
$0.05 per share.  All of the warrants were exercised in July 2003 for $50,000
in cash.

In October 2003, the company issued a total of 228,149 shares of its common
stock in exchange for $62,325 of insurance premiums for one year.









<PAGE> 33


             Pacific WebWorks, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2003

NOTE G - DISCONTINUED OPERATIONS

The following includes the combined net current liabilities for the Company's
discontinued operations as of December 31, 2002:

                                                 World         Total
                                                 Commerce      Discontinued
                                   Logio, Inc.   Network, LLC  Operations
                                   ------------- ------------- -------------
ASSETS
Current assets                     $          -  $          -  $          -
Long-term assets                              -             -             -
                                   ------------- ------------- -------------
  Total assets                     $          -  $          -  $          -
                                   ============= ============= =============

LIABILITIES
Overdraft in bank                  $     23,766  $          -  $     23,766
Capital leases in default                17,825             -        17,825
Payables past due                       177,174        64,010       241,184
Accrued liabilities                       6,012       171,265       177,277
                                   ------------- ------------- -------------
  Total current liabilities        $    224,777  $    235,275  $    460,052
                                   ============= ============= =============

Net current liabilities            $    224,777  $    235,275  $    460,052
                                   ============= ============= =============

The gains (losses) from discontinued operations include the results of
operations for Logio, Inc. and World Commerce Network, LLC from January 1,
2002 through the measurement date of July 1, 2002.   The gains from disposal
of discontinued operations include the results of operations for Logio, Inc.
and World Commerce Network, LLC realized from measurement date of July 1, 2002
through December 31, 2002.  The Company estimates that the ultimate sale or
disposal of discontinued operations will result in a gain net of phase-out
operating gains and losses.  Such gains will be recorded when realized.












<PAGE> 34






             Pacific WebWorks, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2003

NOTE G - DISCONTINUED OPERATIONS - Continued

The following includes the combined net current liabilities for the Company's
discontinued operations as of December 31, 2003

                                                    World
                                                  Commerce
                                                 Network, LLC
                                                -------------
ASSETS
Current assets                                  $          -
Long-term assets                                           -
                                                -------------
   Total assets                                 $          -
                                                =============
LIABILITIES
Payables past due                                     64,010
Accrued liabilities                                  171,264
                                                -------------
  Total current liabilities                     $    235,274
                                                =============

Net current liabilities                         $    235,274
                                                =============

1.  Discontinued subsidiary - Logio Inc.
    -----------------------------------
In July 2002, the Board of Directors of Pacific WebWorks, Inc. resolved to
discontinue its wholly owned subsidiary Logio, Inc. and set forth a formal
plan of disposal.  Logio, Inc., formerly WordCruncher Internet Technologies,
Inc., (Logio) conducted business as a development stage company, historically
engaged in the development and marketing of a focused Internet directory and
search engine intended to service the needs of the business professional.  The
Company's Board has determined that there is no longer a viable market for
this product line.

Settled liabilities
In September 2002, Logio entered into a Settlement Agreement and Release of
its capital lease default with Sunrise International Leasing Corporation.
Consideration for the settlement and release included Logio's verification of
the return of the capital lease equipment (in May 2001) and receipt of Logio's
audited financial statements.  The settlement and release approximates
$445,000 and Logio, formally discontinued operations and has recorded an
extraordinary gain for the forgiveness of this capital lease in default
approximating $457,000 net of income tax expense and changes in deferred
income tax asset of $0) for the year ended December 31, 2003, representing all
amounts accrued for this matter. This gain has been presented as a component
of a gain on disposal of discontinued operations in the Company's consolidated
Statements of Earnings for the year ended December 31, 2003.

Sale of Logio, Inc.
On June 27, 2003 the Company sold all of its shares in Logio, Inc. for $50,000
cash to a group of 11 investors.  The disposal resulted in the realization of
approximately $274,000 in gain from the sale of discontinued operation, during
the second quarter 2003.

<PAGE> 35

             Pacific WebWorks, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2003


NOTE G - DISCONTINUED OPERATIONS - Continued

2.  Discontinued subsidiary  -World Commerce Network, LLC
    -----------------------------------------------------
In July 2002, the Board of Directors of Pacific WebWorks, Inc. resolved to
discontinue World Commerce Network, LLC and set forth a formal plan of
disposal.  Negotiations and settlements of World Commerce liabilities are
currently underway as the LLC is phasing out its operations.  World Commerce
Network became a consolidated entity with the Company in March 2000.

Other current liabilities
Other current liabilities of World Commerce Network, LLC consist of estimated
customer refunds approximating $56,000 and estimated contingent liabilities
from the legal matter noted below approximating $95,000 as of December 31,
2003.

Settled liabilities
In January 2002, World Commerce Network settled a liability, approximating
$12,000, for $1 in value with a printing company.

Also in January 2002, World Commerce Network settled its liabilities with U.S.
Merchant Systems, a former member, approximating $433,000 for approximately
$17,000 in cash and receivables.  World Commerce Network has been
unconditionally forgiven and released from these liabilities in the settlement
agreement.

The total of the settlement, release and forgiveness of these liabilities
approximates $416,000 (net of income tax expense and change in deferred tax
asset of $0) and was recorded as an extraordinary gain by World Commerce.  The
settlement of these liabilities is a component of the gain from disposal of
discontinued operations on the Company's consolidated Statement of Earnings
for the year ended December 31, 2003.






<PAGE> 36













             Pacific WebWorks, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2003



NOTE G - DISCONTINUED OPERATIONS - Continued

2.  Discontinued subsidiary - World Commerce Network, LLC - Continued
    -----------------------------------------------------------------

Pending litigation
In September 2002, World Commerce Network, LLC received a complaint from a
customer financing company for recourse obligations funded for customer leases
during 2000 for seminar related activities.  The agreement between World
Commerce Network and the leasing company provides for recourse on leases in
which customers have not made first payment.  Estimated recourse obligations
and related attorney's fees for World Commerce Network approximate $95,000 at
December 31, 2001 and 2002 and have been recorded as a net current liability
of discontinued operations.  Management believes that the recorded liability
for this matter is sufficient to cover any resulting judgment from this claim.

In April 2001, one of World Commerce Network's former vendors filed a
complaint alleging default under a certain application for credit and personal
guaranty made by a former officer of World Commerce Network.  The vendor seeks
approximately $65,000 plus interest.  World Commerce Network believes the
amount should be reduced based upon the vendor's performance and other
disputes.  World Commerce Network has filed an answer to the complaint and
further litigation is pending.   The Company has recorded amounts in net
current liabilities of discontinued operations.  Management believes that the
amount recorded is sufficient to cover the resulting liability from this
complaint.
























<PAGE> 37



             Pacific WebWorks, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2003


NOTE H - COMMITMENTS AND CONTINGENCIES

1.  Operating lease in default
    --------------------------
In June 2002, in conjunction with the migration of the Intellipay operations
to our Salt Lake City facilities, Intellipay, Inc. defaulted on its operating
lease for office space in Fremont, California.  The lease agreement required
payment of approximately $6,000 per month plus applicable late fees and
interest through December 2003.

As of December 31, 2003, Intellipay, Inc. has recorded an accrued liability of
$83,364 related to the months of office lease under default, less months
re-leased by the property manager, including all interest and late fees.

2.  Operating leases
    ----------------
The Company has entered into a lease agreement for the lease of office space
for its operations in Salt Lake City, Utah.  The lease requires $7,647 per
month through December 2004 and $8,400 from January 2005 through expiration in
December 2006.  Rent expense for the Salt Lake offices for the years ended
December 31, 2002 and 2003 approximates and $74,000 and $99,000 respectively.
The following is a schedule of future minimum lease payments under the
operating lease:

             Year ended             Lease
             December 31,         Commitment
             -----------          -----------
                2004              $   91,764
                2005                 101,760
                2006                 101,760
             Thereafter                    -
             -----------          -----------
                                  $  295,284
                                  ===========

















<PAGE> 38


             Pacific WebWorks, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2003


NOTE I - INCOME TAXES

The tax effects of temporary differences giving rise to deferred tax assets
and liabilities are as follows:

                                              2002           2003
                                         -------------- -------------
Deferred tax assets
   Allowance for doubtful accounts       $       8,100  $     15,099
   Net operating loss carryforwards          5,383,003     2,458,309
   Excess book depreciation and
     amortization                              921,066        65,162
   Capital loss carryforwards                        -       590,081
   Other, net                                   20,927        30,505
                                         -------------- -------------
                                             6,333,494     3,159,157

Less valuation allowance                    (6,333,494)   (3,159,157)
                                         -------------- -------------

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


There were no deferred tax assets of income tax benefits recorded in the
financial statements for net deductible temporary differences or net operating
loss carryforwards because the likelihood of realization of the related tax
benefits cannot be established.  Accordingly, a valuation allowance has been
recorded to reduce the net deferred tax asset to zero.  The decrease in the
valuation allowance was $3,174,337 for the year ended December 31, 2003.

As of December 31, 2003, the Company has net operating loss carryforwards for
tax reporting purposes of approximately $6,700,000 expiring through 2023.  As
of December 31, 2003, the Company had a capital loss carryforward for tax
reporting purposes of approximately $1,600,000 expiring in 2008.








<PAGE> 39










             Pacific WebWorks, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2003


NOTE J - SEGMENT REPORTING

Although the Company operates in one business segment, the production and
distribution of business e-commerce software, management reports by individual
business unit.

Segment reporting by business unit follows:

<TABLE>
<CAPTION>

Year ended             Pacific                    Trade       Fund-      Discontinued
December 31, 2002(a)   WebWorks     Intellipay    Works       Works      Operations(b)
--------------------   ------------ ------------- ----------- ---------- -------------

                    <c>          <c>           <c>         <c>        <c>

Revenues, net          $ 1,668,660  $    903,916  $        -  $       -  $          -

Income (loss) from
continuing operations      (14,037)       47,394           -          -             -

Gain (loss) from
discontinued operations          -             -           -          -       893,305

Net income (loss)      $   (14,037) $     47,394  $        -  $       -  $    893,305

___________________________________________________

(a) Amounts include all intercompany receivables, payables, revenues and expenses
    prior to elimination for consolidation.
(b) Includes Logio, Inc. and World Commerce Network, LLC, non-operating, discontinued
    subsidiaries.

</TABLE>
<TABLE>
<CAPTION>

Year ended             Pacific                    Trade       Fund-      Discontinued
December 31, 2003(a)   WebWorks     Intellipay    Works       Works      Operations(b)
--------------------   ------------ ------------- ----------- ---------- -------------

                    <c>          <c>           <c>         <c>        <c>
Revenues, net          $ 1,299,996  $    554,878  $  377,857  $   4,466  $          -

Income (loss) from
continuing operations      (71,879)       64,784    (335,629)    (5,480)            -

Gain (loss) from
discontinued operations    274,778             -           -          -             -

Net income (loss)      $   202,899  $     64,784  $ (335,629) $  (5,480) $          -
____________________________________________________

(a)  Amounts include all intercompany receivables, payables, revenues and expenses
     prior to elimination for consolidation.
(b)  Includes Logio, Inc. through June 27, 2003 and World Commerce Network, LLC,
     non-operating, discontinued subsidiaries.

</TABLE>
<PAGE> 40

             Pacific WebWorks, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2003


NOTE K - MARKET RISK

We rely on the efforts of third party resellers to add accounts to our
customer base.  A significant portion of our customer accounts were provided
by previous Pacific WebWorks and Intellipay resellers who no longer resell our
products and services.  While we continue to add additional resellers,
including our TradeWorks Marketing subsidiary, we are primarily dependent upon
further addition of reseller distribution channels for future sales growth.


NOTE L - SUBSEQUENT EVENT

In February 2001, the Company received notice from the Utah Labor Commission
regarding an allegation of racial discrimination charged by a former employee.
The former employee claims that he was forced to resign as sales manager due
to demotions and pay cuts related to alleged prejudicial treatment based on
his race and color.  The Company responded to the request for information by
the Labor Commission and stated that it believes the former employee was
treated fairly while under its employ.  On January 18, 2002, an informational
hearing was conducted with the Utah Labor Commission. On February 28, 2002, in
a letter from the Utah Labor Commission, the Company was dismissed of all
charges related to this matter.  In June 2002, an additional conference with
the Utah Labor Commission took place related to the former employee's appeal
of the Company's dismissal in this matter.  In the June 2002 conference, the
Company and the employee were each instructed by the judge to retain counsel
and the appeal was moved to the Adjudication Division of the Utah Labor
Commission.  Subsequently, no discovery has been conducted and no amount of
any claimed damages has been made by the former employee as of December 31,
2003.  By order of the Utah Labor Commission, the former employee was given
until January 15, 2004 to further his appeal, after which date the Company
would be dismissed from the matter and he failed to respond by this date.
Management of the Company believes that this matter is no longer a threat to
the Company.

<PAGE> 41

     ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
              ON ACCOUNTING AND FINANCIAL DISCLOSURE

In our current report dated February 9, 2004, we reported that our independent
auditors, Chisholm & Associates, Certified Public Accountants, resigned as our
independent auditors and we engaged Chisholm, Bierwolf & Nilson, LLC.

                ITEM 8A.  CONTROLS AND PROCEDURES

Our Chief Executive Officer and Chief Financial Officer have reevaluated the
effectiveness of our disclosure controls and procedures as of the end of the
period covered by this report and determined that there continued to be no
significant deficiencies in these procedures.  Also, there were no changes
made or corrective actions to be taken related to our internal control over
financial reporting.

                             PART III

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

Directors and Executive Officers

The directors and executive officers of Pacific WebWorks are listed below.
Their respective ages and positions are listed, as well as, biographical
information for each of these persons is presented.  Our articles of
incorporation provide for a board of directors consisting of at least three,
but no more than nine persons.  Mr. Daniel W. Jackson resigned as director on
February 18, 2004 to pursue other interests and, therefore, we currently have
a vacancy on our board of directors.  Our directors serve until our next
annual meeting or until each is succeeded by a qualified director. Our
executive officers are chosen by our board of directors and serve at its
discretion.  There are no family relationships between or among any of our
directors and executive officers.

Name                 Age  Position Held                        Director since
------------------------------------------------------------------------------
Christian R. Larsen  29   President and Director              April 1999
Kenneth W. Bell      54   Chief Executive Officer
                            and Director                      January 2001
Thomas R. Eldredge   35   Secretary/Treasurer and
                            Chief Financial Officer

Christian R. Larsen - Mr. Larsen currently serves as our President and he
served as our Chief Executive Officer from April 1999 through January 2001.
Prior to 1999 he served as Chief Operating Officer for Pacific WebWorks and as
a consultant for Utah WebWorks.  He has eight years experience providing
computer consulting and business management services.

Kenneth W. Bell - Mr. Bell was appointed as our Chief Executive Officer in
January 2001.  He also serves a Presdient and CEO of Logio, Inc., our
subsidiairy, until its sale in July 2003.He formerly served as President and
Chief Financial Officer of Kelmarc Corporation, a financial and management
advisory company.  He has over thirty years experience in a variety of finance
and management positions, including employment in the commercial banking
industry for fifteen years in Utah and California.  Mr. Bell received a
bachelors degree from Brigham Young University.

Thomas R. Eldredge - On January 5, 2001 our board of directors appointed Mr.
Eldredge as our Senior Vice-President, Secretary/Treasurer and Chief Financial
Officer.  In February 2001, our board of directors appointed Mr. Eldredge as
corporate Secretary.  Mr. Eldredge is a CPA and has over twelve years of
experience in accounting, audit and information systems.  He worked for over
six years with Grant Thornton LLP, one of the nation's six largest public
accounting firms, as a manager in that company's assurance department.  Mr.
Eldredge is a professor at the University of Utah in the accounting and
information systems department at the graduate and undergraduate levels and
has instructed students for over six years at the University of Utah, Grant
Thornton's National training center and Utah Valley State College.  He
received both his Bachelor of Science and Master of Professional Accountancy
from the University of Utah.

                                42

<PAGE>

Audit Committee Financial Expert

We do not currently have an audit committee and, accordingly, we do not have
an audit committee financial expert serving on an audit committee.

Compliance with Section 16(a)

Section 16(a) of the Securities Exchange Act of 1934 requires our directors,
executive officers and person who own ten percent or more of our common stock
to file initial reports of ownership and reports of changes in ownership of
our common stock with the SEC.  Officers, directors and greater than
ten-percent beneficial owners are required by SEC regulations to furnish
Pacific WebWorks with copies of all Section 16(a) reports they file.  Based
upon review of the copies of such forms furnished to us during the fiscal year
ended December 31, 2002 and representations from these reporting persons that
no Forms 5 were required, we believe that Daniel W. Jackson filed a Form 3
late.

Code of Ethics

We are in the process of adopting a code of ethics for our principal executive
and financial officers.  In the meantime, our management intends to promote
honest and ethical conduct, full and fair disclosure in our reports to the
SEC, and compliance with applicable governmental laws and regulations.

                 ITEM 10.  EXECUTIVE COMPENSATION

The following table shows the compensation paid to our named executive
officers in all capacities during the past three fiscal years.  We do not have
formal written agreements with our executive officers.

                    SUMMARY COMPENSATION TABLE

                                                             Long Term
                       Annual Compensation                   Compensation
                       --------------------                  ------------
                                                             Securities
Name and principal                                           underlying
position               Year       Salary ($)      Bonus ($)  Options/SAR's (#)
---------------------  -----      ----------      --------   --------------

Christian R. Larsen    2003       $   67,896      $  4,000   275,000
President              2002           60,708         2,500    50,000
                       2001           55,750             0   325,000

Kenneth W. Bell        2003       $   90,917      $  4,000   300,000
CEO                    2002           81,708         2,500    50,000
                       2001           67,125*            0   637,878

Thomas R. Eldredge     2003       $   68,455     $   3,000   250,000
Secretary/Treasurer    2002           76,270         2,500    50,000
CFO                    2001           67,292*            0   327,273



* Does not include salaries paid by Logio to these persons prior to Pacific
  WebWorks acquisition of Logio.



                                43

<PAGE>
<PAGE>

              OPTION/SAR GRANTS IN LAST FISCAL YEAR

                        Individual Grants
                        -----------------

                                    Percent of
                     Number of      total
                     securities     options/SARs
                     underlying     granted to     Exercise or
                     Options/SAR's  employees in   base price  Expiration
     Name            granted(#)     fiscal year      ($/sh)    date
-------------------  -------------  -------------- ----------- ------------
Christian R. Larsen    275,000         16.9%        $ 0.225    Oct. 2008

Kenneth W. Bell        300,000         18.5%          0.225    Oct. 2008

Thomas R. Eldredge     250,000         15.4%          0.225    Oct. 2008


Compensation of Directors

We do not have any standard arrangement for compensation of our directors for
any services provided as director, including services for committee
participation or for special assignments.  Under our 2001 Equity Incentive
Plan, an independent director is eligible to receive 5,000 shares of our
common stock or options to acquire our common stock each year in which they
serve as a member of our board of directors and 10,000 options upon joining
our board of directors.  At this time we do not have any independent
directors.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
                 AND RELATED STOCKHOLDER MATTERS

The following table lists the beneficial ownership of Pacific WebWorks
outstanding common stock of  each person or group known by us to own
beneficially more than 5% of our outstanding common stock; each of our
executive officers; each of our directors; and all executive officers and
directors as a group.  Beneficial ownership is determined according to the
rules of the SEC and generally includes voting or investment power with
respect to securities.  Based on these rules, two or more persons may be
deemed to be the beneficial owners of the same securities.  Except as
indicated by footnote, the persons named in the table below have sole voting
and investment power with respect to all shares of common stock shown as
beneficially owned by them.  The percentage of beneficial ownership is based
on 24,587,622 outstanding shares of common stock as of March 16, 2004, and any
shares the each of the following persons may acquire within 60 days by the
exercise of warrants and/or options.

                            MANAGEMENT

Name and Address of         Number of Shares of                   Percentage
Beneficial Owners           Common Stock         Options (1)      of Class
--------------------------- -------------------- ---------------- ----------
Christian R. Larsen             878,000 (2)          487,500        5.4%
180 South 300 West, Suite 400
Salt Lake City, Utah 84101

Kenneth W.  Bell                217,311 (3)          812,878        4.1%
180 South 300 West, Suite 400
Salt Lake City, Utah 84101

Thomas R. Eldredge                    0              477,273        1.9%
180 South 300 West, Suite 400
Salt Lake City, Utah 84101


                                44
<PAGE>

All executive officers and     1,095,311           1,777,651       10.9%
directors as a group

(1)    Represents options exercisable within the next 60 days.
(2)    Represents 878,000 shares held by Net Strategic Investments LLC of
       which Mr. Larsen is an affiliate
(3)    Includes 76,309 shares held by Mr. Bell and 141,002 shares owned
       jointly with his spouse.


Securities Authorized Under Equity Compensation Plans

The following table lists the securities authorized for issuance under any
equity compensation plans approved by our shareholders and any equity
compensation plans not approved by our shareholders.  This chart also includes
individual compensation arrangements.

               EQUITY COMPENSATION PLAN INFORMATION
----------------------------------------------------------------------------
                                                            Number of
                                                            securities
                                                            remaining
                                                            available for
                                                            future issuance
                                                            under equity
                 Number of securities   Weighted-average    compensation
                 to be issued upon      exercise price of   plans (excluding
                 exercise of out-       outstanding         securities
                 standing options,      options, warrants   reflected
Plan category    warrants and rights    and rights          in column (a))
                        (a)                (b)                  (c)
---------------- ---------------------- ------------------- ---------------
Equity
compensation
plans approved
by security
holders                  0              $   0.00                  0
---------------- ---------------------- ------------------- ---------------
Equity
compensation
plans not
approved by
security
holders               4,696,302             0.54               2,803,698
---------------- ---------------------- ------------------- ---------------

Total                 4,696,302         $   0.54               2,803,698

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

2001 Equity Incentive Plan   On March 8, 2001 Pacific WebWorks' board of
directors adopted the Pacific WebWorks, Inc. 2001 Equity Incentive Plan.
Under this plan we may grant stock options, stock appreciation rights or
restricted shares to employees, independent directors and certain consultants.
The Board of directors amended the plan in 2003 to reserve 7,500,000 shares
for this plan subject to periodic adjustments for changes in the outstanding
common stock occasioned by stock splits, stock dividends, recapitalizations or
other similar changes.  In the event of a merger, consolidation or plan of
exchange to which we are a party or a sale of all, or substantially all, of
our assets the committee may continue, assume, substitute, accelerate or
settle the outstanding awards.

All of Pacific WebWorks and our subsidiaries' employees, are eligible for
incentive stock options.  Employees, independent directors and consultants are
eligible for restricted shares, non-qualified stock options and stock
appreciation rights.  We currently have approximately eighteen employees,
officers and directors eligible to participate in the plan.  An independent
director is eligible to receive 5,000 shares of our common stock or options to
acquire our common stock each year in which he or she serves as a member of
our board of directors and 10,000 options upon joining our board of directors.
As of the date of this filing we do not have any independent directors.

The plan is administered by a committee which is responsible for determining
the type, amount and terms of any consideration awarded to a recipient.  Under
the plan any options granted to a recipient are exercisable in accordance with
the terms of the agreement governing the grant.  If the option is an incentive
stock option, those terms must be consistent with the requirements of the
Internal Revenue Code, as amended, and applicable regulations, including the
requirement that the option price not be less than the fair market value of
the common stock on the date of the grant.  If the option is not an incentive
stock option, the option price may be any price determined by the committee.

As of December 31, 2003, the board of directors has granted options to acquire
4,696,302 shares of common stock with exercise prices ranging from $0.14 to
$2.00 per share.  The options vest periodically through July 2004 and

                                45

<PAGE>

expire through April 2011.  The plan continues in effect until March 8, 2011,
unless terminated by the board of directors.  The board of directors may
suspend or terminate the plan at any time.

     ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We have not engaged in any transactions in excess of $60,000 during the past
two years involving our executive officers, directors, 5% or more stockholders
or immediate family members of such persons.


            ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

Exhibits

3.1      Articles of Incorporation, as amended (Incorporated by reference to
         exhibit No. 3.1 for Form 10-Q filed November 13, 2001)
3.2      Amended and Restated Bylaws of Pacific WebWorks, Inc. (Incorporated
         by reference to exhibit No. 3.2 for Form10, as amended, file No.
         0-26731, filed July 16, 1999.)
10.1     Master Service Agreement between Electric Lightwave, Inc., and Utah
         WebWorks, Inc., dated February 2, 1998  (Incorporated by reference to
         exhibit No. 10.1 for Form 10, as amended, file No. 0-26731, filed
         July 16, 1999.)
10.2     Internet Access Agreement, Addendum to Master Service Agreement
         between Electric Lightwave, Inc., and Pacific WebWorks, Inc., dated
         January 1, 2002 (Incorporated by reference to exhibit No. 10.2 for
         Form 10-K, filed March 26, 2002)
10.3     Lease Agreement between Pacific WebWorks, Inc. and Westgate Business
         Center, dated November 20, 2003
10.4     Strategic Reseller Agreement with U.S. Merchant Systems (Incorporated
         by reference to exhibit No. 10.9 for Form 10, as amended, file No.
         0-26731, filed July 16, 1999)
21.1     Subsidiaries of Pacific WebWorks (Incorporated by reference to
         exhibit 21.1 for Form 10-QSB, filed November 13, 2003)
31.1     Chief Executive Officer Certification
31.2     Chief Financial Officer Certification
32.1     Section 1350 Certification

Reports on Form 8-K

On February 17, 2004, we filed a current report on Form 8-K, dated February 9,
2004, under Item 4 related to a change in our independent auditor.

         ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

Our former independent auditor, Chisholm & Associates, Certified Public
Accountants, billed an aggregate of $8,200 for the 2003 year and $12,000 for
the 2002 year for professional services rendered for the audit of our annual
financial statements and review of the financial statements included in our
quarterly reports.  Chisholm & Associates did not bill us for any
audit-related fees, tax fees or other fees for the past two fiscal years.

We do not have an audit committee and as a result our entire board of
directors performs the duties of an audit committee.  Our board of directors
evaluates the scope and cost of the engagement of an auditor before the
auditor renders audit and non-audit services.  As a result, we do not rely on
established pre-approval policies and procedures.


                                46

<PAGE>

                            SIGNATURES

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

                                  Pacific WebWorks, Inc.


                                    /s/ Christian R. Larsen
Date: March 18, 2004           By:_____________________________________
                                  Christian R. Larsen,
                                  President and Director


Pursuant to the requirements of the Securities Exchange Act of 1934.  This
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.



                                     /s/ Kenneth W. Bell
Date: March 18, 2004           By:_____________________________________
                                   Kenneth W.  Bell
                                   Chief Executive Officer and Director



                                    /s/ Thomas R. Eldredge
Date: March 18, 2004           By:_____________________________________
                                   Thomas R. Eldredge
                                   Secretary/Treasurer and Chief
                                   Financial Officer



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