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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the quarterly period ending June 30, 2004



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | -----------------------------------------------------------------------------------------



For the transition period from
 to



Commission file number 0-23489



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Access Worldwide Communications, Inc.

(Exact Name of Registrant as Specified in its Charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 52-1309227                          
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|4950 Communication Avenue, Suite 300Boca Raton, Florida        |  | 33431                               
|(Address of Principal Executive Offices)                       |  | (Zip Code)                          



Registrants
telephone number, including area code (561) 226-5000



Securities registered pursuant to Section 12(b) of the Act:



|                     |  |                                           
|-------------------- |  | ------------------------------------------
|Title of each class. |  | Name of each exchange on which registered.
|None                 |  | None                                      



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



Common
Stock, $0.01 par value

Title of Class



Indicate by check mark whether the registrant (1) has 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 as 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 ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).



Yes ̈No x



The number of shares
outstanding of the registrants common stock, $.01 par value, as of August 9, 2004 was 9,893,719.



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ACCESS WORLDWIDE COMMUNICATIONS, INC.



INDEX



|                                                                                                               |  |                                                                                       |  |     
|-------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------- |  | ----
|                                                                                                               |  |                                                                                       |  | Page
|Part IFinancial Information                                                                                   |  |                                                                                      
|                                                                                                               |  |                                                                                      
|Item 1.                                                                                                        |  | Financial Statements                                                                  |  |     
|                                                                                                               | 
|Consolidated Balance Sheets  June 30, 2004 (unaudited) and December 31, 2003                                  |  | 1                                                                                    
|Consolidated Statements of Operations (unaudited)  Three and Six Months Ended June 30, 2004 and June 30, 2003 |  | 2                                                                                    
|Consolidated Statement of Changes in Common Stockholders Deficit (unaudited)  Six Months Ended June 30, 2004 |  | 3                                                                                    
|Consolidated Statements of Cash Flows (unaudited)  Six Months Ended June 30, 2004 and June 30, 2003           |  | 4                                                                                    
|Notes to Consolidated Financial Statements                                                                     |  | 5-7                                                                                  
|Item 2.                                                                                                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 8-10
|Item 3.                                                                                                        |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 11  
|Item 4.                                                                                                        |  | Controls and Procedures                                                               |  | 11  
|                                                                                                               | 
|Part IIOther Information                                                                                      |  |                                                                                      
|Item 4.                                                                                                        |  | Submission of Matters to a Vote of Security Holders                                   |  | 12  
|Item 6.                                                                                                        |  | Exhibits and Reports on Form 8-K                                                      |  | 12  
|Signatures                                                                                                     |  | 13                                                                                   
|Certifications                                                                                                 |  |                                                                                      





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PART IFINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------



ACCESS WORLDWIDE COMMUNICATIONS, INC.



CONSOLIDATED BALANCE SHEETS



|                                                                                                                                        |  |                          |             |   |                  |   |             |  
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                                                        |  | June 30, 2004(Unaudited) |             |   | December 31,2003 |  
|ASSETS                                                                                                                                  |  |                          |             |   |                  |   |             |  
|Current assets:                                                                                                                         |  |                          |             |   |                  |   |             |  
|Cash and cash equivalents                                                                                                               |  | $                        | 5,084,464   |   |                  | $ | 472,722     |  
|Restricted cash                                                                                                                         |  |                          | 122,000     |   |                  |   | 123,000     |  
|Accounts receivable, net of allowance for doubtful accounts of $727,015 and $707,372, respectively                                      |  |                          | 11,368,768  |   |                  |   | 11,069,284  |  
|Unbilled receivables                                                                                                                    |  |                          | 1,067,472   |   |                  |   | 1,176,797   |  
|Taxes receivable                                                                                                                        |  |                          | 28,979      |   |                  |   | 658,666     |  
|Other assets, net                                                                                                                       |  |                          | 1,309,438   |   |                  |   | 950,761     |  
|                                                                                                                                        |  |                          |             |   |                  |   |             |  
|Total current assets                                                                                                                    |  |                          | 18,981,121  |   |                  |   | 14,451,230  |  
|Property and equipment, net                                                                                                             |  |                          | 3,908,605   |   |                  |   | 3,881,954   |  
|Restricted cash                                                                                                                         |  |                          | 589,000     |   |                  |   | 711,000     |  
|Other assets, net                                                                                                                       |  |                          | 146,177     |   |                  |   | 434,769     |  
|                                                                                                                                        |  |                          |             |   |                  |   |             |  
|Total assets                                                                                                                            |  | $                        | 23,624,903  |   |                  | $ | 19,478,953  |  
|                                                                                                                                        |  |                          |             |   |                  |   |             |  
|LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK AND COMMON STOCKHOLDERS DEFICIT                                                    |  |                          |             |   |                  |   |             |  
|Current liabilities:                                                                                                                    |  |                          |             |   |                  |   |             |  
|Current portion of indebtedness                                                                                                         |  | $                        | 7,031,239   |   |                  | $ | 5,098,999   |  
|Current portion of indebtedness  related parties                                                                                       |  |                          | 352,334     |   |                  |   | 383,334     |  
|Accounts payable and accrued expenses                                                                                                   |  |                          | 7,914,989   |   |                  |   | 7,672,764   |  
|Accrued salaries, wages and related benefits                                                                                            |  |                          | 2,023,772   |   |                  |   | 1,347,385   |  
|Deferred revenue                                                                                                                        |  |                          | 3,721,331   |   |                  |   | 2,852,628   |  
|Accrued interest and other related party expenses                                                                                       |  |                          | 12,480      |   |                  |   | 13,304      |  
|                                                                                                                                        |  |                          |             |   |                  |   |             |  
|Total current liabilities                                                                                                               |  |                          | 21,056,145  |   |                  |   | 17,368,414  |  
|Long-term portion of indebtedness                                                                                                       |  |                          | 78,643      |   |                  |   | 97,768      |  
|Other long-term liabilities                                                                                                             |  |                          | 812,988     |   |                  |   | 775,109     |  
|Convertible Notes, net                                                                                                                  |  |                          | 1,175,402   |   |                  |   | 987,336     |  
|Mandatorily redeemable preferred stock, $.01 par value: 2,000,000 shares authorized, 40,000 shares issued and outstanding               |  |                          | 4,000,000   |   |                  |   | 4,000,000   |  
|                                                                                                                                        |  |                          |             |   |                  |   |             |  
|Total liabilities and mandatorily redeemable preferred stock                                                                            |  |                          | 27,123,178  |   |                  |   | 23,228,627  |  
|                                                                                                                                        |  |                          |             |   |                  |   |             |  
|Commitments and contingencies                                                                                                           |  |                          |             |   |                  |   |             |  
|Common stockholders deficit:                                                                                                           |  |                          |             |   |                  |   |             |  
|Common stock, $.01 par value: voting: 20,000,000 shares authorized; 9,893,719 and 9,740,501 shares issued and outstanding,
respectively |  |                          | 98,937      |   |                  |   | 97,405      |  
|Additional paid-in capital                                                                                                              |  |                          | 65,042,811  |   |                  |   | 64,950,294  |  
|Accumulated deficit                                                                                                                     |  |                          | (68,616,923 | ) |                  |   | (68,770,973 | )
|Deferred compensation                                                                                                                   |  |                          | (23,100     | ) |                  |   | (26,400     | )
|                                                                                                                                        |  |                          |             |   |                  |   |             |  
|Total common stockholders deficit                                                                                                      |  |                          | (3,498,275  | ) |                  |   | (3,749,674  | )
|                                                                                                                                        |  |                          |             |   |                  |   |             |  
|Total liabilities, mandatorily redeemable preferred stock and common stockholders deficit                                              |  | $                        | 23,624,903  |   |                  | $ | 19,478,953  |  
|                                                                                                                                        |  |                          |             |   |                  |   |             |  



The accompanying notes
are an integral part of these financial statements.



1



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ACCESS WORLDWIDE COMMUNICATIONS, INC.



CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)



|                                                       |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|------------------------------------------------------ |  | -------------------------- | ---------- | - | ------------------------ | - | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                       |  | Three Months EndedJune 30, |            |   | Six Months EndedJune 30, |  
|                                                       |  | 2004                       |            |   | 2003                     |   |            | 2004 |  |   | 2003       |  
|Revenues                                               |  | $                          | 13,960,350 |   |                          | $ | 13,962,773 |      |  | $ | 26,941,212 |   |  | $ | 26,199,281 |  
|Cost of revenues                                       |  |                            | 7,529,082  |   |                          |   | 9,396,139  |      |  |   | 15,457,231 |   |  |   | 17,684,425 |  
|                                                       |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Gross profit                                           |  |                            | 6,431,268  |   |                          |   | 4,566,634  |      |  |   | 11,483,981 |   |  |   | 8,514,856  |  
|Selling, general and administrative expenses           |  |                            | 5,667,754  |   |                          |   | 5,459,579  |      |  |   | 10,653,648 |   |  |   | 9,915,992  |  
|Gain on extinguishment of indebtedness  related party |  |                            |           |   |                          |   | (299,555   | )    |  |   |           |   |  |   | (299,555   | )
|Amortization expense                                   |  |                            |           |   |                          |   | 36,994     |      |  |   |           |   |  |   | 74,008     |  
|                                                       |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Income (loss) from operations                          |  |                            | 763,514    |   |                          |   | (630,384   | )    |  |   | 830,333    |   |  |   | (1,175,589 | )
|Interest income                                        |  |                            | 4,148      |   |                          |   | 3,120      |      |  |   | 6,766      |   |  |   | 9,039      |  
|Interest expenserelated parties                       |  |                            | (21,572    | ) |                          |   | (27,313    | )    |  |   | (43,916    | ) |  |   | (68,178    | )
|Interest expense                                       |  |                            | (316,833   | ) |                          |   | (231,236   | )    |  |   | (639,133   | ) |  |   | (350,289   | )
|                                                       |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Income (loss) before income tax expense                |  |                            | 429,257    |   |                          |   | (885,813   | )    |  |   | 154,050    |   |  |   | (1,585,017 | )
|Income tax expense                                     |  |                            |           |   |                          |   |           |      |  |   |           |   |  |   |           |  
|                                                       |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Net income (loss)                                      |  | $                          | 429,257    |   |                          | $ | (885,813   | )    |  | $ | 154,050    |   |  | $ | (1,585,017 | )
|                                                       |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Basic earnings (loss) per share of common stock:       |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Net income (loss)                                      |  | $                          | 0.04       |   |                          | $ | (0.09      | )    |  | $ | 0.02       |   |  | $ | (0.16      | )
|Weighted average common shares outstanding             |  |                            | 9,839,312  |   |                          |   | 9,740,501  |      |  |   | 9,789,907  |   |  |   | 9,740,334  |  
|Diluted earnings (loss) per share of common stock:     |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Net income (loss)                                      |  | $                          | 0.04       |   |                          | $ | (0.09      | )    |  | $ | 0.01       |   |  | $ | (0.16      | )
|Weighted average common shares outstanding             |  |                            | 11,392,684 |   |                          |   | 9,740,501  |      |  |   | 11,264,974 |   |  |   | 9,740,334  |  



The accompanying notes
are an integral part of these financial statements.



2



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ACCESS WORLDWIDE COMMUNICATIONS, INC.



CONSOLIDATED STATEMENT OF CHANGES IN COMMON STOCKHOLDERS DEFICIT

(UNAUDITED)



FOR THE SIX MONTHS ENDED JUNE 30, 2004



|                                              |  |              |  |                           |        |                     |   |            |                      |   |             |       |  |   |         |   |  |   |            |  
|--------------------------------------------- |  | ------------ |  | ------------------------- | ------ | ------------------- | - | ---------- | -------------------- | - | ----------- | ----- |  | - | ------- | - |  | - | ---------- | -
|                                              |  | Common Stock |  | AdditionalPaid-in Capital |        | Accumulated Deficit |   |            | DeferredCompensation |   |             | Total | 
|                                              |  | Shares       |  | Amount                    |        |                     |   |           
|Balance, December 31, 2003                    |  | 9,740,501    |  | $                         | 97,405 |                     | $ | 64,950,294 |                      | $ | (68,770,973 | )     |  | $ | (26,400 | ) |  | $ | (3,749,674 | )
|Amortization of deferred compensation         |  |              |  |                           |        |                     |   |            |                      |   |             |       |  |   | 3,300   |   |  |   | 3,300      |  
|Common stock issued to pay accrued bonuses    |  | 143,216      |  |                           | 1,432  |                     |   | 85,930     |                      |   |             |       |  |   |         |   |  |   | 87,362     |  
|Common stock options exercised                |  | 10,002       |  |                           | 100    |                     |   | 6,587      |                      |   |             |       |  |   |         |   |  |   | 6,687      |  
|Net income for the period ended June 30, 2004 |  |              |  |                           |        |                     |   |            |                      |   | 154,050     |       |  |   |         |   |  |   | 154,050    |  
|Balance, June 30, 2004                        |  | 9,893,719    |  | $                         | 98,937 |                     | $ | 65,042,811 |                      | $ | (68,616,923 | )     |  | $ | (23,100 | ) |  | $ | (3,498,275 | )
|                                              |  |              |  |                           |        |                     |   |            |                      |   |             |       |  |   |         |   |  |   |            |  



The accompanying notes
are an integral part of these financial statements.



3



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ACCESS WORLDWIDE COMMUNICATIONS, INC.



CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)



FOR THE SIX MONTHS ENDED JUNE 30,



|                                                                                         |  |      |           |   |      |   |            |  
|---------------------------------------------------------------------------------------- |  | ---- | --------- | - | ---- | - | ---------- | -
|                                                                                         |  | 2004 |           |   | 2003 |  
|Cash flows from operating activities:                                                    |  |      |           |   |      |   |            |  
|Net income (loss)                                                                        |  | $    | 154,050   |   |      | $ | (1,585,017 | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |      |           |   |      |   |            |  
|Depreciation and amortization                                                            |  |      | 734,688   |   |      |   | 836,589    |  
|Amortization of deferred financing costs                                                 |  |      | 88,638    |   |      |   | 78,564     |  
|Accretion of discount on Convertible Notes                                               |  |      | 188,066   |   |      |   |           |  
|Amortization of deferred compensation                                                    |  |      | 3,300     |   |      |   | 3,300      |  
|Gain on extinguishment of indebtedness  related party                                   |  |      |          |   |      |   | (299,555   | )
|Allowance for doubtful accounts                                                          |  |      | 19,643    |   |      |   | 536,959    |  
|Changes in operating assets and liabilities:                                             |  |      |           |   |      |   |            |  
|Accounts receivable                                                                      |  |      | (319,127  | ) |      |   | (2,163,943 | )
|Unbilled receivables                                                                     |  |      | 109,325   |   |      |   | 763,969    |  
|Taxes receivable                                                                         |  |      | 629,687   |   |      |   |           |  
|Other assets                                                                             |  |      | (158,723  | ) |      |   | (591,311   | )
|Accounts payable and accrued expenses                                                    |  |      | 225,520   |   |      |   | (508,452   | )
|Accrued salaries, wages and related benefits                                             |  |      | 763,749   |   |      |   | (206,503   | )
|Accrued interest and other related party expenses                                        |  |      | 53,760    |   |      |   | (24,517    | )
|Deferred revenue                                                                         |  |      | 868,703   |   |      |   | 4,432,235  |  
|                                                                                         |  |      |           |   |      |   |            |  
|Net cash provided by operating activities                                                |  |      | 3,361,279 |   |      |   | 1,272,318  |  
|                                                                                         |  |      |           |   |      |   |            |  
|Cash flows from investing activities:                                                    |  |      |           |   |      |   |            |  
|Additions to property and equipment, net                                                 |  |      | (761,339  | ) |      |   | (332,660   | )
|Decrease (increase) in restricted cash                                                   |  |      | 123,000   |   |      |   | (834,000   | )
|                                                                                         |  |      |           |   |      |   |            |  
|Net cash used in investing activities                                                    |  |      | (638,339  | ) |      |   | (1,166,660 | )
|                                                                                         |  |      |           |   |      |   |            |  
|Cash flows from financing activities:                                                    |  |      |           |   |      |   |            |  
|Payments on capital leases                                                               |  |      | (99,658   | ) |      |   | (9,621     | )
|Issuance of common stock                                                                 |  |      | 6,687     |   |      |   | 230        |  
|Net borrowings (payments) under Debt Agreement and Credit Facility                       |  |      | 2,012,773 |   |      |   | (1,708,581 | )
|Proceeds from sale of subscriptionsconvertible notes payable                            |  |      |          |   |      |   | 1,840,000  |  
|Payment of loan origination fees                                                         |  |      |          |   |      |   | (744,582   | )
|Payments on related party debt                                                           |  |      | (31,000   | ) |      |   | (1,041,402 | )
|                                                                                         |  |      |           |   |      |   |            |  
|Net cash provided by (used in) financing activities                                      |  |      | 1,888,802 |   |      |   | (1,663,956 | )
|                                                                                         |  |      |           |   |      |   |            |  
|Net increase (decrease) in cash and cash equivalents                                     |  |      | 4,611,742 |   |      |   | (1,558,298 | )
|Cash and cash equivalents, beginning of period                                           |  |      | 472,722   |   |      |   | 2,197,209  |  
|                                                                                         |  |      |           |   |      |   |            |  
|Cash and cash equivalents, end of period                                                 |  | $    | 5,084,464 |   |      | $ | 638,911    |  
|                                                                                         |  |      |           |   |      |   |            |  



The accompanying notes
are an integral part of these financial statements.



4



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ACCESS WORLDWIDE COMMUNICATIONS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1.
BASIS OF PRESENTATION



The accompanying unaudited
consolidated financial statements of Access Worldwide Communication, Inc. (Access Worldwide, we, our, us, or the Company) have been prepared in accordance with accounting principles
generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, we do not include therein all of the information and footnotes
required by accounting principles generally accepted in the United States of America for a complete set of consolidated financial statements. For further information, refer to our consolidated financial statements and footnotes included in our
Annual Report on Form 10-K for the year ended December 31, 2003, filed with the Securities and Exchange Commission.



The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires
us to make estimates and assumptions that affect reported amounts included in the consolidated financial statements. In our opinion, all adjustments necessary for a fair presentation of this interim financial information have been included. Such
adjustments consisted only of normal recurring items. The results of operations for the six months ended June 30, 2004 are not necessarily indicative of the results to be expected for the year ending December 31, 2004.



2. RECLASSIFICATIONS



Certain reclassifications have been made to the 2003 consolidated financial statements to conform to the June 30, 2004
presentation. Such reclassifications did not change our net loss or total common stockholders deficit as previously reported.



3. RESTRICTED CASH



On June 10, 2003, we obtained a new letter of credit (Letter of Credit) in the amount of $834,000 to replace the original letter of credit
issued to the landlord of our Maryland communication center in 2001. The Letter of Credit was collateralized by a certificate of deposit in the same amount, which was reduced accordingly on the anniversary date of the lease agreement, as described
below. Therefore, such certificate of deposit is classified as restricted cash in the accompanying balance sheets at June 30, 2004 and December 31, 2003.



The amount of the Letter of Credit and restricted cash will be reduced on each anniversary of the lease agreement through May 2011. The balance of the
Letter of Credit will be reduced to the amount shown on each anniversary date as follows:



|                      |  |   |        
|--------------------- |  | - | -------
|May 2005              |  | $ | 589,000
|May 2006              |  |   | 466,000
|May 2007              |  |   | 343,000
|May 2008 through 2010 |  |   | 221,000



4. STOCK BASED COMPENSATION



Options granted under our stock-based compensation plan
to employees are accounted for using the intrinsic value method. We do not recognize compensation expense in connection with granting stock options to employees as the strike price of the option at the time of the grant generally equals the fair
market value of our stock at such time. Options granted under our stock-based compensation plan to non-employees are accounted for based on fair value accounting rules.



No compensation cost has been recognized for options granted under our stock-based compensation plan except for a grant of
150,000 stock options to an executive of the Company with a strike price of $0.50 per share on January 2, 2003. The Company recorded unearned stock compensation for the intrinsic value of the award ($33,000) in connection with the grant. Such
amount, which is shown as an increase of stockholders deficit, is being amortized as compensation expense over the related vesting period.



5



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ACCESS WORLDWIDE COMMUNICATIONS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)



Had the fair value based method been used to account for such compensation, compensation costs would
have reduced net income (loss) and earnings (loss) per share for the three and six months ended June 30, 2004 and 2003 to the following pro forma amounts:



|                                                                                                                                     |  |                            |         |   |                           |   |          |      |  |   |         |   |  |   |            |  
|------------------------------------------------------------------------------------------------------------------------------------ |  | -------------------------- | ------- | - | ------------------------- | - | -------- | ---- |  | - | ------- | - |  | - | ---------- | -
|                                                                                                                                     |  | Three Months EndedJune 30, |         |   | Six Months Ended June 30, |  
|                                                                                                                                     |  | 2004                       |         |   | 2003                      |   |          | 2004 |  |   | 2003    |  
|Net income (loss), as reported                                                                                                       |  | $                          | 429,257 |   |                           | $ | (885,813 | )    |  | $ | 154,050 |   |  | $ | (1,585,017 | )
|Add: Stock-based employee compensation expense included in net income (loss), net of related tax effect                              |  |                            | 1,650   |   |                           |   | 1,650    |      |  |   | 3,300   |   |  |   | 3,300      |  
|                                                                                                                                     |  |                            |         |   |                           |   |          |      |  |   |         |   |  |   |            |  
|Deduct: Total stock-based employee compensation expense determined under fair value method for all awards, net of related tax
effect |  |                            | (43,687 | ) |                           |   | (52,581  | )    |  |   | (85,095 | ) |  |   | (102,437   | )
|                                                                                                                                     |  |                            |         |   |                           |   |          |      |  |   |         |   |  |   |            |  
|Pro forma net income (loss)                                                                                                          |  |                            | 387,220 |   |                           |   | (936,744 | )    |  |   | 72,255  |   |  |   | (1,684,154 | )
|                                                                                                                                     |  |                            |         |   |                           |   |          |      |  |   |         |   |  |   |            |  
|Earnings (loss) per share:                                                                                                           |  |                            |         |   |                           |   |          |      |  |   |         |   |  |   |            |  
|Basic  as reported                                                                                                                  |  | $                          | 0.04    |   |                           | $ | (0.09    | )    |  | $ | 0.02    |   |  | $ | (0.16      | )
|                                                                                                                                     |  |                            |         |   |                           |   |          |      |  |   |         |   |  |   |            |  
|Basic  pro forma                                                                                                                    |  | $                          | 0.04    |   |                           | $ | (0.10    | )    |  | $ | 0.01    |   |  | $ | (0.17      | )
|                                                                                                                                     |  |                            |         |   |                           |   |          |      |  |   |         |   |  |   |            |  
|Diluted  as reported                                                                                                                |  | $                          | 0.04    |   |                           | $ | (0.09    | )    |  | $ | 0.01    |   |  | $ | (0.16      | )
|                                                                                                                                     |  |                            |         |   |                           |   |          |      |  |   |         |   |  |   |            |  
|Diluted  pro forma                                                                                                                  |  | $                          | 0.03    |   |                           | $ | (0.10    | )    |  | $ | 0.01    |   |  | $ | (0.17      | )
|                                                                                                                                     |  |                            |         |   |                           |   |          |      |  |   |         |   |  |   |            |  



5. INCOME TAXES



The effective tax rate used by us to record income tax expense for the three
and six months ended June 30, 2004 and 2003 differs from the federal statutory rate primarily due to the valuation allowance recorded in connection with the Companys deferred tax assets.



6. EARNINGS (LOSS) PER COMMON SHARE



Basic earnings per share is based on the weighted average number of shares
of Common Stock outstanding during the period. Diluted earnings per share includes the dilutive effect of potential common shares.



The following is a reconciliation of basic net income per share and diluted net income per share for the three and six months ended June 30, 2004:



|                                                                                       |  |                                           |            |                                         |   |           
|-------------------------------------------------------------------------------------- |  | ----------------------------------------- | ---------- | --------------------------------------- | - | ----------
|2004:                                                                                  |  | For the Three MonthsEnded June 30,        |            | For the Six MonthsEnded June 30,       
|                                                                                       | 
|Net income applicable to Common Stock - basic and diluted                              |  | $                                         | 429,257    |                                         | $ | 154,050   
|                                                                                       |  |                                          
|Weighted average number of common shares outstanding  basic                           |  |                                           | 9,839,312  |                                         |   | 9,789,907 
|                                                                                       |  |                                           |            |                                         |   |           
|Potential shares exercisable under stock option plans                                  |  |                                           | 514,662    |                                         |   | 437,276   
|                                                                                       |  |                                           |            |                                         |   |           
|Potential shares upon exercise of Warrants                                             |  |                                           | 1,038,710  |                                         |   | 1,037,791 
|                                                                                       |  |                                           |            |                                         |   |           
|Weighted average number of common and common equivalent shares outstanding  dilutive* |  |                                           | 11,392,684 |                                         |   | 11,264,974
|                                                                                       |  |                                           |            |                                         |   |           
|                                                                                       |  |                                          
|2003:                                                                                  |  | For the Three MonthsEnded June 30, Shares |            | For the Six MonthsEnded June 30, Shares
|                                                                                       | 
|Weighted average number of common shares outstanding  basic                           |  |                                           | 9,740,501  |                                         |   | 9,740,334 
|                                                                                       |  |                                           |            |                                         |   |           
|Weighted average number of common and common equivalent shares outstanding  dilutive* |  |                                           | 9,740,501  |                                         |   | 9,740,334 
|                                                                                       |  |                                           |            |                                         |   |           



|* | Since the effects of the stock options are anti-dilutive for the three and six months ended June 30, 2003, and the effects of Convertible Notes are anti-dilutive for the three and
six months ended June 30, 2004, these effects have not been included in the calculation of dilutive (loss) earnings per common share.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



6



---

ACCESS WORLDWIDE COMMUNICATIONS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)



7. INDEBTEDNESS



On January 29, 2004, the Debt Agreement with CapitalSource Finance, LLC (CapitalSource) was amended to include an Overadvance Agreement (the
Overadvance) with CapitalSource for a maximum amount of $0.6 million to fund the expansion of TelAc Teleservices Group (TelAc) into Augusta, Maine. The Overadvance is for an 18 month period commencing on January 28, 2004 and
bears interest at 11%. Monthly payments of interest only are due until August 1, 2004, when additional monthly principal payments of $50,000 will commence. The Overadvance agreement contains an Overadvance Participation Fee of the greater of
$150,000 or 1.5% of the product of 5 times consolidated annualized earnings before interest, taxes, depreciation and amortization (EBITDA) if paid at maturity or the occurrence of a triggering event as defined, or the greater of $300,000
or 3% of the product of 5 times consolidated annualized EBITDA, if the Overadvance is not paid in full at the maturity date or a trigging event as defined. The Overadvance is collateralized by the personal assets of Mr. Shawkat Raslan, Chief
Executive Officer of the Company. As of June 30, 2004, $0.6 million was outstanding on the Overadvance.



8. SEGMENTS



In
accordance with SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, our reportable segments are strategic business units that offer different products and services to different industries in the United
States and other countries.



The table below presents
information about our reportable segments for our continuing operations used by the chief operating decision-maker of the Company for the three and six months ended June 30, 2004 and 2003.



For the three months ended June 30,



|                                  |  |                |            |   |          |   |               |  |                |            |  |       |            |   |  |   |            |  
|--------------------------------- |  | -------------- | ---------- | - | -------- | - | ------------- |  | -------------- | ---------- |  | ----- | ---------- | - |  | - | ---------- | -
|2004                              |  | Pharmaceutical |            |   | Business |   | Segment Total |  | Reconciliation |            |  | Total |           
|Revenues                          |  | $              | 7,390,480  |   |          | $ | 6,569,870     |  | $              | 13,960,350 |  | $     |           |   |  | $ | 13,960,350 |  
|Gross profit                      |  |                | 3,814,684  |   |          |   | 2,616,584     |  |                | 6,431,268  |  |       |           |   |  |   | 6,431,268  |  
|Income from operations            |  |                | 1,402,755  |   |          |   | 465,248       |  |                | 1,868,003  |  |       | (1,104,489 | ) |  |   | 763,514    |  
|EBITDA(1)                         |  |                | 1,525,114  |   |          |   | 688,285       |  |                | 2,213,399  |  |       | (1,073,185 | ) |  |   | 1,140,214  |  
|Depreciation expense              |  |                | 122,359    |   |          |   | 223,037       |  |                | 345,396    |  |       | 31,304     |   |  |   | 376,700    |  
|Amortization expense              |  |                |           |   |          |   |              |  |                |           |  |       |           |   |  |   |           |  
|                                  |  |                |            |   |         
|2003                              |  |                |            |   |          |   |               |  |                |            |  |       |           
|Revenues                          |  | $              | 6,388,931  |   |          | $ | 7,573,842     |  | $              | 13,962,773 |  | $     |           |   |  | $ | 13,962,773 |  
|Gross profit                      |  |                | 1,780,802  |   |          |   | 2,785,832     |  |                | 4,566,634  |  |       |           |   |  |   | 4,566,634  |  
|(Loss) income from operations(2)  |  |                | (373,459   | ) |          |   | 683,320       |  |                | 309,861    |  |       | (940,245   | ) |  |   | (630,384   | )
|EBITDA(1)                         |  |                | (242,693   | ) |          |   | 932,304       |  |                | 689,611    |  |       | (910,052   | ) |  |   | (220,441   | )
|Depreciation expense              |  |                | 93,772     |   |          |   | 248,984       |  |                | 342,756    |  |       | 30,193     |   |  |   | 372,949    |  
|Amortization expense              |  |                | 36,994     |   |          |   |              |  |                | 36,994     |  |       |           |   |  |   | 36,994     |  
|                                  |  |                |            |   |         
|For the six months ended June 30, |  |                |            |   |          |   |               |  |                |            |  |       |            |   |  |   |            |  
|                                  |  |                |            |   |         
|2004                              |  | Pharmaceutical |            |   | Business |   | Segment Total |  | Reconciliation |            |  | Total |           
|Revenues                          |  | $              | 13,608,767 |   |          | $ | 13,332,445    |  | $              | 26,941,212 |  | $     |           |   |  | $ | 26,941,212 |  
|Gross profit                      |  |                | 6,447,065  |   |          |   | 5,036,916     |  |                | 11,483,981 |  |       |           |   |  |   | 11,483,981 |  
|Income (loss) from operations     |  |                | 2,121,727  |   |          |   | 587,920       |  |                | 2,709,647  |  |       | (1,879,314 | ) |  |   | 830,333    |  
|EBITDA(1)                         |  |                | 2,348,762  |   |          |   | 1,033,127     |  |                | 3,381,889  |  |       | (1,816,868 | ) |  |   | 1,565,021  |  
|Depreciation expense              |  |                | 227,035    |   |          |   | 445,207       |  |                | 672,242    |  |       | 62,446     |   |  |   | 734,688    |  
|Amortization expense              |  |                |           |   |          |   |              |  |                |           |  |       |           |   |  |   |           |  
|                                  |  |                |            |   |         
|2003                              |  |                |            |   |          |   |               |  |                |            |  |       |           
|Revenues                          |  | $              | 12,153,705 |   |          | $ | 14,045,576    |  | $              | 26,199,281 |  | $     |           |   |  | $ | 26,199,281 |  
|Gross profit                      |  |                | 3,408,720  |   |          |   | 5,106,136     |  |                | 8,514,856  |  |       |           |   |  |   | 8,514,856  |  
|(Loss) income from operations(2)  |  |                | (663,757   | ) |          |   | 1,105,814     |  |                | 442,057    |  |       | (1,617,646 | ) |  |   | (1,175,589 | )
|EBITDA(1)                         |  |                | (395,954   | ) |          |   | 1,615,117     |  |                | 1,219,163  |  |       | (1,558,163 | ) |  |   | (339,000   | )
|Depreciation expense              |  |                | 193,795    |   |          |   | 509,303       |  |                | 703,098    |  |       | 59,483     |   |  |   | 762,581    |  
|Amortization expense              |  |                | 74,008     |   |          |   |              |  |                | 74,008     |  |       |           |   |  |   | 74,008     |  



|(1) | EBITDA is calculated by taking income (loss) from operations, which is before interest and
taxes, and adding depreciation and amortization expense. EBITDA is a non-GAAP measure of profitability and operating efficiency widely used by investors to evaluate and compare operating performance among different companies excluding the impact of
certain non-cash charges (depreciation and amortization). We believe that EBITDA provides investors with valuable measures to compare our operating performance with the operating performance of other companies.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | (Loss) income from operations and EBITDA for the Pharmaceutical Segment include a $299,555
gain on extinguishment of indebtedness-related party for the three and six months ended June 30, 2003.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



7



---

|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------



The following discussion of the financial condition and results of operations of the Company should be read in conjunction
with our Annual Report on Form 10-K for the year ended December 31, 2003.



Three Months Ended June 30, 2004 Compared to Three Months Ended June 30, 2003



Our revenues remained unchanged at $14.0 million for the three months ended June 30, 2004, compared to $14.0 million for the three months ended June 30, 2003. Revenues for the Pharmaceutical Segment increased $1.0
million, or 15.6%, to $7.4 million for the three months ended June 30, 2004, compared to $6.4 million for the three months ended June 30, 2003. The increase was primarily due to the Company being awarded a Direct to Consumer (DTC)
program by one of our existing clients. This was offset by a decrease in our medical education revenues. Revenues for the Business Segment decreased $1.0 million, or 15.2%, to $6.6 million for the three months ended June 30, 2004, compared to $7.6
million for the three months ended June 30, 2003. The decrease was primarily due to a decrease in programs and hours performed on behalf of one of our major clients.



Our gross profit increased $1.8 million, or 39.1%, to $6.4 million for the three months ended June 30, 2004, compared to
$4.6 million for the three months ended June 30, 2003. Gross profit as a percentage of revenues increased to 45.7% for the three months ended June 30, 2004, from 32.9% for the three months ended June 30, 2003. Gross profit as a percentage of
revenues for the Pharmaceutical Segment for the three months ended June 30, 2004 increased to 51.4%, compared to 28.1% for the three months ended June 30, 2003. The increase was primarily due to the increased revenues from the DTC program, offset by
the decrease in medical education revenues, and the reduction in medical education personnel costs. Gross profit as a percentage of revenues for the Business Segment increased to 39.4% for the three months ended June 30, 2004, from 36.8% for the
three months ended June 30, 2003. The increase as a percentage of revenues was primarily attributed to a reduction in variable cost personnel as revenues declined.



Our selling, general and administrative expenses increased by $0.2 million, or 3.6%, to $5.7 million for the three months
ended June 30, 2004, compared to $5.5 million for the three months ended June 30, 2003. Selling, general and administrative expenses as a percentage of revenues for the Company increased to 40.7% for the three months ended June 30, 2004, compared to
39.3% for the three months ended June 30, 2003. Selling, general and administrative expenses as a percentage of revenues for the Pharmaceutical Segment decreased to 32.4% for the three months ended June 30, 2004, from 34.4% for the three months
ended June 30, 2003. The decrease was primarily due to the increase in revenues, a non-recurring bad debt expense recorded in the second quarter of 2003 with no similar charge in 2004 and a slight increase in personnel costs. Selling, general and
administrative expenses as a percentage of revenues for the Business Segment increased to 33.3% for the three months ended June 30, 2004, compared to 27.6% for the three months ended June 30, 2003. The increase as a percentage of revenues was
primarily attributed to the decrease in revenues and an increase in rent expense and payroll costs as a result of the expansion of the customer sales and service facility to Augusta, Maine.



Our 6.5% subordinated promissory note with a former stockholder of AM Medica
Communications Group was settled for $0.7 million, which resulted in a gain of approximately $0.3 million during the three months ended June 30, 2003.



Our net interest expense remained unchanged at $0.3 million for the three months ended June 30, 2004, compared to $0.3 million for the three months ended
June 30, 2003.



Six Months Ended June 30, 2004 Compared to Six Months Ended
June 30, 2003



Our revenues increased $0.7 million, or
2.7%, to $26.9 million for the six months ended June 30, 2004, compared to $26.2 million for the six months ended June 30, 2003. Revenues for the Pharmaceutical Segment increased $1.4 million, or 11.5%, to $13.6 million for the six months ended June
30, 2004, compared to $12.2 million for the six months ended June 30, 2003. The increase was primarily due to the Company being awarding a Direct to Consumer (DTC) program by one of our existing clients. This was offset by a decrease in
our medical education revenues. Revenues for the Business Segment decreased by $0.7 million, or 5.0%, to $13.3 million for the six months ended June 30, 2004, compared to $14.0 million for the six months ended June 30, 2003. The decrease was
primarily due to a decrease in programs and hours performed on behalf of one of our major clients, which if the decline continues could have a significant impact on our Business Services Segment.



Our gross profit increased $3.0 million, or 35.3%, to $11.5 million for the
six months ended June 30, 2004, compared to $8.5 million for the six months ended June 30, 2003. Gross Profit as a percentage of revenues increased to 42.8% for the six months ended June 30, 2004, from 32.4% for the six months ended June 30, 2003.
Gross profit as a percentage of revenues for the Pharmaceutical Segment for the six months ended June 30, 2004 increased to 47.1%, compared to 27.9% for the six months ended June 30, 2003. The increase was primarily due to the increased revenues
from the DTC program, offset by the decrease in medical education revenues, and a reduction in variable personnel costs. Gross profit as a percentage of revenues for the Business Segment increased to 37.6% for the



8



---

six months ended June 30, 2004, from 36.4% for the six months ended June 30, 2003. The increase was primarily attributed to a reduction in variable cost
personnel as revenues declined.



Our selling, general and
administrative expenses increased by $0.7 million, or 7.0%, to $10.7 million for the six months ended June 30, 2004, compared to $10.0 million for the six months ended June 30, 2003. Selling, general and administrative expenses as a percentage of
revenues for the Company increased to 39.8% for the six months ended June 30, 2004, compared to 38.2% for the six months ended June 30, 2003. Selling, general and administrative expenses as a percentage of revenues for the Pharmaceutical Segment
decreased to 31.6% for the six months ended June 30, 2004, from 33.6% for the six months ended June 30, 2003. The decrease was primarily due a non-recurring bad debt expense recorded in the second quarter of 2003 with no similar charge in 2004
offset by an increase in personnel and related compensation costs due to the increase in revenues. Selling, general and administrative expenses as a percentage of revenues for the Business Segment increased to 33.1% for the six months ended June 30,
2004, compared to 28.6% for the six months ended June 30, 2003. The increase was primarily due to the decrease in revenues and the expansion of the customer sales and service facilities in Arlington, Virginia and Augusta, Maine which resulted in
higher rent expense and personnel costs.



Our 6.5% subordinated
promissory note with a former stockholder of AM Medica Communications Group was settled for $0.7 million, which resulted in a gain of approximately $0.3 million during the six months ended June 30, 2003.



Our net interest expense increased $0.3 million, or 75.0%, to $0.7 million
for the six months ended June 30, 2004, compared to $0.4 million for the six months ended June 30, 2003. The increase was primarily due to the accretion of the discount on Convertible Notes and a higher average loan balance due to a receivable
payment of $3.1 million being received on the last day of June.



Liquidity
and Capital Resources



At June 30, 2004 and December 31,
2003, we had negative working capital of $2.1 million and $2.9 million, respectively. Cash and cash equivalents were $5.1 million at June 30, 2004, compared to $0.5 million at December 31, 2003. The significant increase in cash and cash equivalents
is due to collection of a receivable of $3.1 million on the last day of June.



Net cash provided by operating activities during the first six months of 2004 was $3.4 million, compared to $1.3 million during the first six months of 2003. The increase in net cash provided by operating activities
was primarily due to an increase in deferred revenues and a decrease in other assets for the six months ended June 30, 2004 compared to an increase in deferred revenues and a decrease in accounts receivable and other assets for the six months ended
June 30, 2003.



Net cash used in investing activities was $0.6
million for the first six months of 2004, compared to $1.2 million for the first six months of 2003. The decrease in net cash used in investing activities was primarily due to the increase in fixed asset purchases for the expansion of the customer
sales and service facilities in Arlington, Virginia and Augusta, Maine offset by a decrease in restricted cash in 2004.



Net cash provided by financing activities was $1.9 million for the first six months of 2004, compared to net cash used in financing activities of $1.7
million for the first six months of 2003. The increase in net cash provided by financing activities was primarily due to increased borrowings under our Debt Agreement due to a receivable payment of $3.1 million being received on the last day of June
without enough time to be swept to pay down the Debt Agreement.



On January 29, 2004, the Debt Agreement with CapitalSource Finance, LLC (CapitalSource) was amended to include an Overadvance Agreement (the Overadvance) with CapitalSource for a maximum amount of $0.6 million to
fund the expansion of TelAc Teleservices Group (TelAc) into Augusta, Maine. The Overadvance is for an 18 month period commencing on January 28, 2004 and bears interest at 11%. Monthly payments of interest only are due until August 1,
2004, when additional monthly principal payments of $50,000 will commence. The Overadvance agreement contains an Overadvance Participation Fee of the greater of $150,000 or 1.5% of the product of 5 times consolidated annualized earnings before
interest, taxes, depreciation and amortization (EBITDA) if paid at maturity or the occurrence of a triggering event as defined, or the greater of $300,000 or 3% of the product of 5 times consolidated annualized EBITDA, if the Overadvance
is not paid in full at the maturity date or a trigging event as defined. The Overadvance is collateralized by the personal assets of Mr. Shawkat Raslan, Chief Executive Officer of the Company. As of June 30, 2004 $0.6 million was outstanding on the
Overadvance.



As of June 30, 2004, we are in compliance with
all of our debt covenants under the Debt Agreement. We expect to meet our short-term liquidity requirements through net cash provided by operations, and borrowings under the Debt Agreement and the Overadvance. We believe that these sources of cash
will be sufficient to meet the Companys operating needs and planned capital expenditures for at least the next twelve months.



9



---

The following is a chart of the Companys approximate contractual cash payment obligations, which
have been aggregated to facilitate a basic understanding of the Companys liquidity as of June 30, 2004:



Contractual Cash Obligations



|                              |  |                        |            |        |   |           |  |         |           |               |   |         |  |   |          
|----------------------------- |  | ---------------------- | ---------- | ------ | - | --------- |  | ------- | --------- | ------------- | - | ------- |  | - | ---------
|                              |  | Payments Due by Period
|                              |  | Total                  |            | 1 year |   | 2-4 years |  | 5 years |           | After 5 years
|Long-term debt                |  | $                      | 7,316,000  |        | $ | 7,316,000 |  | $       |          |               | $ |        |  | $ |         
|Convertible Notes             |  |                        | 2,100,000  |        |   |          |  |         | 2,100,000 |               |   |        |  |   |         
|Capital lease obligations     |  |                        | 147,000    |        |   | 68,000    |  |         | 79,000    |               |   |        |  |   |         
|Operating leases              |  |                        | 10,381,000 |        |   | 2,208,000 |  |         | 5,738,000 |               |   | 885,000 |  |   | 1,550,000
|                              |  |                        |            |        |   |           |  |         |           |               |   |         |  |   |          
|Total contractual obligations |  | $                      | 19,944,000 |        | $ | 9,592,000 |  | $       | 7,917,000 |               | $ | 885,000 |  | $ | 1,550,000
|                              |  |                        |            |        |   |           |  |         |           |               |   |         |  |   |          



Risk Factors That May Affect Future
Results



This report contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. Those statements represent our current expectations, beliefs, future plans and strategies,
anticipated events or trends concerning matters that are not historical facts. Such forward-looking statements include, among others:



| |  | Statements regarding proposed activities pursuant to agreements with clients;
| | - | -----------------------------------------------------------------------------



| |  | Future plans relating to our business strategy; and,
| | - | ----------------------------------------------------



| |  | Trends, or proposals, or activities of clients or industries which we serve.
| | - | ----------------------------------------------------------------------------



Such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially from those
expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited, to the following:





| |  | Risks associated with our Debt Agreement;
| | - | -----------------------------------------



| |  | Competition from other third-party providers and those clients and prospects who may decide to do the work that Access Worldwide does in-house;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  | Industry consolidation which reduces the number of clients that we are able to serve;
| | - | -------------------------------------------------------------------------------------



| |  | Potential consumer saturation reducing the need for services;
| | - | -------------------------------------------------------------



| |  | Certain needs for our growth;
| | - | -----------------------------



| |  | Our dependence on the continuation of the trend toward outsourcing;
| | - | -------------------------------------------------------------------



| |  | The ability to sustain a downturn in any of the industries in which we participate;
| | - | -----------------------------------------------------------------------------------



| |  | The effect of changes in a drugs life cycle;
| | - | ---------------------------------------------



| |  | Our ability and our clients ability to comply with state, federal and industry regulations;
| | - | --------------------------------------------------------------------------------------------



| |  | Reliance on a limited number of major clients;
| | - | ----------------------------------------------



| |  | The ability to maintain relationships with existing customers;
| | - | --------------------------------------------------------------



| |  | The effects of possible contract cancellations;
| | - | -----------------------------------------------



| |  | Reliance on technology;
| | - | -----------------------



| |  | Reliance on key personnel and labor force, and the ability to recruit additional personnel;
| | - | -------------------------------------------------------------------------------------------



| |  | The possible impact of terrorist activity or attacks, war and other international conflicts, and a downturn in the US economy;
| | - | ------------------------------------------------------------------------------------------------------------------------------



| |  | The effects of an interruption of our business;
| | - | -----------------------------------------------



| |  | Our ability to successfully open and operate at capacity our new communication center in Maine;
| | - | -----------------------------------------------------------------------------------------------



| |  | Our ability to develop or fund the operations of new products or service offerings;
| | - | -----------------------------------------------------------------------------------



| |  | The unpredictability of the outcome of the litigation in which we are involved;
| | - | -------------------------------------------------------------------------------



| |  | Risks associated with our stock trading on the OTC Bulletin Board; and,
| | - | -----------------------------------------------------------------------



| |  | The volatility of our stock price.
| | - | ----------------------------------



The Company assumes no duty to update any forward-looking statements. For a more detailed discussion of these risks and others that could affect the
Companys results, see the Companys filings with the Securities and Exchange Commission, including the risk factors section of Access Worldwides Annual Report on Form 10-K for the year ended December 31, 2003 filed with the
Securities and Exchange Commission.



10



---

|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------



We are exposed to market risks from changes in interest rates and are subject to interest rate risks on our Debt Agreement caused by changes in interest
rates. Our ability to limit our exposure to market risk and interest rate risk is restricted as a result of our current cash management arrangement under the Debt Agreement. Accordingly, we are unable to enter into any derivative or similar
transactions that could limit our exposure to market risk and interest rate risks. Our Debt Agreement currently provides interest rates ranging of the greater of 7.0% or prime plus 2.75%. The prime rate is the prime rate published by the Wall
Street Journal. A one percent increase in the prime interest rate would result in a pre-tax impact on earnings of approximately $0.07 million per year.



|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------



The Companys Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Companys disclosure controls and
procedures (as such term is defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this quarterly report (the Evaluation
Date). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Companys disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the
Company (including its consolidated subsidiaries) required to be included in the Companys periodic filings under the Exchange Act.



Since the Evaluation Date, there have not been any significant changes in the Companys internal controls or in other factors that could
significantly affect such controls.



11



---

PART IIOTHER INFORMATION



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



On May 28, 2004, the Company held its 2004 Annual Meeting of Stockholders. At the Annual Meeting, the following six individuals, constituting the full
Board of Directors of the Company, were nominated and elected to serve as the Directors of the Company:



|                   |  |          |  |          
|------------------ |  | -------- |  | ---------
|Liam S. Donohue    |  | For:     |  | 6,474,681
|                   |  | Against: |  | 18,250   
|Frederick Thorne   |  | For:     |  | 6,474,681
|                   |  | Against: |  | 18,250   
|Shawkat Raslan     |  | For:     |  | 6,474,681
|                   |  | Against: |  | 18,250   
|Orhan Sadik-Khan   |  | For:     |  | 6,474,681
|                   |  | Against: |  | 18,250   
|Carl Tiedemann     |  | For:     |  | 6,474,681
|                   |  | Against: |  | 18,250   
|Charles Henri Weil |  | For:     |  | 6,474,681
|                   |  | Against: |  | 18,250   



In addition, the
selection of BDO Seidman, LLP to serve as the Companys independent auditors for 2004 was ratified:



|                                      |  |                     |  |          
|------------------------------------- |  | ------------------- |  | ---------
|Selection of BDO Seidman, LLP to      |  | For:                |  | 6,469,881
|serve as independent auditors for the |  | Against:            |  | 18,250   
|fiscal year ending December 31, 2004  |  | Withhold Authority: |  | 4,800    



No other matters were
submitted to a vote of stockholders.



|ITEM 6. | EXHIBITS AND REPORTS ON FORM 8-K
|------- | --------------------------------



| | (a) | Exhibits
| | --- | --------



|     |  |                                                                  
|---- |  | -----------------------------------------------------------------
|     | 
|31.1 |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
|     | 
|31.2 |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
|     | 
|32.1 |  | Section 1350 Certification of Chief Executive Officer            
|     | 
|32.2 |  | Section 1350 Certification of Chief Financial Officer            



| | (b) | Reports on form 8-K
| | --- | -------------------



Current report on Form 8-K dated May 5, 2004 was furnished under Item 12 of Form 8-K, setting forth the press release containing
information to the Companys financial results for the three months ended March 31, 2004. The current report on Form 8-K is not deemed to be incorporated by reference by any filings made by the Company with the Securities and Exchange
Commission.



Current report on Form 8-K dated
June 23, 2004 was filed under Item 5 of Form 8-K, setting forth the announcement of the addition of a new director.



12



---

SIGNATURES



Pursuant to the
requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                     |  |  |  |                                       |  |                        |  |                                                                                                                    
|-------------------- |  |  |  | ------------------------------------- |  | ---------------------- |  | -------------------------------------------------------------------------------------------------------------------
|                     |  |  |  | ACCESS WORLDWIDE COMMUNICATIONS, INC.
|                     |  |  | 
|Date: August 9, 2004 |  |  |  | By:                                   |  | /s/    SHAWKAT RASLAN 
|                     |  |  |  |                                       |  |                        |  | Shawkat Raslan, Chairman of the Board, President and Chief Executive Officer (principal executive
officer)         
|                     |  |  | 
|Date: August 9, 2004 |  |  |  | By:                                   |  | /s/    RICHARD A. LYEW
|                     |  |  |  |                                       |  |                        |  | Richard A. Lyew , Executive Vice President and Chief Financial Officer (principal financial and accounting
officer)



13



---

Exhibit Index



|            |  |                                                                  
|----------- |  | -----------------------------------------------------------------
|Exhibit No. |  | Description                                                      
|            | 
|31.1        |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
|            | 
|31.2        |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
|            | 
|32.1        |  | Section 1350 Certification of Chief Executive Officer            
|            | 
|32.2        |  | Section 1350 Certification of Chief Financial Officer            



14