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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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



For the quarterly period ending
September 30, 2005



| ̈ | 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)



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



Registrants
telephone number, including area code (571) 438-6140



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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



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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 ̈No  x



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange
Act).    Yes ̈No  x



Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act.):    Yes ̈No  x



Indicate the number of shares
outstanding of each of the registrants classes of common stock, as of the latest practicable date.



The number of shares outstanding of the registrants common stock, par value $.01per share, as of November 15, 2005 was 12,096,219.



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##### Table of Contents

ACCESS WORLDWIDE COMMUNICATIONS, INC.



INDEX



|                             |  |                                                                                                                           |  |      
|---------------------------- |  | ------------------------------------------------------------------------------------------------------------------------- |  | -----
|                             |  |                                                                                                                           |  | Page 
|Part I-Financial Information |  |                                                                                                                          
|                             |  |                                                                                                                          
|Item 1.                      |  | Financial Statements                                                                                                      |  | 1    
|                             |  |                                                                                                                          
|                             |  | Consolidated Balance Sheets  September 30, 2005 (unaudited) and December 31, 2004                                        |  | 1    
|                             |  |                                                                                                                          
|                             |  | Consolidated Statements of Operations (unaudited)  Three and Nine Months Ended September 30, 2005 and September 30, 2004 |  | 2    
|                             |  |                                                                                                                          
|                             |  | Consolidated Statement of Changes in Common Stockholders Deficit (unaudited)  Nine Months Ended September 30, 2005      |  | 3    
|                             |  |                                                                                                                          
|                             |  | Consolidated Statements of Cash Flows (unaudited)  Nine Months Ended September 30, 2005 and September 30, 2004           |  | 4    
|                             |  |                                                                                                                          
|                             |  | Notes to Consolidated Financial Statements                                                                                |  | 5-11 
|                             |  |                                                                                                                          
|Item 2.                      |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                     |  | 12-18
|                             |  |                                                                                                                          
|Item 3.                      |  | Quantitative and Qualitative Disclosures About Market Risk                                                                |  | 19   
|                             |  |                                                                                                                          
|Item 4.                      |  | Controls and Procedures                                                                                                   |  | 19   
|                             | 
|Part II-Other Information    |  |                                                                                                                          
|                             |  |                                                                                                                          
|Item 1.                      |  | Legal Proceedings                                                                                                         |  | 20   
|                             |  |                                                                                                                          
|Item 4.                      |  | Submission of Matters to a Vote of Security Holders                                                                       |  | 20   
|                             |  |                                                                                                                          
|Item 6.                      |  | Exhibits                                                                                                                  |  | 20   
|                             |  |                                                                                                                          
|                             |  | Signatures                                                                                                                |  | 21   
|                             |  |                                                                                                                          
|                             |  | Certifications                                                                                                            |  | 23-26



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##### Table of Contents

PART IFINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS



ACCESS WORLDWIDE COMMUNICATIONS, INC.



CONSOLIDATED BALANCE SHEETS



|                                                                                                                                          |  |                               |             |   |                  |   |             |  
|----------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------- | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                                                          |  | September 30, 2005(Unaudited) |             |   | December 31,2004 |  
|ASSETS                                                                                                                                    |  |                               |             |   |                  |   |             |  
|Current assets:                                                                                                                           |  |                               |             |   |                  |   |             |  
|Cash and cash equivalents                                                                                                                 |  | $                             | 673,503     |   |                  | $ | 2,570,546   |  
|Restricted cash                                                                                                                           |  |                               | 877,000     |   |                  |   | 122,000     |  
|Accounts receivable, net of allowance for doubtful accounts of $79,292 and $776,066, respectively                                         |  |                               | 6,771,746   |   |                  |   | 7,567,448   |  
|Unbilled receivables                                                                                                                      |  |                               | 528,444     |   |                  |   | 398,547     |  
|Other assets, net                                                                                                                         |  |                               | 792,895     |   |                  |   | 1,001,671   |  
|                                                                                                                                          |  |                               |             |   |                  |   |             |  
|Total current assets                                                                                                                      |  |                               | 9,643,588   |   |                  |   | 11,660,212  |  
|Property and equipment, net                                                                                                               |  |                               | 4,918,050   |   |                  |   | 3,614,322   |  
|Restricted cash                                                                                                                           |  |                               | 466,000     |   |                  |   | 589,000     |  
|Other assets, net                                                                                                                         |  |                               | 614,962     |   |                  |   | 146,177     |  
|                                                                                                                                          |  |                               |             |   |                  |   |             |  
|Total assets                                                                                                                              |  | $                             | 15,642,600  |   |                  | $ | 16,009,711  |  
|                                                                                                                                          |  |                               |             |   |                  |   |             |  
|LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK AND COMMON STOCKHOLDERS DEFICIT                                                      |  |                               |             |   |                  |   |             |  
|Current liabilities:                                                                                                                      |  |                               |             |   |                  |   |             |  
|Current portion of indebtedness                                                                                                           |  | $                             | 3,774,836   |   |                  | $ | 2,955,450   |  
|Current portion of indebtedness - related parties                                                                                         |  |                               | 352,334     |   |                  |   | 352,334     |  
|Accounts payable                                                                                                                          |  |                               | 1,595,470   |   |                  |   | 739,438     |  
|Accrued expenses                                                                                                                          |  |                               | 1,578,579   |   |                  |   | 2,857,183   |  
|Grants payable                                                                                                                            |  |                               | 235,346     |   |                  |   | 2,257,000   |  
|Accrued salaries, wages and related benefits                                                                                              |  |                               | 484,309     |   |                  |   | 1,204,301   |  
|Customer deposits                                                                                                                         |  |                               | 526,216     |   |                  |   | 165,512     |  
|Deferred revenue                                                                                                                          |  |                               | 3,160,027   |   |                  |   | 2,981,859   |  
|Accrued interest and other related party expenses                                                                                         |  |                               | 56,823      |   |                  |   | 12,673      |  
|                                                                                                                                          |  |                               |             |   |                  |   |             |  
|Total current liabilities                                                                                                                 |  |                               | 11,763,940  |   |                  |   | 13,525,750  |  
|Long-term portion of indebtedness                                                                                                         |  |                               | 741,790     |   |                  |   | 135,008     |  
|Other long-term liabilities                                                                                                               |  |                               | 796,607     |   |                  |   | 786,386     |  
|Convertible Notes, net                                                                                                                    |  |                               | 1,965,290   |   |                  |   | 1,427,685   |  
|Mandatorily redeemable preferred stock, $.01 par value: 1,000,000 shares authorized, 40,000 shares issued and outstanding                 |  |                               | 4,000,000   |   |                  |   | 4,000,000   |  
|                                                                                                                                          |  |                               |             |   |                  |   |             |  
|Total liabilities                                                                                                                         |  |                               | 19,267,627  |   |                  |   | 19,874,829  |  
|                                                                                                                                          |  |                               |             |   |                  |   |             |  
|Commitments and contingencies (Notes 5 and 13)                                                                                            |  |                               |             |   |                  |   |             |  
|Common stockholders deficit:                                                                                                             |  |                               |             |   |                  |   |             |  
|Common stock to be issued, 4,510,000 shares (Note 9)                                                                                      |  |                               | 2,255,000   |   |                  |   |            |  
|Common stock, $.01 par value: voting: 20,000,000 shares authorized; 12,096,219 and 10,841,719 shares issued and outstanding,
respectively |  |                               | 120,962     |   |                  |   | 108,417     |  
|Additional paid-in capital                                                                                                                |  |                               | 68,212,866  |   |                  |   | 66,228,271  |  
|Accumulated deficit                                                                                                                       |  |                               | (74,199,005 | ) |                  |   | (70,182,006 | )
|Deferred compensation                                                                                                                     |  |                               | (14,850     | ) |                  |   | (19,800     | )
|                                                                                                                                          |  |                               |             |   |                  |   |             |  
|Total common stockholders deficit                                                                                                        |  |                               | (3,625,027  | ) |                  |   | (3,865,118  | )
|                                                                                                                                          |  |                               |             |   |                  |   |             |  
|Total liabilities, mandatorily redeemable preferred stock and common stockholders deficit                                                |  | $                             | 15,642,600  |   |                  | $ | 16,009,711  |  
|                                                                                                                                          |  |                               |             |   |                  |   |             |  



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



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##### Table of Contents

ACCESS WORLDWIDE COMMUNICATIONS, INC.



CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)



|                                                                   |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|------------------------------------------------------------------ |  | ------------------------------- | ---------- | - | ------------------------------ | - | --------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                                   |  | Three Months EndedSeptember 30, |            |   | Nine Months EndedSeptember 30, |  
|                                                                   |  | 2005                            |            |   | 2004                           |   |           | 2005 |  |   | 2004       |  
|Revenues                                                           |  | $                               | 8,455,213  |   |                                | $ | 9,871,862 |      |  | $ | 28,341,232 |   |  | $ | 36,813,074 |  
|Cost of revenues                                                   |  |                                 | 5,242,277  |   |                                |   | 5,840,565 |      |  |   | 16,345,368 |   |  |   | 21,510,396 |  
|                                                                   |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|Gross profit                                                       |  |                                 | 3,212,936  |   |                                |   | 4,031,297 |      |  |   | 11,995,864 |   |  |   | 15,302,678 |  
|Selling, general and administrative expenses                       |  |                                 | 4,746,811  |   |                                |   | 4,640,923 |      |  |   | 13,961,300 |   |  |   | 15,081,971 |  
|                                                                   |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|(Loss) income from operations                                      |  |                                 | (1,533,875 | ) |                                |   | (609,626  | )    |  |   | (1,965,436 | ) |  |   | 220,707    |  
|Interest income                                                    |  |                                 | 6,376      |   |                                |   | 5,760     |      |  |   | 19,487     |   |  |   | 12,526     |  
|Interest expenserelated parties                                   |  |                                 | (22,938    | ) |                                |   | (12,750   | )    |  |   | (68,813    | ) |  |   | (56,666    | )
|Interest expense                                                   |  |                                 | (466,229   | ) |                                |   | (323,302  | )    |  |   | (1,262,237 | ) |  |   | (962,435   | )
|                                                                   |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|Net loss before deemed dividend                                    |  |                                 | (2,016,666 | ) |                                |   | (939,918  | )    |  |   | (3,276,999 | ) |  |   | (785,868   | )
|Deemed dividend warrants issued to certain stockholders (Note 10) |  |                                 | (740,000   | ) |                                |   |          |      |  |   | (740,000   | ) |  |   |           |  
|                                                                   |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|Net loss applicable to common stockholders                         |  | $                               | (2,756,666 | ) |                                | $ | (939,918  | )    |  | $ | (4,016,999 | ) |  | $ | (785,868   | )
|                                                                   |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|Basic and diluted loss per share of common stock                   |  | $                               | (0.20      | ) |                                | $ | (0.09     | )    |  | $ | (0.34      | ) |  | $ | (0.08      | )
|                                                                   |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|Weighted average common shares outstanding                         |  |                                 | 13,599,552 |   |                                |   | 9,906,886 |      |  |   | 11,909,830 |   |  |   | 9,828,900  |  
|                                                                   |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  



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



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ACCESS WORLDWIDE COMMUNICATIONS, INC.



CONSOLIDATED STATEMENT OF CHANGES IN COMMON STOCKHOLDERS DEFICIT

(UNAUDITED)



FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005



|                                                                          |  |              |  |                           |         |                            |           |        |                    |           |  |                      |            |   |       |   |             |   |  |   |         |   |  |   |            |  
|------------------------------------------------------------------------- |  | ------------ |  | ------------------------- | ------- | -------------------------- | --------- | ------ | ------------------ | --------- |  | -------------------- | ---------- | - | ----- | - | ----------- | - |  | - | ------- | - |  | - | ---------- | -
|                                                                          |  | Common Stock |  | Common Stock To Be Issued |         | Additional Paid-in Capital |           |        | AccumulatedDeficit |           |  | DeferredCompensation |            |   | Total |  
|                                                                          |  | Shares       |  | Amount                    |         | Shares                     |           | Amount |                    |           |  |                     
|Balance, December 31, 2004                                                |  | 10,841,719   |  | $                         | 108,417 |                            |          |        | $                  |          |  | $                    | 66,228,271 |   |       | $ | (70,182,006 | ) |  | $ | (19,800 | ) |  | $ | (3,865,118 | )
|Amortization of deferred compensation                                     |  |             |  |                           |        |                            |          |        |                    |          |  |                      |           |   |       |   |            |   |  |   | 4,950   |   |  |   | 4,950      |  
|Common stock options exercised                                            |  | 69,500       |  |                           | 695     |                            |          |        |                    |          |  |                      | 6,675      |   |       |   |            |   |  |   |        |   |  |   | 7,370      |  
|Common stock issued to pay accrued bonus                                  |  | 185,000      |  |                           | 1,850   |                            |          |        |                    |          |  |                      | 216,470    |   |       |   |            |   |  |   |        |   |  |   | 218,320    |  
|Common stock options granted for services                                 |  |             |  |                           |        |                            |          |        |                    |          |  |                      | 31,500     |   |       |   |            |   |  |   |        |   |  |   | 31,500     |  
|Common stock issued in private placement                                  |  | 1,000,000    |  |                           | 10,000  |                            |          |        |                    |          |  |                      | 990,000    |   |       |   |            |   |  |   |        |   |  |   | 1,000,000  |  
|Common stock to be issued for Convertible Debt III                        |  |             |  |                           |        |                            | 4,510,000 |        |                    | 2,255,000 |  |                      | (50        | ) |       |   |            |   |  |   |        |   |  |   | 2,254,950  |  
|Net loss                                                                  |  |             |  |                           |        |                            |          |        |                    |          |  |                      |           |   |       |   | (3,276,999  | ) |  |   |        |   |  |   | (3,276,999 | )
|Deemed dividend on common stock - warrants issued to certain stockholders |  |             |  |                           |        |                            |          |        |                    |          |  |                      | 740,000    |   |       |   | (740,000    | ) |  |   |        |   |  |   |           |  
|                                                                          |  |              |  |                           |         |                            |           |        |                    |           |  |                      |            |   |       |   |             |   |  |   |         |   |  |   |            |  
|Balance, September 30, 2005                                               |  | 12,096,219   |  | $                         | 120,962 |                            | 4,510,000 |        | $                  | 2,255,000 |  | $                    | 68,212,866 |   |       | $ | (74,199,005 | ) |  | $ | (14,850 | ) |  | $ | (3,625,027 | )
|                                                                          |  |              |  |                           |         |                            |           |        |                    |           |  |                      |            |   |       |   |             |   |  |   |         |   |  |   |            |  



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



3



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##### Table of Contents

ACCESS WORLDWIDE COMMUNICATIONS, INC.



CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



FOR THE NINE MONTHS ENDED SEPTEMBER 30,



|                                                                                          |  |      |            |   |      |   |            |  
|----------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                                          |  | 2005 |            |   | 2004 |  
|Cash flows from operating activities:                                                     |  |      |            |   |      |   |            |  
|Net loss                                                                                  |  | $    | (3,276,999 | ) |      | $ | (785,868   | )
|Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |  |      |            |   |      |   |            |  
|Depreciation                                                                              |  |      | 1,013,438  |   |      |   | 1,131,103  |  
|Amortization of deferred financing costs                                                  |  |      | 63,511     |   |      |   | 132,957    |  
|Amortization of non-cash stock compensation                                               |  |      | 11,075     |   |      |   | 4,950      |  
|Accretion of discount on Convertible Notes                                                |  |      | 537,605    |   |      |   | 283,871    |  
|(Recovery) provision for doubtful accounts                                                |  |      | (691,725   | ) |      |   | 27,063     |  
|Changes in operating assets and liabilities:                                              |  |      |            |   |      |   |            |  
|Accounts receivable                                                                       |  |      | 1,487,427  |   |      |   | 3,570,522  |  
|Unbilled receivables                                                                      |  |      | (129,897   | ) |      |   | 310,480    |  
|Taxes receivable                                                                          |  |      |           |   |      |   | 629,687    |  
|Other assets                                                                              |  |      | (258,145   | ) |      |   | (23,201    | )
|Accounts payable, grants payable and accrued expenses                                     |  |      | (2,434,002 | ) |      |   | (1,166,413 | )
|Accrued salaries, wages and related benefits                                              |  |      | (501,672   | ) |      |   | 72,834     |  
|Accrued interest and related party expenses                                               |  |      | 44,150     |   |      |   | (727       | )
|Customer deposits                                                                         |  |      | 360,704    |   |      |   | (45,003    | )
|Deferred revenue                                                                          |  |      | 178,168    |   |      |   | (127,829   | )
|                                                                                          |  |      |            |   |      |   |            |  
|Net cash (used in) provided by operating activities                                       |  |      | (3,596,362 | ) |      |   | 4,014,426  |  
|                                                                                          |  |      |            |   |      |   |            |  
|Cash flows from investing activities:                                                     |  |      |            |   |      |   |            |  
|Additions to property and equipment, net                                                  |  |      | (2,317,169 | ) |      |   | (852,348   | )
|Decrease in restricted cash                                                               |  |      | (632,000   | ) |      |   | 123,000    |  
|                                                                                          |  |      |            |   |      |   |            |  
|Net cash used in investing activities                                                     |  |      | (2,949,169 | ) |      |   | (729,348   | )
|                                                                                          |  |      |            |   |      |   |            |  
|Cash flows from financing activities:                                                     |  |      |            |   |      |   |            |  
|Borrowings (payments) under capital leases                                                |  |      | 880,357    |   |      |   | (76,161    | )
|Proceeds from issuance of common stock                                                    |  |      | 1,000,000  |   |      |   | 14,987     |  
|Proceeds from exercise of common stock options                                            |  |      | 7,370      |   |      |   |           |  
|Net borrowings (payments) under Debt Agreement                                            |  |      | 482,662    |   |      |   | (2,708,256 | )
|Proceeds from issuance of Convertible Notes                                               |  |      | 2,254,950  |   |      |   |            |  
|Proceeds from insurance financing, net                                                    |  |      | 63,149     |   |      |   |           |  
|Loan origination fees                                                                     |  |      | (40,000    | ) |      |   |           |  
|Payment of related party debt                                                             |  |      |           |   |      |   | (31,000    | )
|                                                                                          |  |      |            |   |      |   |            |  
|Net cash provided by (used in) financing activities                                       |  |      | 4,648,488  |   |      |   | (2,800,430 | )
|                                                                                          |  |      |            |   |      |   |            |  
|Net (decrease) increase in cash and cash equivalents                                      |  |      | (1,897,043 | ) |      |   | 484,648    |  
|Cash and cash equivalents, beginning of period                                            |  |      | 2,570,546  |   |      |   | 472,722    |  
|                                                                                          |  |      |            |   |      |   |            |  
|Cash and cash equivalents, end of period                                                  |  | $    | 673,503    |   |      | $ | 957,370    |  
|                                                                                          |  |      |            |   |      |   |            |  
|Non-cash investing and financing activities:                                              |  |      |            |   |      |   |            |  
|Equipment acquisitions through capital leases                                             |  |      |           |   |      |   | 151,166    |  



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



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##### Table of Contents

ACCESS WORLDWIDE COMMUNICATIONS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



1. BASIS OF PRESENTATION



Access Worldwide Communications, Inc. (we or the Company) provide a variety of sales, education and communication programs to
clients in the medical, pharmaceutical, telecommunications, financial services, insurance and consumer products industries through our operating subsidiaries in two business segments  Pharmaceutical Services and Business Services. Please refer
to Note 12regarding our business segments.



In our
opinion, these financial statements reflect all normal, recurring adjustments necessary to provide a fair presentation of our financial position, results of operations and cash flows for the periods presented. These interim financial statements are
condensed, and thus, do not include all of the information and footnotes required by United States generally accepted accounting principles (GAAP) for presentation of a complete set of financial statements. The balance sheet as of
December 31, 2004 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by GAAP for a complete set of financial statements.



These interim results are not necessarily indicative of the results that
should be expected for the full year. For a better understanding of Access Worldwide Communications, Inc. and our financial statements, the condensed interim financial statements should be read in conjunction with our audited consolidated financial
statements for the year ended December 31, 2004, which are included in our 2004 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 31, 2005.



2. RECLASSIFICATIONS



Certain amounts have been reclassified in our prior year consolidated financial statements to conform them to the
presentation used in the current year. Such reclassifications did not change our net loss or total common stockholders deficit as previously reported.



3. RECENT ACCOUNTING PRONOUNCEMENTS



In December 2004, the Financial Accounting Standards Board (FASB) issued Statement No. 123 (revised 2004), Share-Based Payment(SFAS No. 123R). This statement is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation(SFAS No. 123), and supersedes APB Opinion No. 25, Accounting for Stock Issued
to Employees(APB No. 25), and its related implementation guidance. Under SFAS No. 123R, entities are required to recognize the cost of an equity award based on its fair value at the date of grant. The cost, which is
calculated in a similar manner to the pro forma calculation shown in Note 6, is recognized over the attribution period, which is the expected period of benefit. SFAS No. 123R is effective for fiscal periods beginning on or after June 15,
2005. SFAS No. 123R allows a company to choose among three different methods of adoption, which range from full restatement of prior period results to prospective application beginning in the period of adoption. We are currently in the
process of assessing the impact on our consolidated financial position and results of operations of alternative fair value methodologies and alternative methods of adoption. In April 2005, the Securities and Exchange Commission (SEC)
amended its Regulation S-X to amend the date of compliance with SFAS No. 123R to the first reporting period of the fiscal year beginning on or after June 15, 2005. We anticipate adopting SFAS No. 123R on January 1, 2006.



In December 2004, the FASB issued FASB Staff Position
No. FAS 109-2, Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004(FSP No. 109-2). FSP No. 109-2 provides accounting and disclosure
guidance for a special one-time dividends received deduction allowed on the repatriation of certain foreign earnings to a U.S. taxpayer, provided certain criteria are met. This guidance could become effective for us once operations begin at our
Philippines location, which is now expected to be by the beginning of the fourth quarter of 2005. In addition, various provisions under the Internal Revenue Code have created situations that result in deemed dividends. We have not
completed our evaluation of the potential benefits of these deductions under the Act. We anticipate completing our study in the fourth quarter of 2005. The law requires that we distribute the deemed dividends before any dividends are
eligible for the tax deduction. We do not expect the impact to be material to our consolidated financial position or results of operations.



4. RESTRICTED CASH



We obtained a letter of credit (Letter of Credit) in the amount of $834,000 to replace the 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. Therefore, such certificate of deposit is classified as restricted cash in the accompanying balance sheets at
September 30, 2005 and December 31, 2004.



5



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##### Table of Contents

ACCESS WORLDWIDE COMMUNICATIONS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)





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



See also Note 8 for
additional restrictions on cash.



5. COMMITMENTS AND CONTINGENCIES



Employment Agreements



In connection with certain acquisitions and in the normal course of
business, we entered into employment agreements with our management employees, which expire at various times through 2007, certain of whom are our stockholders. The employment agreements have terms up to five years and require annual base salary
payments of $1,779,000 and bonus amounts of up to $549,000 per year, excluding $20,000 accrued severance payable to a former employee.



Litigation



The Company is involved in a variety of proceedings that arise from time to time in the ordinary course of its business, including among other things,
issues related to contracts, intellectual property, product liability, employment and securities. Management believes that the only matter currently of significance is the following:



On September 10, 2004, Ivelisse Lamboy (the Plaintiff), a former employee with our AM Medica division,
filed suit against us in the Supreme Court of New York, County of Bronx for wrongful termination and breach of an employment agreement. The Plaintiff seeks $0.5 million in damages which she claims is equal to 10 years of employment. We assert these
claims are not valid and intend to vigorously defend any action related to these claims. The Company has filed for summary judgment and a stay of pretrial discovery until the court rules on the Summary Judgment. The court has granted the stay on
pretrial discovery, but the Company is presently awaiting a decision from the court regarding the summary judgment. We believe the claims asserted have no legal basis; however, we cannot provide assurance as to the outcome of the litigation.



6. STOCK-BASED COMPENSATION



We apply APB No. 25, Accounting for Stock Issued to Employees,
and related Interpretations in accounting for our stock-based compensation plans. Thus, we use the intrinsic value method to determine the compensation cost for our stock-based awards. 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 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 was
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. We recorded unearned stock compensation
for the intrinsic value of the award ($33,000) in connection with the grant. Such amount, which is shown as a reduction of stockholders equity, is being amortized as compensation expense over the related vesting period.



6



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ACCESS WORLDWIDE COMMUNICATIONS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)





Had compensation cost for awards under our stock-based compensation plans been determined using the
fair value method prescribed by SFAS No. 123, our net loss applicable to common stockholders and loss per share would have been increased to the pro forma amounts presented below:



|                                                                                                                                     |  |                                 |            |   |                                |   |          |      |  |   |            |   |  |   |          |  
|------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------- | ---------- | - | ------------------------------ | - | -------- | ---- |  | - | ---------- | - |  | - | -------- | -
|                                                                                                                                     |  | Three Months EndedSeptember 30, |            |   | Nine Months EndedSeptember 30, |  
|                                                                                                                                     |  | 2005                            |            |   | 2004                           |   |          | 2005 |  |   | 2004       |  
|Net loss applicable to common stockholders, as reported                                                                              |  | $                               | (2,756,666 | ) |                                | $ | (939,918 | )    |  | $ | (4,016,999 | ) |  | $ | (785,868 | )
|Add: Stock-based employee compensation expense included in reported net (loss) income, net of related tax effect                     |  |                                 | 1,650      |   |                                |   | 1,650    |      |  |   | 4,950      |   |  |   | 4,950    |  
|Deduct: Total stock-based employee compensation expense determined under fair value method for all awards, net of related tax
effect |  |                                 | (36,939    | ) |                                |   | (22,634  | )    |  |   | (108,741   | ) |  |   | (107,729 | )
|                                                                                                                                     |  |                                 |            |   |                                |   |          |      |  |   |            |   |  |   |          |  
|Pro forma net loss                                                                                                                   |  |                                 | (2,791,955 | ) |                                |   | (960,902 | )    |  |   | (4,120,790 | ) |  |   | (888,647 | )
|                                                                                                                                     |  |                                 |            |   |                                |   |          |      |  |   |            |   |  |   |          |  
|Loss per share:                                                                                                                      |  |                                 |            |   |                                |   |          |      |  |   |            |   |  |   |          |  
|Basic and diluted  as reported                                                                                                      |  | $                               | (0.20      | ) |                                | $ | (0.09    | )    |  | $ | (0.34      | ) |  | $ | (0.08    | )
|                                                                                                                                     |  |                                 |            |   |                                |   |          |      |  |   |            |   |  |   |          |  
|Basic and diluted  pro forma                                                                                                        |  | $                               | (0.21      | ) |                                | $ | (0.10    | )    |  | $ | (0.35      | ) |  | $ | (0.09    | )
|                                                                                                                                     |  |                                 |            |   |                                |   |          |      |  |   |            |   |  |   |          |  



These pro forma
results are not necessarily indicative of results that may be expected in future periods since additional options may be granted and the estimated fair value of the stock options is assumed to be amortized to expense over the expected option lives.



The pro forma information above was determined using the
Black-Scholes option-pricing model based on the following assumptions:



| |  |  | expected volatility rates of 109% for 2005 and 111% for 2004;
| | - |  | -------------------------------------------------------------



| |  |  | risk-free interest rates of 4.18% for 2005 and 2.80% for 2004;
| | - |  | --------------------------------------------------------------



| |  |  | expected option lives of 5 years for both years; and
| | - |  | ----------------------------------------------------



| |  |  | expected dividend yield of 0% for both years.
| | - |  | ---------------------------------------------



In accordance with EITF No. 00-23, Issues Related to the Accounting for Stock Compensation under APB Opinion No. 25, Accounting for Stock
Issued to Employees(EITF 00-23),and FASB Interpretation No. 44, Accounting for Certain Transactions involving Stock Compensation, when an employee terminates from a company but continues to provide services as a
consultant, the award is remeasured under either the fair value or intrinsic value method and accounted for prospectively. We did not record any compensation expense in the first three quarters of 2005 associated with non-employee options.



7. LOSS PER COMMON SHARE



The information required to compute net loss per basic and diluted share is
as follows:



|                                                                           |  |                                         |  |                                       
|-------------------------------------------------------------------------- |  | --------------------------------------- |  | --------------------------------------
|2005:                                                                      |  | For the Three MonthsEnded September 30, |  | For the Nine MonthsEnded September 30,
|Weighted average number of common shares outstanding  basic and dilutive* |  | 13,599,552                              |  | 11,909,830                            
|                                                                           |  |                                         |  |                                       
|                                                                           |  |                                        
|2004:                                                                      |  | For the Three MonthsEnded September 30, |  | For the Nine MonthsEnded September 30,
|Weighted average number of common shares outstanding  basic and dilutive* |  | 9,906,886                               |  | 9,828,900                             
|                                                                           |  |                                         |  |                                       

---

|* | Since the effects of the stock options, warrants, and Convertible Notes are anti-dilutive for the three and nine months ended September 30, 2005 and 2004, these effects have
not been included in the calculation of dilutive earnings per share. In addition, the effect of the 4,510,000 shares of the Companys common stock to be issued to the holders of the Convertible Notes III, as a result of their automatic
conversion upon issuance (see Note 9 below), is included for the three and nine months ended September 30, 2005.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

ACCESS WORLDWIDE COMMUNICATIONS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)





8. INDEBTEDNESS



Our borrowings consist of the following:



|                                                                                                                                                                                                                                     |  |                   |            |   |                  |   |            |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------- | ---------- | - | ---------------- | - | ---------- | -
|                                                                                                                                                                                                                                     |  | September 30,2005 |            |   | December 31,2004 |  
|Revolving Credit, Term Loan and Security Agreement (collectively the Debt Agreement)                                                                                                                                               |  | $                 | 3,313,195  |   |                  | $ | 2,830,533  |  
|6% subordinated promissory note due to former stockholder of TeleManagement Services (TMS); interest at default rate of 10% per
year. Principal and interest payments restricted per subordination agreement to the Debt Agreement |  |                   | 352,334    |   |                  |   | 352,334    |  
|Deferred Financing                                                                                                                                                                                                                   |  |                   | 71,541     |   |                  |   | 8,392      |  
|Capital leases payable in monthly installments through May 2010                                                                                                                                                                      |  |                   | 1,131,890  |   |                  |   | 251,533    |  
|                                                                                                                                                                                                                                     |  |                   |            |   |                  |   |            |  
|                                                                                                                                                                                                                                     |  |                   | 4,868,960  |   |                  |   | 3,442,792  |  
|Less: current portion                                                                                                                                                                                                                |  |                   | (4,127,170 | ) |                  |   | (3,307,784 | )
|                                                                                                                                                                                                                                     |  |                   |            |   |                  |   |            |  
|                                                                                                                                                                                                                                     |  | $                 | 741,790    |   |                  | $ | 135,008    |  
|                                                                                                                                                                                                                                     |  |                   |            |   |                  |   |            |  



We paid approximately
$567,000 of interest on our borrowings in the first three quarters of 2005. Additional information regarding our long-term debt structure can be found in our 2004 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on
March 31, 2005.



On June 10, 2005, we notified our
senior lender, Capital Source, that we were in default of our financial covenants contained in our Debt Agreement, as of April 30, 2005, due to the longer than expected lead time to replace the revenues previously generated by one of our main
telecommunications clients. On August 12, 2005, we entered into the Fourth Amendment (Fourth Amendment) to our Debt Agreement dated June 10, 2003 that modified among other things, the Minimum EBITDA and the Fixed Coverage
Ratio, as defined. The Fourth Amendment also requires the Company to raise a minimum of $967,000 of net aggregate proceeds from the sale of equity capital, which is the initial amount required to be maintained in a deposit account (Deposit
Account) with Merrill Lynch, prior to permitted scheduled withdrawals. See Note 9 regarding the closing of the private placement on August 31, 2005. The Deposit Account has been pledged as collateral under the Debt Agreement and is
subject to an Account Control Agreement between the Company, Capital Source, and Merrill Lynch with withdrawals restricted to the following, unless approved in writing by Capital Source:



|                 |  |   |        
|---------------- |  | - | -------
|October 1, 2005  |  | $ | 203,000
|November 1, 2005 |  |   | 180,000
|December 1, 2005 |  |   | 180,000
|January 1, 2006  |  |   | 191,000
|                 |  |   |        
|                 |  | $ | 754,000
|                 |  |   |        



On November 1, 2005,
we notified Capital Source that as of September 30, 2005, we were in default of our financial covenants to the Debt Agreement due to continued losses at our United States Business Services division as we continue to replace revenues from a large
client which was lost at the end of 2004. Management continues to make changes to attempt to reduce the losses at our United States Business Services division.



On November 21, 2005, the Company entered into a forbearance agreement (the Forbearance Agreement) with Capital Source. The Agreement
provides that Capital Source (a) forbear its right to accelerate collection of the full outstanding balance on the Debt Agreement, as amended, which rights arose from the Event of Default, and (b) maintain its discretionary right to continue to make
available to the Company draws as provided under the Debt Agreement, until the Forbearance Termination Date of January 31, 2006. We are in continued discussions with Capital Source regarding an amendment to the Debt Agreement which may take place
shortly after we complete our 2006 budgeting process. Under the terms of the Forbearance Agreement, we are required to submit our budget and financial projections for the period November 1, 2005 through December 31, 2006 to Capital Source by no
later than December 16, 2005. See Note 13 for further discussion regarding managements plans with respect to the Forbearance and Debt Agreements.



9. CONVERTIBLE NOTES AND WARRANTS



On August 31, 2005, the Company completed a private placement for approximately $2.255 million of Convertible Notes (Convertible Notes
III) and Warrants (Warrants) to Accredited Investors, as such term is defined in the Securities Act of 1933, as amended. The Convertible Notes III includes investment totaling $1,000,000 from certain members of the Companys
Board of Directors and executive management. The Convertible Notes III are convertible at a ratio of 2 shares of the Companys common stock for each $1.00 invested. The Convertible Notes III were automatically convertible upon the Conversion
Event,



8



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ACCESS WORLDWIDE COMMUNICATIONS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)





which is defined as that date upon which the majority of our common stockholders voted to amend the Amended and
Restated Certificate of Incorporation (Certificate of Incorporation) of the Company, to increase the authorized shares of the Companys common stock from 20 million to not less than 35 million. On August 25, 2005, by
written consent, the stockholders holding a majority of the Companys common stock approved an amendment to the Companys Certificate of Incorporation to increase the number of authorized shares of the Companys common stock from
20 million to 40 million. As a result of the Conversion Event, on the August 31, 2005 closing date of the Convertible Notes III, the notes automatically converted into 4,510,000 shares of the Companys common stock. Such shares were
not issued until November 16, 2005, therefore the $2.255 million balance for such shares are classified as Common Stock To Be Issued in the accompanying consolidated balance sheet as of September 30, 2005. The proceeds of the
Convertible Notes III were used to fund the $967,000 Deposit Account described in Note 8 above, and the remainder will be used to fund working capital and operations.



Each holder of the Convertible Notes III received Warrants to purchase 2 shares of the Companys common stock for each
$1.00 invested. The Warrants, which are exercisable into an aggregate of 4,510,000 shares of the Companys common stock, have an exercise price of $0.75 per share, a term of ten years, and are exercisable commencing upon the Vesting Date, which
is defined as the completion of both (i) the date upon which the holder of the Warrant pays the purchase price for the Notes, and (ii) the date of the Conversion Event. As the Warrants were issued to investors whose Convertible Notes III
automatically converted upon issuance to common stock, the Warrants represent a cost of capital.



At September 30, 2005 and December 31, 2004, the balance of our debt discounts associated with our two previously issued $3.25 million
Convertible Notes is approximately $1.28 million and $1.82 million, respectively. We accreted approximately $0.5 million of the debt discount as interest expense during the first three quarters of 2005. Additional information regarding our
Convertible Notes can be found in our 2004 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 31, 2005.



10. PRIVATE PLACEMENT OF COMMON STOCK



On March 4, 2005, we entered into a subscription agreement (Subscription Agreement) with certain Accredited Investors to sell 1,000,000
shares of the Companys common stock at a price of $1.00 per share, for an aggregate purchase price of approximately $1.0 million. The sale of these shares was exempt from registration under the Securities Act of 1933 as a private offering to
Accredited Investors under Section 4(2) of the Securities Act and Rule 506 of Regulation D. Of the 1,000,000 shares subscribed, 150,000 shares were purchased by a member of the Companys Board of Directors, and 42,500 shares of the
1,000,000 shares were issued to the Board member or a company affiliated with the Board member on behalf of the other participants as a broker fee. The shares were issued on June 13, 2005.



On July 10, 2005, we amended the March 4, 2005 Subscription
Agreement, so that, should the Company raise additional capital (the New Offering) by July 10, 2006, and the New Offering provides for a purchase price per share of the Companys common stock that is less than the $1.00 per
share price of the March 4, 2005 private placement, then the investors in the private placement shall be issued warrants to purchase 1,000,000 shares of the Companys common stock. The exercise price of the warrants shall be that which
provides for an average purchase price per share of Companys common stock that is similar to that of the New Offering.



As a result of the private placement of Convertible Notes III described in Note 9 above, on September 15, 2005, the Company issued warrants to
purchase 1,000,000 shares of the Companys common stock to the investors in the March 4, 2005 private placement pursuant to the Subscription Agreement. The warrants have an exercise price of $0.01 per share, a ten year term, and shall vest
on the date which the Company amends its Certificate of Incorporation pursuant to a vote of the Companys common stockholders, to increase the number of authorized shares of the Companys common stock from 20 million shares to no less
than thirty 35 million shares. As described in Note 9 above, on August 25, 2005, by written consent, the stockholders holding a majority of the Companys common stock approved an amendment to the Companys Certificate of
Incorporation to increase the number of authorized shares of the Companys common stock from 20 million to 40 million. The warrants issued on September 15, 2005 have a fair value of approximately $740,000, measured using a
Black-Scholes pricing model with the following assumptions: an expected life of 10 years, expected volatility of 108%, risk-free interest rate of 4.18%, and a 0% dividend yield. This value has been recorded as a deemed dividend related to the
warrants issued to certain stockholders who purchased their shares in the March 4, 2005 private placement, and has been classified as such in the accompanying Consolidated Statements of Operations for the three and nine months ended
September 30, 2005.



9



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ACCESS WORLDWIDE COMMUNICATIONS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)





11. INCOME TAXES



The effective tax rate used by us for the nine month periods ended September 30, 2005 and 2004 differs from the federal statutory rate primarily due
to the valuation allowance recorded in connection with the Companys deferred tax assets.



12. 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.



We currently operate as two reportable business
segments, consisting of the Pharmaceuticals Services segment and the Business Services segment. The Pharmaceutical Services segment, which consists of our medical education business, AM Medica Group (AMG), and our pharmaceutical
communication business, TMS Professional Markets Group (TMS), provides medical education, medical publishing, product detailing, physician and pharmacist profiling, patient education, disease management, pharmacy stocking, and clinical
trial recruitment to the pharmaceutical and medical industries. The Business Services segment, which consists of our multilingual communication business, TelAc Teleservices Group (TelAc), provides telemarketing services including inbound
and outbound programs to clients in the telecommunications, financial services, legal services, insurance, and consumer products industries.



The following is a summary of the significant accounts and balances by segment, reconciled to the consolidated totals, for the three and nine months ended
September 30, 2005 and 2004.



|                        |  |      |  |                |            |          |   |            |               |  |   |                |   |  |       |            |   |  |   |            |  
|----------------------- |  | ---- |  | -------------- | ---------- | -------- | - | ---------- | ------------- |  | - | -------------- | - |  | ----- | ---------- | - |  | - | ---------- | -
|                        |  |      |  | Pharmaceutical |            | Business |   |            | Segment Total |  |   | Reconciliation |   |  | Total |           
|Revenues                |  |      |  |                |            |          |   |            |               |  |   |                |   |  |       |            |   |  |   |            |  
|Three months ended      |  | 2005 |  | $              | 5,188,569  |          | $ | 3,266,644  |               |  | $ | 8,455,213      |   |  | $     |           |   |  | $ | 8,455,213  |  
|                        |  | 2004 |  |                | 4,872,551  |          |   | 4,999,311  |               |  |   | 9,871,862      |   |  |       |           |   |  |   | 9,871,862  |  
|Nine months ended       |  | 2005 |  |                | 18,220,653 |          |   | 10,120,579 |               |  |   | 28,341,232     |   |  |       |           |   |  |   | 28,341,232 |  
|                        |  | 2004 |  |                | 18,481,318 |          |   | 18,331,756 |               |  |   | 36,813,074     |   |  |       |           |   |  |   | 36,813,074 |  
|                        |  |      |  |                |            |         
|Gross profit            |  |      |  |                |            |          |   |            |               |  |   |                |   |  |       |            |   |  |   |            |  
|Three months ended      |  | 2005 |  |                | 2,304,074  |          |   | 908,862    |               |  |   | 3,212,936      |   |  |       |           |   |  |   | 3,212,936  |  
|                        |  | 2004 |  |                | 2,364,967  |          |   | 1,666,330  |               |  |   | 4,031,297      |   |  |       |           |   |  |   | 4,031,297  |  
|Nine months ended       |  | 2005 |  |                | 8,660,498  |          |   | 3,335,366  |               |  |   | 11,995,864     |   |  |       |           |   |  |   | 11,995,864 |  
|                        |  | 2004 |  |                | 8,599,432  |          |   | 6,703,246  |               |  |   | 15,302,678     |   |  |       |           |   |  |   | 15,302,678 |  
|                        |  |      |  |                |            |         
|Operating (loss) income |  |      |  |                |            |          |   |            |               |  |   |                |   |  |       |            |   |  |   |            |  
|Three months ended      |  | 2005 |  |                | 322,496    |          |   | (1,465,603 | )             |  |   | (1,143,107     | ) |  |       | (390,768   | ) |  |   | (1,533,875 | )
|                        |  | 2004 |  |                | 425,850    |          |   | (438,229   | )             |  |   | (12,379        | ) |  |       | (597,247   | ) |  |   | (609,626   | )
|Nine months ended       |  | 2005 |  |                | 2,766,712  |          |   | (2,958,918 | )             |  |   | (192,206       | ) |  |       | (1,773,230 | ) |  |   | (1,965,436 | )
|                        |  | 2004 |  |                | 2,547,577  |          |   | 149,691    |               |  |   | 2,697,268      |   |  |       | (2,476,561 | ) |  |   | 220,707    |  
|                        |  |      |  |                |            |         
|EBITDA(1)               |  |      |  |                |            |          |   |            |               |  |   |                |   |  |       |            |   |  |   |            |  
|Three months ended      |  | 2005 |  |                | 456,626    |          |   | (1,231,884 | )             |  |   | (775,258       | ) |  |       | (386,790   | ) |  |   | (1,162,048 | )
|                        |  | 2004 |  |                | 581,357    |          |   | (229,136   | )             |  |   | 352,221        |   |  |       | (565,432   | ) |  |   | (213,211   | )
|Nine months ended       |  | 2005 |  |                | 3,168,679  |          |   | (2,360,695 | )             |  |   | 807,984        |   |  |       | (1,759,982 | ) |  |   | (951,998   | )
|                        |  | 2004 |  |                | 2,930,119  |          |   | 803,991    |               |  |   | 3,734,110      |   |  |       | (2,382,300 | ) |  |   | 1,351,810  |  
|                        |  |      |  |                |            |         
|Depreciation expense    |  |      |  |                |            |          |   |            |               |  |   |                |   |  |       |            |   |  |   |            |  
|Three months ended      |  | 2005 |  |                | 134,130    |          |   | 233,719    |               |  |   | 367,849        |   |  |       | 3,978      |   |  |   | 371,827    |  
|                        |  | 2004 |  |                | 155,507    |          |   | 209,093    |               |  |   | 364,600        |   |  |       | 31,815     |   |  |   | 396,415    |  
|Nine months ended       |  | 2005 |  |                | 401,967    |          |   | 598,223    |               |  |   | 1,000,190      |   |  |       | 13,248     |   |  |   | 1,013,438  |  
|                        |  | 2004 |  |                | 382,542    |          |   | 654,300    |               |  |   | 1,036,842      |   |  |       | 94,261     |   |  |   | 1,131,103  |  

---

|(1) | EBITDA is calculated by taking (loss) income 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
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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ACCESS WORLDWIDE COMMUNICATIONS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)





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.



13. LIQUIDITY, CAPITAL RESOURCES, AND GOING CONCERN CONSIDERATIONS



On November 1, 2005, we notified Capital Source that as of September 30, 2005, we were in default of our financial covenants to the Debt Agreement due to
continued losses at our United States Business Services division as we continue to replace revenues from a large client which was lost at the end of 2004. Management continues to make changes to attempt to reduce the losses at our United States
Business Services division.



On November 21, 2005, the Company
entered into a forbearance agreement (the Forbearance Agreement) with Capital Source. The Agreement provides that Capital Source (a) forbear its right to accelerate collection of the full outstanding balance on the Debt Agreement, as
amended, which rights arose from the Event of Default, and (b) maintain its discretionary right to continue to make available to the Company draws as provided under the Debt Agreement, until the Forbearance Termination Date of January 31, 2006. We
are in continued discussions with Capital Source regarding an amendment to the Debt Agreement which may take place shortly after we complete our 2006 budgeting process. Under the terms of the Forbearance Agreement, we are required to submit our
budget and financial projections for the period November 1, 2005 through December 31, 2006 to Capital Source by no later than December 16, 2005.



We are also in discussions with certain investors, including some members of our Board of Directors, to participate in a new private placement to raise
additional working capital through the issuance of convertible debt instruments. As of November 21, 2005, we have received verbal commitments from certain of those investors to purchase approximately $1.5 million of such instruments.



Based on those commitments, we expect to meet our short term liquidity
requirements through net cash provided from operations, the release of restricted cash collateral under lease arrangements (see Note 4) the release of Convertible Notes III proceeds from the Deposit Account (see Note 8), borrowings under the Debt
Agreement, and proceeds expected to be raised through a new private placement. We believe that these sources of cash will be sufficient to meet the Companys operating and planned capital expenditures for at least the next twelve months.



The accompanying financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As a consequence, the financial statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or the amounts and classifications of liabilities that might be necessary should we be unable to continue as a going concern. There can be no assurances that we will succeed in: a) increasing revenue and
reducing losses at our US Business Services division, b) complying with the terms of the Forbearance Agreement and/or obtaining an amendment to the Debt Agreement or, c) raising additional capital through a private placement, and failure to do so
could have a material adverse effect on our financial condition and operating results and our ability to continue as a going concern.



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



Disclosure Concerning Forward-Looking Statements



In December 1995, the Private Securities Litigation Reform Act of 1995 (the Reform Act) was enacted by the United States Congress. The
Reform Act, as amended, contains certain amendments to the Securities Act of 1933 and the Securities Exchange Act of 1934. These amendments provide protection from liability in private lawsuits for forward-looking statements made by
public companies. We choose to take advantage of the safe harbor provisions of the Reform Act.



This Quarterly Report on Form 10-Q contains both historical information and other information. While we have specifically identified certain
information as being forward-looking in the context of its presentation, we caution the reader that, with the exception of information that is clearly historical, all the information contained in this Quarterly Report on Form 10-Q should be
considered to be forward-looking statements as referred to in the Reform Act. Without limitation, when we use the words believe, estimate, plan, expect, intend,
anticipate, continue, project, probably, should, will and similar expressions, we intend to clearly express that the information deals with possible future events and is
forward-looking in nature.



Forward-looking information
involves risks and uncertainties. This information is based on various factors and assumptions about future events that may or may not actually come true. As a result, our operations and financial results in the future could differ substantially
from those we have discussed in the forward-looking statements in this Quarterly Report and other documents that have been filed or furnished with the Securities and Exchange Commission. In particular, various economic and competitive factors,
including those outside our control, such as the following, could cause our actual results during the remainder of fiscal 2005 and in future years to differ materially from those expressed in any forward-looking statement made in this Quarterly
Report on Form 10-Q:



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



| |  |  | Our ability to successfully operate at capacity our newly opened communication center in the Philippines;
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | Unfavorable foreign currency exchange rates;
| | - |  | --------------------------------------------



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



| |  |  | Risks associated with our Debt Agreement, including rising interest rates and our ability to comply with financial covenants contained under our Debt Agreement;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our ability to continue as a going concern if we are unable to generate cash flow and income from continuing operations;
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | 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;
| | - |  | -------------------------------------------------------------------



| |  |  | Dependence on the industries we serve;
| | - |  | --------------------------------------



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



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



| |  |  | Reliance on key personnel and labor force and recent changes in management;
| | - |  | ---------------------------------------------------------------------------



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##### Table of Contents

| |  |  | 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;
| | - |  | -----------------------------------------------



| |  |  | The volatility of our stock price and,
| | - |  | --------------------------------------



| |  |  | Risks associated with our stock trading on the OTC Bulletin Board.
| | - |  | ------------------------------------------------------------------



In addition, under the heading Critical Accounting Policies in the Managements Discussion and Analysis of Financial Condition and
Results of Operations section of our Annual Report on Form 10-K, we describe various estimates and assumptions that we make that affect the reported amounts of assets, liabilities, sales and expenses as well as the disclosure of
contingent assets and liabilities. Future revisions to these estimates and assumptions may cause these amounts, when reported, to differ materially from those expressed in any forward-looking statement made in this Quarterly Report on
Form 10-Q. All subsequent written and oral forward-looking statements attributable to Access Worldwide Communications, Inc. and our subsidiaries are expressly qualified in their entirety by the foregoing factors.



Results of Operations



Overview



Access Worldwide Communications, Inc. (we or the Company) is an outsourced marketing services
company that provides a variety of sales, education and communication programs to clients in the medical, pharmaceutical, telecommunications, financial services, insurance and consumer products industries. We provide services through the following
two business segments:



| |  |  | Pharmaceutical Services Segment, which consists of our medical education business, AM Medica Group (AMG), and our pharmaceutical communication business, TMS
Professional Markets Group (TMS), provides medical education, medical publishing, product detailing, physician and pharmacist profiling, patient education, disease management, pharmacy stocking, and clinical trial recruitment to the
pharmaceutical and medical industries.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Business Services Segment, which consists of our multilingual communication businesses, TelAc Teleservices Group (TelAc), and Access Worldwide (AWWC) Philippines,
Inc. a Philippine corporation and wholly owned subsidiary of Access Worldwide Communications, Inc., which recently opened 350 seat communications center based in Manila, Philippines. Both of these divisions provide telemarketing services including
inbound and outbound programs to clients in the telecommunications, financial services, legal services, insurance and consumer products industries.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The health of the pharmaceutical marketing and medical education industry is driven by the well-being of pharmaceutical drug
manufacturers. These companies are continually impacted by developments in science and technology, the Food & Drug Administration (FDA), and organizational changes, most notably, substantial mergers between leading
manufacturers.



Both the industry and manufacturers are
influenced by the growing role of patients in the selection and usage of their medications. More people are walking into their doctors offices requesting a specific drug driven by information they gathered from Direct-to-Consumer
(DTC) advertising such as television commercials or magazine advertisements. DTC ads can inform sufferers and their caregivers about available or new treatments, side effects and risks. They can also serve as a reminder to take or refill
medications. As a result, the DTC industry has grown significantly and greater marketing programs directed to consumers are being developed.



As in the pharmaceutical marketing and medical education arena, the Business Services industry is large and has been impacted by government regulation and
trade association guidelines.



The size of the industry has
attracted a large number of teleservices companies, resulting in an extremely fragmented industry with hundreds of companies offering communication center management, customer service, consulting, lead generation, fulfillment or database management
services. In addition to U.S. companies, we also compete with international firms that have centers located overseas. While there are certain clients that prefer centers located in the United States that use multicultural residents to provide
multilingual teleservices, which we provide, there are other clients looking for the cost savings associated with overseas involvement. As a result of this off-shore demand, we have established a presence overseas by opening a communication center
in Manila, Philippines.



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##### Table of Contents

With the growth of the industry has come the proposal and passage of new teleservices legislation, in
particular, a national do-not-call list and the regulation of predictive dialers. The national do-not-call list enables consumers to add their telephone number to a national registry of people who have indicated they are not interested in receiving
telephone solicitations. Telemarketers are required to access the registry every quarter and may be fined $11,000 per violation. However, teleservices providers are allowed to contact consumers with whom they have an established business
relationship for up to 18 months after the consumers last purchase, delivery or payment, even if the consumers telephone number is on the national do-not-call registry.



Overall



|                          |  |                                 |     |                                |   |      |  |      |      |  |   |     
|------------------------- |  | ------------------------------- | --- | ------------------------------ | - | ---- |  | ---- | ---- |  | - | ----
|                          |  | Three Months EndedSeptember 30, |     | Nine Months EndedSeptember 30,
|(in millions)             |  | 2005                            |     | 2004                           |   | 2005 |  | 2004
|Revenue                   |  |                                 |     |                                |   |      |  |      |      |  |   |     
|Pharmaceutical Segment    |  | $                               | 5.2 |                                | $ | 4.9  |  | $    | 18.2 |  | $ | 18.5
|Business Services Segment |  |                                 | 3.2 |                                |   | 5.0  |  |      | 10.1 |  |   | 18.3
|                          |  |                                 |     |                                |   |      |  |      |      |  |   |     
|Total Revenue             |  | $                               | 8.4 |                                | $ | 9.9  |  | $    | 28.3 |  | $ | 36.8
|                          |  |                                 |     |                                |   |      |  |      |      |  |   |     
|Gross Profit              |  |                                 |     |                                |   |      |  |      |      |  |   |     
|Pharmaceutical Segment    |  | $                               | 2.3 |                                | $ | 2.3  |  | $    | 8.7  |  | $ | 8.6 
|Business Services Segment |  |                                 | 0.9 |                                |   | 1.7  |  |      | 3.3  |  |   | 6.7 
|                          |  |                                 |     |                                |   |      |  |      |      |  |   |     
|Total Gross Profit        |  | $                               | 3.2 |                                | $ | 4.0  |  | $    | 12.0 |  | $ | 15.3
|                          |  |                                 |     |                                |   |      |  |      |      |  |   |     
|SG&A                      |  |                                 |     |                                |   |      |  |      |      |  |   |     
|Pharmaceutical Segment    |  | $                               | 2.0 |                                | $ | 2.0  |  | $    | 5.9  |  | $ | 6.1 
|Business Services Segment |  |                                 | 2.4 |                                |   | 2.2  |  |      | 6.3  |  |   | 6.6 
|Other                     |  |                                 | 0.4 |                                |   | 0.5  |  |      | 1.8  |  |   | 2.4 
|                          |  |                                 |     |                                |   |      |  |      |      |  |   |     
|Total SG&A                |  | $                               | 4.8 |                                | $ | 4.7  |  | $    | 14.0 |  | $ | 15.1
|                          |  |                                 |     |                                |   |      |  |      |      |  |   |     



Three Months Ended
September 30, 2005 Compared to Three Months Ended September 30, 2004



Pharmaceutical Services



Revenues for the
Pharmaceutical Services (Pharmaceutical) Segment increased 6.1% in the three months ended September 30, 2005 compared to the three months ended September 30, 2004. The increase was primarily attributed to the increase in
non-production revenue for two significant customers in pharmaceutical communication business. This non-production revenue was generated by the increase in programs and the increase in requests from these customers for the Company to perform
additional reporting and IT analysis than was not done in the past for existing programs.



Gross profit as a percentage of revenues for the Pharmaceutical Segment for the three months ended September 30, 2005 decreased to 44.2%, compared to 46.9% for the three months ended September 30, 2004. The
decrease was primarily attributed to a change in the mix of programs performed by our medical education division which resulted in lower margins.



Selling, general and administrative expenses as a percentage of revenues for the Pharmaceutical Segment decreased to 38.5% for the three months ended
September 30, 2005, compared to 40.8% for the three months ended September 30, 2004. The decrease was primarily attributed to the increase in revenue.



Business Services



Revenues for the Business Services (Business) Segment decreased 36.0% for the three months ended September 30, 2005 compared to the three
months ended September 30, 2004. The decrease was primarily attributed to the lead time necessary for our two new business development professionals to replace the revenue lost from a prior client due to regulatory changes. We are continuing to
experience an increase in business activity from each of these individuals.



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Gross profit as a percentage of revenues for the Business Segment decreased to 28.1% for the three months
ended September 30, 2005, from 34.0% for the three months ended September 30, 2004. The decrease was primarily attributed to the significant decrease in revenue and a shift to pay for performance type projects from some of our clients.



Selling, general and administrative expenses as a percentage
of revenues for the Business Segment increased 31.0% for the three months ended September 30, 2005 compared to the three months ended September 30, 2004. The increase was primarily attributed to the fact that our Maryland communication
center ceased revenue and profit generating operations, while we continue to incur overhead expenses such as rent, utilities and depreciation of fixed assets. Management has commenced steps to bring selling, general and administrative costs in line
with the revenue decrease, including identifying ways to make more efficient use of office space and reduce office space that is not being fully utilized, and establishing a process to identify and eliminate poorly performing programs and reduce the
number of employees.



Interest Expense



Our net interest expense increased to $0.5 million for the three months
ended September 30, 2005, compared to $0.3 million for the three months ended September 30, 2004, due primarily to the accretion of the discount on Convertible Notes, along with the increase in the loan balance under the Debt Agreement and
increased prime rate of interest.



Nine Months Ended September 30,
2005 Compared to Nine Months Ended September 30, 2004



Pharmaceutical Services



Revenues for the
Pharmaceutical Services (Pharmaceutical) Segment decreased 1.6% in the nine months ended September 30, 2005, compared to the nine months ended September 30, 2004. The decrease was primarily attributed to a year to date
reduction of $0.8 million in our medical education revenues offset by an increase in revenues in our physician and pharmacist program.



Gross profit as a percentage of revenues for the Pharmaceutical Segment for the nine months ended September 30, 2005 decreased only 1.3% to 47.8%,
compared to 46.5% for the nine months ended September 30, 2004. The decrease was primarily attributed to a change in the mix of programs performed by our medical education division which resulted in lower margins.



Selling, general and administrative expenses as a percentage of revenues for
the Pharmaceutical Segment decreased to 32.4% for the nine months ended September 30, 2005, compared to 33.0% for the nine months ended September 30, 2004. The decrease was primarily attributed to the favorable settlement of our litigation
against MTI for $363,000 and a net recovery from an insurance claim for flood damages at our Florida location of $215,000.



Business Services



Revenues for the Business Services (Business) Segment decreased 44.8% in the nine months ended September 30, 2005, compared to the nine
months ended September 30, 2004. The decrease was primarily attributed to the lead time necessary for our two new business development professionals to replace the revenue lost from a prior client due to regulatory changes. We are beginning to
experience an increase in activity from each of these individuals.



Gross profit as a percentage of revenues for the Business Segment decreased to 32.7% for the nine months ended September 30, 2005, from 36.6% for the nine months ended September 30, 2004. The decrease was primarily attributed to
the significant decrease in revenue coupled with an increase in pay for performance type projects. The pay for performance type projects, compared to projects which are billed solely on a flat hourly rate, are billed at a lower hourly rate with
predetermined performance targets that are only billable once achieved. Therefore, if the performance goal is not met, the billable amount is lower.



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Selling, general and administrative expenses as a percentage of revenues for the Business Segment
increased 26.3% for the nine months ended September 30, 2005, compared to the nine months ended September 30, 2004. The increase was primarily attributed to the fact that our Maryland communication center ceased revenue and profit
generating operations, while we continue to incur overhead expenses such as rent, utilities and depreciation of fixed assets. Management has commenced steps to bring selling, general and administrative costs in line with the revenue decrease.



Interest Expense



Our net interest expense increased to $1.3 million for the nine months ended
September 30, 2005, compared to $1.0 million for the nine months ended September 30, 2004 due primarily to the accretion of the discount on Convertible Notes, along with the increase in the loan balance under the Debt Agreement.



Liquidity and Capital Resources



At September 30, 2005 and December 31, 2004, we had negative
working capital of approximately $2.2 million and $1.8 million, respectively. Cash and cash equivalents were $0.7 million at September 30, 2005, compared to $2.6 million at December 31, 2004.



Net cash used in operating activities was $3.6 million in the nine months
ended September 30, 2005, compared to net cash provided by operating activities of $4.0 million in the nine months ended September 30, 2004. The net decrease was primarily due to a decrease in accounts receivables of $2.1 million and a
decrease in grants payable of $2.0 million. These changes were primarily the result of decreased revenue and billings in our business services segment and medical education division, coupled with less grant payments to be made to recipients on
behalf of our clients.



Net cash used in investing activities
was $2.9 million in the nine months ended September 30, 2005, compared $0.7 million in the nine months ended September 30, 2004. The change was the result of significant purchases of fixed assets related to the build-out of our new
communications center in Manila, Philippines.



Net cash
provided by financing activities was $4.6 million in the nine months ended September 30, 2005, compared to net cash used in financing activities of $2.8 million in the nine months ended September 30, 2004. The change was primarily due to
increases in net borrowing under the Debt Agreement of $0.5 million and borrowing for equipment under a capital lease in the Philippines of $0.9 million, as well as an increase due to proceeds from a private placement from Accredited Investors of
$1.0 million and proceeds from the issuance of convertible notes of $2.25 million. The increased borrowing was primarily a result of the delays being experienced in reconciling completed projects and collections of accounts receivables and increased
working capital needs due to decreases in revenues.



On
July 15, 2003, we sold $2.1 million of our 5% Convertible Promissory Notes and Warrants (Convertible Notes I). The securities were offered and sold pursuant to the exemption provided by Section 4(2) of the Securities Act of
1933, as amended, (the Act) and Rule 506 of Regulation D as promulgated under the Act. The securities were sold only to Accredited Investors including Company officers and directors, as these terms are defined under Regulation D. The
Convertible Notes I have a 39 month term and bear interest at a rate of 5%. Interest is paid quarterly, provided we are in compliance with the covenants of our Debt Agreement. Holders of the convertible notes may convert all or any part of the
principal amount into shares of the Companys common stock at any time beginning one year from issuance date until all principal and accrued interest thereon is paid in full, at a conversion price equal to $1.00 per share. The warrants are
exercisable, at a purchase price of $0.01 per share of common stock, from one year after the issuance date through 10 years from the vesting date. Proceeds from the sale of these securities were used to fund working capital and operations.



On January 29, 2004, the Debt Agreement with
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 into Augusta, Maine. The Overadvance was for an 18 month period
commencing on January 28, 2004 and bore interest at 11%. Monthly payments of interest only were due until August 1, 2004, when additional monthly principal payments of $50,000 commenced. The Overadvance agreement contained 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 Overadvance was not paid in full at the maturity date or a triggering event as defined. The Overadvance was collateralized by the personal assets of
Mr. Shawkat Raslan, Chief Executive Officer of the Company. The Overadvance was repaid to CapitalSource in July of 2005.



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On November 12, 2004, we entered into the Third Amendment (the Third Amendment) to our
Debt Agreement dated June 10, 2003 that modified among other things, the minimum EBITDA, the Fixed Coverage Ratio, the Minimum Cash Velocity, as defined, and extended the term of the Debt Agreement to June 10, 2009.



On December 15, 2004, we completed a private placement of $1.15 million
of Convertible Notes and warrants (Convertible Notes II) to purchase up to 1.15 million shares of our common stock that were sold to Accredited Investors, as such term is defined in the Security Agreement. The proceeds of the
Convertible Notes II were used to fund working capital and operations. The Convertible Notes II have a 39 month term, bearing interest at a rate of 5% and are convertible after one year from the Effective Date of the Convertible Notes II to common
stock at $1.00 per share. The warrants have an exercise price of $0.01 per share, a term of ten years, and are exercisable commencing December 15, 2005. Interest on the Convertible Notes II is paid quarterly. Principal is payable on the
earliest of the 39 month term or a Change of Control (as defined); in either case, only after (i) all amounts due under our Debt Agreement have been paid or (ii) CapitalSource has consented to the payment.



In the event that any interest payment is not made within 30 days of its due
date, an interest rate of 8% will be retroactively applied to the Effective Date of the Convertible Notes I and II. In the event of a default, as defined, the following will occur: (i) a default rate of the lesser of 16% per annum or the
maximum rate of interest allowable by law will be retroactively applied to the Effective Date of the Convertible Notes I and II, (ii) additional warrants equaling 50% of the remaining outstanding principal balance of the Convertible Notes I and
II will become exercisable, and (iii) all accrued and unpaid interest will be required to be issued. We will take all reasonable efforts to file a registration statement so as to permit a public offering and sale by the holders of Convertible
Notes II under the Securities Act within 395 days from the Effective Date.



On March 4, 2005, we entered into a Subscription Agreement (Subscription Agreement) to issue to Accredited Investors, 1,000,000 shares of the Companys common stock at a price per share of $1.00,
for an aggregate purchase price of approximately $1 million. The sale of these shares was exempt from registration under the Securities Act of 1933 as a private offering to Accredited Investors under Section 4(2) of the Securities Act and Rule
506 of Regulation D. The shares were issued on June 13, 2005.



On June 10, 2005, we notified our senior lender, Capital Source, that we were in default of our financial covenants contained in our Debt Agreement, as of April 30, 2005, due to the longer than expected lead time to replace the
revenues previously generated by one of our main telecommunications clients. On August 12, 2005, we entered into the Fourth Amendment (Fourth Amendment) to our Debt Agreement date June 10, 2003 that modified among other things,
the Minimum EBITDA and the Fixed Coverage Ratio, as defined. The Fourth Amendment also requires the Company to raise a minimum of $967,000 of net aggregate proceeds from the sale of equity capital, which is the initial amount required to be
maintained in a deposit account (Deposit Account) with Merrill Lynch, prior to permitted scheduled withdrawals. See the paragraph below regarding the closing of a private placement on August 31, 2005. The account was pledged as
collateral under the Debt Agreement and is subject to an Account Control Agreement between the Company, Capital Source, and Merrill Lynch with withdrawals restricted to the following, unless approved in writing by Capital Source:



|                 |  |   |        
|---------------- |  | - | -------
|October 1, 2005  |  | $ | 203,000
|November 1, 2005 |  |   | 180,000
|December 1, 2005 |  |   | 180,000
|January 1, 2006  |  |   | 191,000
|                 |  |   |        
|                 |  | $ | 754,000
|                 |  |   |        



As reported by the
Company in its current report on Form 8-K filed with the Securities and Exchange Commission on September 1, 2005, as of August 31, 2005, we completed a private placement for $2.255 million of Convertible Notes (Convertible Notes
III) and Warrants (Warrants) to Accredited Investors, as such term is defined in the Securities Act of 1933, as amended. The Convertible Notes III are convertible at a ratio of 2 shares of the Companys common stock for each
$1.00 invested. The Convertible Notes III automatically convert upon the Conversion Event, which is defined as that date upon which the majority of our common stockholders, pursuant to Delaware law, consent to amend the Companys Amended and
Restated Certificate of Incorporation (Certificate of Incorporation), to increase the authorized shares of the Companys Common Stock from 20 million to not less than 35 million. On August 25, 2005, by written consent, the
stockholders holding a majority of the Companys common stock approved an amendment to the Companys Certificate of Incorporation to increase the number of authorized shares of the Companys common stock from 20 million to 40
million. As a result of the Conversion Event, on the August 31, 2005 closing date of the Convertible Notes III, the notes automatically converted into 4,510,000 shares of the Companys common stock. Such shares were issued on November 16,
2005. The proceeds of the Convertible Notes III were used to fund the $967,000 Deposit Account and the remainder will be used to fund working capital and operations.



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Each holder of the Convertible Notes III received a warrant to purchase 2 shares of the Companys
common stock for each $1.00 invested. The Warrants, which are exercisable into an aggregate of 4,510,000 shares of the Companys common stock have an exercise price of $0.75 per share, a term of ten years, and are exercisable commencing upon
the Vesting Date, which is defined as the completion of both (i) the date upon which the Holder of the Warrant pays the purchase price for the Notes, and (ii) the date of the Conversion Event.



On July 10, 2005, we amended the March 4, 2005 Subscription
Agreement, so that, should the Company raise additional capital (the New Offering) by July 10, 2006, and the New Offering provides for a purchase price per share of the Companys common stock that is less than the $1.00 per
share price of the March 4, 2005 private placement, then the investors in the private placement shall be issued warrants to purchase 1,000,000 shares of the Companys common stock. The exercise price of the warrants shall be that which
provides for an average purchase price per share of Companys common stock that is similar to that of the New Offering.



As a result of the private placement of Convertible Notes III, on September 15, 2005, the Company issued warrants to purchase 1,000,000 shares of the
Companys common stock to the investors in the March 4, 2005 private placement pursuant to the Subscription Agreement. The warrants have an exercise price of $0.01 per share, a ten year term, and shall vest on the date which the Company
amends its Certificate of Incorporation, pursuant to a vote of the Companys common stockholders, to increase the number of authorized shares of the Companys common stock from 20 million shares to no less than thirty 35 million
shares. As described in Note 9 of our Notes to Consolidated Financial Statements, on August 25, 2005, by written consent, the stockholders holding a majority of the Companys common stock approved an amendment to the Companys
Certificate of Incorporation to increase the number of authorized shares of the Companys common stock from 20 million to 40 million.



On November 1, 2005, we notified Capital Source that as of September 30, 2005, we were in default of our financial covenants to the Debt Agreement due to
continued losses at our United States Business Services division as we continue to replace revenues from a large client which was lost at the end of 2004. Management continues to make changes to attempt to reduce the losses at our United States
Business Services division.



On November 21, 2005, the Company
entered into a forbearance agreement (the Forbearance Agreement) with Capital Source. The Agreement provides that Capital Source (a) forbear its right to accelerate collection of the full outstanding balance on the Debt Agreement, as
amended, which rights arose from the Event of Default, and (b) maintain its discretionary right to continue to make available to the Company draws as provided under the Debt Agreement, until the Forbearance Termination Date of January 31, 2006. We
are in continued discussions with Capital Source regarding an amendment to the Debt Agreement which may take place shortly after we complete our 2006 budgeting process. Under the terms of the Forbearance Agreement, we are required to submit our
budget and financial projections for the period November 1, 2005 through December 31, 2006 to Capital Source by no later than December 16, 2005.



We are also in discussions with certain investors, including some members of our Board of Directors, to participate in a new private placement to raise
additional working capital through the issuance of convertible debt instruments. As of November 21, 2005, we have received verbal commitments from certain of those investors to purchase approximately $1.5 million of such instruments.



Based on those commitments, we expect to meet our short term liquidity
requirements through net cash provided from operations, the release of restricted cash collateral under lease arrangements (see Note 4 to our Notes to Consolidated Financial Statements) the release of Convertible Notes III proceeds from the Deposit
Account (see Note 8 to our Notes to Consolidated Financial Statements), borrowings under the Debt Agreement, and proceeds expected to be raised through a new private placement. We believe that these sources of cash will be sufficient to meet the
Companys operating and planned capital expenditures for at least the next twelve months.



The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As a consequence,
the financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classifications of liabilities that might be necessary should we be unable to continue as a going
concern. There can be no assurances that we will succeed in: a) increasing revenue and reducing losses at our US Business Services division, b) complying with the terms of the Forbearance Agreement and/or obtaining an amendment to the Debt Agreement
or, c) raising additional capital through a private placement, and failure to do so could have a material adverse effect on our financial condition and operating results and our ability to continue as a going concern.



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 commitments as of September 30, 2005:



|                              |  |                        |            |        |   |           |  |         |           |               |   |           |  |   |        
|----------------------------- |  | ---------------------- | ---------- | ------ | - | --------- |  | ------- | --------- | ------------- | - | --------- |  | - | -------
|                              |  | Payments Due by Period
|                              |  | Total                  |            | 1 year |   | 2-4 years |  | 5 years |           | After 5 years
|Long-term debt                |  | $                      | 3,666,000  |        | $ | 3,666,000 |  | $       |          |               | $ |          |  | $ |       
|Convertible debt              |  |                        | 3,250,000  |        |   |          |  |         | 3,250,000 |               |   |          |  |   |       
|Capital lease obligations     |  |                        | 1,132,000  |        |   | 390,000   |  |         | 729,000   |               |   | 13,000    |  |   |       
|Operating leases1             |  |                        | 8,719,000  |        |   | 2,269,000 |  |         | 4,947,000 |               |   | 1,001,000 |  |   | 502,000
|Purchase obligation           |  |                        | 63,000     |        |   | 63,000    |  |         |          |               |   |          |  |   |       
|                              |  |                        |            |        |   |           |  |         |           |               |   |           |  |   |        
|Total contractual obligations |  | $                      | 16,830,000 |        | $ | 6,388,000 |  | $       | 8,926,000 |               | $ | 1,014,000 |  | $ | 502,000
|                              |  |                        |            |        |   |           |  |         |           |               |   |           |  |   |        

---

|1 | Includes the minimum rental payments required under our operating lease for our Philippines
communication center. The rent amount of approximately Php $1,125,000 is to be paid monthly in Philippines pesos. We have included this amount, converted to US dollars at a rate of 0.0178.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We have no off-balance sheet arrangements. The debt and lease obligations in
the above table do not included accrued interest.



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##### Table of Contents

Transactions with Related Parties



During the first quarter of 2005, we entered into a Consulting Agreement with a member of our board of directors to provide
consulting services with regard to all matters and activities we are performing in the Philippines. The Consulting Agreement provides among other things (i) a term through February 29, 2008 with an option to renew on a month-by-month basis
thereafter, (ii) the payment of US $5,000 a month for the remainder of the term, (iii) a designated percent commission on all Qualifying Sales as defined in the Consulting Agreement throughout the remainder of the term, and (iv) a
one-time receipt of 50,000 stock options priced at fair market value.



On March 29, 2005, we entered into an operating lease agreement for our communications center in the Philippines from a realty company that is majority owned by the immediate family of a member of our board of directors. The lease has
a term of five years with the minimum rent payments of approximately $20,000 per month. Additionally, we have approximately $63,000 of cash in a Philippines bank account with a bank that is also majority owned by the immediate family of a member of
our board of directors.



As described in Note 9 of our Notes to
Consolidated Financial Statements, as of August 31, 2005, we completed a private placement for $2.255 million of Convertible Notes (Convertible Notes III) and Warrants (Warrants) to Accredited Investors, as such terms is
defined in the Securities and Exchange Act of 1933, as amended. The Convertible Notes III includes investment totaling $1,000,000 from certain members of the Companys Board of Directors and executive management.



As a result of the private placement of Convertible Notes III, on September
15, 2005, the Company issued warrants to purchase 1,000,000 shares of the Companys common stock to the investors in the March 4, 2005 private placement pursuant to the Subscription Agreement, including a warrant to purchase 192,500 shares
issued to a member of the Companys Board of Directors who participated in the March 4, 2005 private placement.



Critical Accounting Policies



The Companys significant accounting policies are disclosed in the notes of the Companys consolidated financial statements in the Annual Report
on Form 10-K for the year ended December 31, 2004. On an on-going basis, the Company evaluates its estimates and assumptions, including those related to valuation of percentage of completion revenues, allowance for doubtful accounts, allowances
on net deferred tax assets and the useful lives of long lived assets, which includes property and equipment, and accrued expenses. Since the date of the last Annual Report, there have been no material changes to the Companys significant
accounting policies.



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



In the normal course of doing business, we are exposed to market risk from changes in interest rates and are subject to interest rate risk 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 arrangements 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 for an interest rate 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 change in the prime interest rate would result in a pre-tax impact to us on earnings of approximately $0.05 million.



ITEM 4. CONTROLS AND PROCEDURES



We carried out an evaluation under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer of the effectiveness of our disclosure controls and procedures as of the
end of the period covered by this Quarterly Report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective for recording, processing and summarizing the
information we are required to disclose in the reports we file under the Securities Exchange Act of 1934, within the time periods specified in the SECs rules and forms. Our management necessarily applied its judgment in assessing the costs and
benefits of such controls and procedures, which by their nature can provide only reasonable assurance regarding managements control objectives. There has been no change in our internal control over financial reporting during our last quarter,
identified in connection with the evaluation referred to above, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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##### Table of Contents

PART IIOTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS



The Company is involved in a variety of proceedings that arise from time to time in the ordinary course of its business, including among other things, issues related to contracts, intellectual property, product liability, employment and
securities. Management believes that the only matter currently of significance is the following:



On September 10, 2004, Ivelisse Lamboy (the Plaintiff), a former employee with our AM Medica division, filed suit against us in the
Supreme Court of New York, County of Bronx for wrongful termination and breach of an employment agreement. The Plaintiff seeks $0.5 million in damages which she claims is equal to 10 years of employment. We assert these claims are not valid and
intend to vigorously defend any action related to these claims. The Company has filed for summary judgment and a stay of pretrial discovery until the court rules on the Summary Judgment. The court has granted the stay on pretrial discovery, but the
Company is presently awaiting a decision from the court regarding the summary judgment. We believe the claims asserted have no legal basis; however, we cannot provide assurance as to the outcome of the litigation.



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



On August 25, 2005, Stockholders of the Company owning a majority of the Companys outstanding common stock par value $0.01 per share (the
Common Stock), approved, by written consent, to amend the Amended and Restated Certificate of Incorporation of the Company to increase the authorized shares of Company Common Stock from 20 million to 40 million shares.



With respect to the ratification of the increase in authorized
shares of Common Stock, 6,882,155 votes were cast for this matter, which represents 56.90% of the outstanding shares of Common Stock.



ITEM 6. EXHIBITS



(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            



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##### Table of Contents

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: November 21, 2005 |  | By:                                   |  | /s/ SHAWKAT RASLAN                                                                                                
|                        |  |                                       |  | Shawkat Raslan, Chairman of the Board, President and Chief Executive Officer (principal executive
officer)        
|                        |  |                                      
|Date: November 21, 2005 |  | By:                                   |  | /s/ RICHARD A. LYEW                                                                                               
|                        |  |                                       |  | Richard A. Lyew, Executive Vice President and Chief Financial Officer (principal financial and accounting officer)



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##### Table of Contents

Exhibit Index



|               |  |                                                                  
|-------------- |  | -----------------------------------------------------------------
|Exhibit Number |  | 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            



22