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



The number of share outstanding of the registrants common stock, $.01 par value, as of August 5, 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  June 30, 2005 (unaudited) and December 31, 2004                                  |  | 1    
|                             |  |                                                                                                               
|                             |  | Consolidated Statements of Operations (unaudited)  Three and Six Months Ended June 30, 2005 and June 30, 2004 |  | 2    
|                             |  |                                                                                                               
|                             |  | Consolidated Statement of Changes in Common Stockholders Deficit (unaudited)  Six Months Ended June 30, 2005 |  | 3    
|                             |  |                                                                                                               
|                             |  | Consolidated Statements of Cash Flows (unaudited)  Six Months Ended June 30, 2005 and June 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                                                     |  | 18   
|                             |  |                                                                                                               
|Item 4.                      |  | Controls and Procedures                                                                                        |  | 18   
|                             | 
|Part II-Other Information    |  | 18                                                                                                            
|                             |  |                                                                                                               
|Item 1.                      |  | Legal Proceedings                                                                                              |  | 18   
|                             |  |                                                                                                               
|Item 4.                      |  | Submission of Matters to a Vote of Security Holders                                                            |  | 18   
|                             |  |                                                                                                               
|Item 6.                      |  | Exhibits                                                                                                       |  | 18   
|                             |  |                                                                                                               
|                             |  | Signatures                                                                                                     |  |      
|                             |  |                                                                                                               
|                             |  | Certifications                                                                                                 |  |      



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##### Table of Contents

PART IFINANCIAL INFORMATION



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



ACCESS WORLDWIDE COMMUNICATIONS, INC.



CONSOLIDATED BALANCE SHEETS



|                                                                                                                                          |  |                          |             |   |                  |   |             |  
|----------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                                                          |  | June 30, 2005(Unaudited) |             |   | December 31,2004 |  
|ASSETS                                                                                                                                    |  |                          |             |   |                  |   |             |  
|Current assets:                                                                                                                           |  |                          |             |   |                  |   |             |  
|Cash and cash equivalents                                                                                                                 |  | $                        | 2,418,041   |   |                  | $ | 2,570,546   |  
|Restricted cash                                                                                                                           |  |                          | 123,000     |   |                  |   | 122,000     |  
|Accounts receivable, net of allowance for doubtful accounts of $86,795 and $776,066, respectively                                         |  |                          | 8,937,296   |   |                  |   | 7,567,448   |  
|Unbilled receivables                                                                                                                      |  |                          | 1,569,353   |   |                  |   | 398,547     |  
|Other assets, net                                                                                                                         |  |                          | 770,492     |   |                  |   | 1,001,671   |  
|                                                                                                                                          |  |                          |             |   |                  |   |             |  
|Total current assets                                                                                                                      |  |                          | 13,818,182  |   |                  |   | 11,660,212  |  
|Property and equipment, net                                                                                                               |  |                          | 3,676,761   |   |                  |   | 3,614,322   |  
|Restricted cash                                                                                                                           |  |                          | 466,000     |   |                  |   | 589,000     |  
|Other assets, net                                                                                                                         |  |                          | 901,030     |   |                  |   | 146,177     |  
|                                                                                                                                          |  |                          |             |   |                  |   |             |  
|Total assets                                                                                                                              |  | $                        | 18,861,973  |   |                  | $ | 16,009,711  |  
|                                                                                                                                          |  |                          |             |   |                  |   |             |  
|LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK AND COMMON STOCKHOLDERS DEFICIT                                                      |  |                          |             |   |                  |   |             |  
|Current liabilities:                                                                                                                      |  |                          |             |   |                  |   |             |  
|Current portion of indebtedness                                                                                                           |  | $                        | 6,101,863   |   |                  | $ | 2,955,450   |  
|Current portion of indebtedness - related parties                                                                                         |  |                          | 352,334     |   |                  |   | 352,334     |  
|Accounts payable                                                                                                                          |  |                          | 1,518,635   |   |                  |   | 739,438     |  
|Accrued expenses                                                                                                                          |  |                          | 2,513,406   |   |                  |   | 3,022,695   |  
|Grants payable                                                                                                                            |  |                          | 80,000      |   |                  |   | 2,257,000   |  
|Accrued salaries, wages and related benefits                                                                                              |  |                          | 875,348     |   |                  |   | 1,204,301   |  
|Deferred revenue                                                                                                                          |  |                          | 4,377,485   |   |                  |   | 2,981,859   |  
|Accrued interest and other related party expenses                                                                                         |  |                          | 100,682     |   |                  |   | 12,673      |  
|                                                                                                                                          |  |                          |             |   |                  |   |             |  
|Total current liabilities                                                                                                                 |  |                          | 15,919,753  |   |                  |   | 13,525,750  |  
|Long-term portion of indebtedness                                                                                                         |  |                          | 143,494     |   |                  |   | 135,008     |  
|Other long-term liabilities                                                                                                               |  |                          | 879,975     |   |                  |   | 786,386     |  
|Convertible Notes, net                                                                                                                    |  |                          | 1,783,712   |   |                  |   | 1,427,685   |  
|Mandatorily redeemable preferred stock, $.01 par value: 2,000,000 shares authorized, 40,000 shares issued and outstanding                 |  |                          | 4,000,000   |   |                  |   | 4,000,000   |  
|                                                                                                                                          |  |                          |             |   |                  |   |             |  
|Total liabilities                                                                                                                         |  |                          | 22,726,934  |   |                  |   | 19,874,829  |  
|                                                                                                                                          |  |                          |             |   |                  |   |             |  
|Commitments and contingencies (Note 5)                                                                                                    |  |                          |             |   |                  |   |             |  
|Common stockholders deficit:                                                                                                             |  |                          |             |   |                  |   |             |  
|Common stock, $.01 par value: voting: 20,000,000 shares authorized; 12,096,219 and 10,841,719 shares issued and outstanding,
respectfully |  |                          | 120,962     |   |                  |   | 108,417     |  
|Additional paid-in capital                                                                                                                |  |                          | 67,472,916  |   |                  |   | 66,228,271  |  
|Accumulated deficit                                                                                                                       |  |                          | (71,442,339 | ) |                  |   | (70,182,006 | )
|Deferred compensation                                                                                                                     |  |                          | (16,500     | ) |                  |   | (19,800     | )
|                                                                                                                                          |  |                          |             |   |                  |   |             |  
|Total common stockholders deficit                                                                                                        |  |                          | (3,864,961  | ) |                  |   | (3,865,118  | )
|                                                                                                                                          |  |                          |             |   |                  |   |             |  
|Total liabilities, mandatorily redeemable preferred stock and common stockholders deficit                                                |  | $                        | 18,861,973  |   |                  | $ | 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 Ended June 30, |            |   | Six Months Ended June 30, |  
|                                                |  | 2005                        |            |   | 2004                      |   |            | 2005 |  |   | 2004       |  
|Revenues                                        |  | $                           | 9,535,225  |   |                           | $ | 13,960,350 |      |  | $ | 19,886,019 |   |  | $ | 26,941,212 |  
|Cost of revenues                                |  |                             | 5,593,618  |   |                           |   | 7,645,882  |      |  |   | 11,103,091 |   |  |   | 15,669,831 |  
|                                                |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Gross profit                                    |  |                             | 3,941,607  |   |                           |   | 6,314,468  |      |  |   | 8,782,928  |   |  |   | 11,271,381 |  
|Selling, general and administrative expenses    |  |                             | 4,192,145  |   |                           |   | 5,550,954  |      |  |   | 9,214,489  |   |  |   | 10,441,048 |  
|                                                |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|(Loss) income from operations                   |  |                             | (250,538   | ) |                           |   | 763,514    |      |  |   | (431,561   | ) |  |   | 830,333    |  
|Interest income                                 |  |                             | 6,609      |   |                           |   | 4,148      |      |  |   | 13,111     |   |  |   | 6,766      |  
|Interest expenserelated parties                |  |                             | (22,112    | ) |                           |   | (21,572    | )    |  |   | (45,875    | ) |  |   | (43,916    | )
|Interest expense                                |  |                             | (424,411   | ) |                           |   | (316,833   | )    |  |   | (796,008   | ) |  |   | (639,133   | )
|                                                |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Net (loss) income                               |  | $                           | (690,452   | ) |                           | $ | 429,257    |      |  | $ | (1,260,333 | ) |  | $ | 154,050    |  
|                                                |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Basic (loss) income per share of common stock   |  | $                           | (0.06      | ) |                           | $ | 0.04       |      |  | $ | (0.11      | ) |  | $ | 0.02       |  
|                                                |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Weighted average common shares outstanding      |  |                             | 11,286,219 |   |                           |   | 9,839,312  |      |  |   | 11,064,969 |   |  |   | 9,789,907  |  
|                                                |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Diluted (loss) income per share of common stock |  | $                           | (0.06      | ) |                           | $ | 0.04       |      |  | $ | (0.11      | ) |  | $ | 0.01       |  
|                                                |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Weighted average common shares outstanding      |  |                             | 11,286,219 |   |                           |   | 11,392,684 |      |  |   | 11,064,969 |   |  |   | 11,264,974 |  
|                                                |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  



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 SIX MONTHS ENDED JUNE 30, 2005



|                                          |  |              |  |                            |         |                    |   |            |                      |   |             |       |  |   |         |   |  |   |            |  
|----------------------------------------- |  | ------------ |  | -------------------------- | ------- | ------------------ | - | ---------- | -------------------- | - | ----------- | ----- |  | - | ------- | - |  | - | ---------- | -
|                                          |  | Common Stock |  | Additional Paid-in Capital |         | AccumulatedDeficit |   |            | DeferredCompensation |   |             | Total | 
|                                          |  | 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     |  |             |  |                            |        |                    |   |           |                      |   |            |       |  |   | 3,300   |   |  |   | 3,300      |  
|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  |  
|Net loss                                  |  |             |  |                            |        |                    |   |           |                      |   | (1,260,333  | )     |  |   |        |   |  |   | (1,260,333 | )
|                                          |  |              |  |                            |         |                    |   |            |                      |   |             |       |  |   |         |   |  |   |            |  
|Balance, June 30, 2005                    |  | 12,096,219   |  | $                          | 120,962 |                    | $ | 67,472,916 |                      | $ | (71,442,339 | )     |  | $ | (16,500 | ) |  | $ | (3,864,961 | )
|                                          |  |              |  |                            |         |                    |   |            |                      |   |             |       |  |   |         |   |  |   |            |  



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



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ACCESS WORLDWIDE COMMUNICATIONS, INC.



CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



FOR THE SIX MONTHS ENDED JUNE 30,



|                                                                                                   |  |      |            |   |      |   |           |  
|-------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | --------- | -
|                                                                                                   |  | 2005 |            |   | 2004 |  
|Cash flows from operating activities:                                                              |  |      |            |   |      |   |           |  
|Net (loss) income                                                                                  |  | $    | (1,260,333 | ) |      | $ | 154,050   |  
|Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: |  |      |            |   |      |   |           |  
|Depreciation                                                                                       |  |      | 641,611    |   |      |   | 734,688   |  
|Amortization of deferred financing costs                                                           |  |      | 41,504     |   |      |   | 88,638    |  
|Amortization of non-cash stock compensation                                                        |  |      | 6,800      |   |      |   | 3,300     |  
|Accretion of discount on Convertible Notes                                                         |  |      | 356,027    |   |      |   | 188,066   |  
|(Recovery) provision for doubtful accounts                                                         |  |      | (266,801   | ) |      |   | 19,643    |  
|Changes in operating assets and liabilities:                                                       |  |      |            |   |      |   |           |  
|Accounts receivable                                                                                |  |      | (1,103,045 | ) |      |   | (319,127  | )
|Unbilled receivables                                                                               |  |      | (1,170,806 | ) |      |   | 109,325   |  
|Taxes receivable                                                                                   |  |      |           |   |      |   | 629,687   |  
|Other assets                                                                                       |  |      | (537,177   | ) |      |   | (158,723  | )
|Accounts payable, grants payable and accrued expenses                                              |  |      | (1,813,504 | ) |      |   | 225,520   |  
|Accrued salaries, wages and related benefits                                                       |  |      | (110,633   | ) |      |   | 763,749   |  
|Accrued interest and related party expenses                                                        |  |      | 88,009     |   |      |   | 53,760    |  
|Deferred revenue                                                                                   |  |      | 1,395,626  |   |      |   | 868,703   |  
|                                                                                                   |  |      |            |   |      |   |           |  
|Net cash (used in) provided by operating activities                                                |  |      | (3,732,722 | ) |      |   | 3,361,279 |  
|                                                                                                   |  |      |            |   |      |   |           |  
|Cash flows from investing activities:                                                              |  |      |            |   |      |   |           |  
|Additions to property and equipment                                                                |  |      | (704,053   | ) |      |   | (761,339  | )
|Decrease in restricted cash                                                                        |  |      | 122,000    |   |      |   | 123,000   |  
|                                                                                                   |  |      |            |   |      |   |           |  
|Net cash used in investing activities                                                              |  |      | (582,053   | ) |      |   | (638,339  | )
|                                                                                                   |  |      |            |   |      |   |           |  
|Cash flows from financing activities:                                                              |  |      |            |   |      |   |           |  
|Borrowings (payments) under capital leases                                                         |  |      | 9,149      |   |      |   | (108,050  | )
|Proceeds from issuance of common stock                                                             |  |      | 1,000,000  |   |      |   | 6,687     |  
|Proceeds from exercise of common stock options                                                     |  |      | 7,370      |   |      |   |          |  
|Net borrowings under Debt Agreement                                                                |  |      | 3,063,483  |   |      |   | 2,012,773 |  
|Proceeds from insurance financing, net                                                             |  |      | 82,268     |   |      |   | 8,392     |  
|Payment of related party debt                                                                      |  |      |           |   |      |   | (31,000   | )
|                                                                                                   |  |      |            |   |      |   |           |  
|Net cash provided by financing activities                                                          |  |      | 4,162,270  |   |      |   | 1,888,802 |  
|                                                                                                   |  |      |            |   |      |   |           |  
|Net (decrease) increase in cash and cash equivalents                                               |  |      | (152,505   | ) |      |   | 4,611,742 |  
|Cash and cash equivalents, beginning of period                                                     |  |      | 2,570,546  |   |      |   | 472,722   |  
|                                                                                                   |  |      |            |   |      |   |           |  
|Cash and cash equivalents, end of period                                                           |  | $    | 2,418,041  |   |      | $ | 5,084,464 |  
|                                                                                                   |  |      |            |   |      |   |           |  



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



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ACCESS WORLDWIDE COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



1. BASIS OF PRESENTATION



We 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 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 May 2005, FASB issued Statement No. 154, Accounting Changes and Error
Corrections(SFAS 154). SFAS 154 replaces APB No. 20, Accounting Changes, and SFAS 3, Reporting Accounting Changes in Interim Financial Statements, and establishes retrospective application as the required method for
reporting a change in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. SFAS 154 applies to all voluntary changes in accounting principles and to changes required
by an accounting pronouncement in the instance that the pronouncement does not include specific transition provisions. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. We
do not anticipate that the adoption of SFAS 154 will have a material impact on our consolidated financial position or results of operations.



In March 2005, the FASB issued Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations (FIN 47). This
Interpretation clarifies that conditional asset retirement obligations meet the definition of a liability and should be recognized when incurred if the fair value can be reasonably estimated. FIN 47 also provides guidance as to when an entity would
have sufficient information to reasonably estimate the fair value of an asset retirement obligation. FIN 47 is effective for fiscal years ending after December 15, 2005. We do not expect the adoption of FIN 47 to have a material impact on our
consolidated financial position or results of operations.



In December 2004, the FASB issued Statement No. 153, Exchange of Non-monetary Assets an Amendment of APB Opinion No. 29(SFAS No. 153). This Statement amends APB Opinion No. 29, Accounting for Non-monetary
Transactions,to eliminate the exception for non-monetary exchanges of similar productive assets and replaces it with a general exception for exchanges of non-monetary assets that do not have commercial substance. Under this Statement, a
non-monetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. SFAS No. 153 will become effective for non-monetary asset exchanges occurring in fiscal periods
beginning after June 15, 2005. We do not expect the adoption of SFAS No. 153 to have a material impact on our consolidated financial position or results of operations.



In December 2004, the 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



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ACCESS WORLDWIDE COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)



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 (the Jobs 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 end of the third quarter or 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 Jobs Act. We anticipate completing our study in the third 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 June 30, 2005 and December 31, 2004.



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



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 $47,000 accrued severance payable to a former employee.



Litigation



We and our subsidiaries are parties to legal proceedings that we believe to be either ordinary, routine litigation incidental to the business of present
and former operations or immaterial to our consolidated financial condition, results of operations or cash flows.



6



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##### Table of Contents

ACCESS WORLDWIDE COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)



Certain of our subsidiaries are defendants or plaintiffs
in lawsuits that have arisen in the normal course of business. While certain of these matters involve substantial amounts, it is managements opinion, based on the advice of counsel, that the ultimate resolution of such litigation will not have
a material adverse effect on our financial condition, results of operations or cash flows, with the exception of 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 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.



Settled Litigation



On July 18, 2003, we filed suit against MTI Information Technologies, LLC (MTI) in Broward County, Florida. The lawsuit was seeking
enforcement of a pharmaceutical telemarketing service contract (the Contract) with MTI for services rendered. Services were terminated after payments due from MTI became severely delinquent. The lawsuit alleged that MTI breached its
Contract with the Company by not paying for services rendered. The lawsuit was seeking payment for work performed of approximately $0.6 million. On July 21, 2003, MTI filed a counter suit against us in Bucks County, Pennsylvania for breach of
contract and tortuous interference for our failure to complete telemarketing campaigns. The two cases were subsequently combined in the Circuit Court of the 17thJudicial Circuit in Broward County, FL 03-12385. In May of 2005 the case settled out of court. The Company received the courts final order of dismissal May 21, 2005, and as of that date the case
was officially closed, resulting in a recovery of approximately $363,000 to the Company.



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.



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
earnings and earnings per share would have been reduced to the pro forma amounts presented below:



|                                                                                                                                     |  |                            |          |   |                           |   |         |      |  |   |            |   |  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------ |  | -------------------------- | -------- | - | ------------------------- | - | ------- | ---- |  | - | ---------- | - |  | - | ------- | -
|                                                                                                                                     |  | Three Months EndedJune 30, |          |   | Six Months Ended June 30, |  
|                                                                                                                                     |  | 2005                       |          |   | 2004                      |   |         | 2005 |  |   | 2004       |  
|Net (loss) income, as reported                                                                                                       |  | $                          | (690,452 | ) |                           | $ | 429,257 |      |  | $ | (1,260,333 | ) |  | $ | 154,050 |  
|Add: Stock-based employee compensation expense included in reported net (loss) income, net of related tax effect                     |  |                            | 1,650    |   |                           |   | 1,650   |      |  |   | 3,300      |   |  |   | 3,300   |  
|Deduct: Total stock-based employee compensation expense determined under fair value method for all awards, net of related tax
effect |  |                            | (38,243  | ) |                           |   | (43,687 | )    |  |   | (71,803    | ) |  |   | (85,095 | )
|                                                                                                                                     |  |                            |          |   |                           |   |         |      |  |   |            |   |  |   |         |  
|Pro forma net (loss) income                                                                                                          |  |                            | (727,045 | ) |                           |   | 387,220 |      |  |   | (1,328,836 | ) |  |   | 72,255  |  
|                                                                                                                                     |  |                            |          |   |                           |   |         |      |  |   |            |   |  |   |         |  
|(Loss) earnings per share:                                                                                                           |  |                            |          |   |                           |   |         |      |  |   |            |   |  |   |         |  
|Basic  as reported                                                                                                                  |  | $                          | (0.06    | ) |                           | $ | 0.04    |      |  | $ | (0.11      | ) |  | $ | 0.02    |  
|                                                                                                                                     |  |                            |          |   |                           |   |         |      |  |   |            |   |  |   |         |  
|Basic  pro forma                                                                                                                    |  | $                          | (0.06    | ) |                           | $ | 0.04    |      |  | $ | (0.12      | ) |  | $ | 0.01    |  
|                                                                                                                                     |  |                            |          |   |                           |   |         |      |  |   |            |   |  |   |         |  
|Diluted  as reported                                                                                                                |  | $                          | (0.06    | ) |                           | $ | 0.04    |      |  | $ | (0.11      | ) |  | $ | 0.01    |  
|                                                                                                                                     |  |                            |          |   |                           |   |         |      |  |   |            |   |  |   |         |  
|Diluted  pro forma                                                                                                                  |  | $                          | (0.06    | ) |                           | $ | 0.03    |      |  | $ | (0.12      | ) |  | $ | 0.01    |  
|                                                                                                                                     |  |                            |          |   |                           |   |         |      |  |   |            |   |  |   |         |  



7



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##### Table of Contents

ACCESS WORLDWIDE COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)



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 or second quarter of 2005 associated with non-employee options.



7. LOSS PER COMMON SHARE



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



|                                                                                       |  |                                    |  |                                 
|-------------------------------------------------------------------------------------- |  | ---------------------------------- |  | --------------------------------
|2005:                                                                                  |  | For the Three MonthsEnded June 30, |  | For the Six MonthsEnded June 30,
|Weighted average number of common shares outstanding  basic                           |  | 11,286,219                         |  | 11,064,969                      
|                                                                                       |  |                                    |  |                                 
|Weighted average number of common and common equivalent shares outstanding  dilutive* |  | 11,286,219                         |  | 11,064,969                      
|                                                                                       |  |                                    |  |                                 
|                                                                                       |  |                                   
|2004:                                                                                  |  | For the Three MonthsEnded June 30, |  | For the Six MonthsEnded June 30,
|Weighted average number of common shares outstanding  basic                           |  | 9,839,312                          |  | 9,789,907                       
|                                                                                       |  |                                    |  |                                 
|Potential shares exercisable under stock option plans                                  |  | 514,662                            |  | 437,276                         
|                                                                                       |  |                                    |  |                                 
|Potential shares upon exercise of Warrants                                             |  | 1,038,710                          |  | 1,037,791                       
|                                                                                       |  |                                    |  |                                 
|Weighted average number of common and common equivalent shares outstanding  dilutive* |  | 11,392,684                         |  | 11,264,974                      
|                                                                                       |  |                                    |  |                                 

---

|* | Since the effects of the stock options, warrants, and Convertible Notes are anti-dilutive for the three and six months ended June 30, 2005, and the effects of Convertible Notes are
anti-dilutive for the three and six months ended June 30, 2004, these effects have not been included in the calculation of dilutive earnings per share.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



8



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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:



|                                                                                                                                                                                                                                     |  |               |            |   |                  |   |            |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------- | ---------- | - | ---------------- | - | ---------- | -
|                                                                                                                                                                                                                                     |  | June 30, 2005 |            |   | December 31,2004 |  
|Revolving Credit, Term Loan and Security Agreement (collectively the Debt Agreement)                                                                                                                                               |  | $             | 5,894,016  |   |                  | $ | 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                                                                                                                                                                                                                   |  |               | 90,660     |   |                  |   | 8,392      |  
|Capital leases payable in monthly installments through May 2010                                                                                                                                                                      |  |               | 260,681    |   |                  |   | 251,533    |  
|                                                                                                                                                                                                                                     |  |               |            |   |                  |   |            |  
|                                                                                                                                                                                                                                     |  |               | 6,597,691  |   |                  |   | 3,442,792  |  
|Less: current portion                                                                                                                                                                                                                |  |               | (6,454,197 | ) |                  |   | (3,307,784 | )
|                                                                                                                                                                                                                                     |  |               |            |   |                  |   |            |  
|                                                                                                                                                                                                                                     |  | $             | 143,494    |   |                  | $ | 135,008    |  
|                                                                                                                                                                                                                                     |  |               |            |   |                  |   |            |  



We paid approximately
$312,000 of interest on our borrowings in the first half of 2005. Additional information regarding our long-term debt structure can be found in our 2004 Annual Report on Form 10-K, filed 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 required to be maintained in a deposit account with Merrill Lynch. See Note 13 regarding the status of the private placement. The account will be
pledged as collateral under the Debt Agreement and will be 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:



|                  |  |   |        
|----------------- |  | - | -------
|September 1, 2005 |  | $ | 213,000
|October 1, 2005   |  |   | 203,000
|November 1, 2005  |  |   | 180,000
|December 1, 2005  |  |   | 180,000
|January 1, 2005   |  |   | 191,000
|                  |  |   |        
|                  |  | $ | 967,000
|                  |  |   |        



As of June 30, 2005,
as a result of the Fourth Amendment, we were in compliance with our financial covenants contained in our Debt Agreement.



9. CONVERTIBLE NOTES



At June 30, 2005 and December 31, 2004, the balance of our debt discounts associated with our $3.25 million Convertible Notes is approximately $1.47
million and $1.82 million, respectively. We accreted approximately $356,000 of the debt discount as interest expense during the first half of 2005. Additional information regarding our Convertible Notes can be found in our 2004 Annual Report on Form
10-K, filed on March 31, 2005.



10. PRIVATE PLACEMENT OF COMMON STOCK



On March 4, 2005, we sold subscriptions to accredited
investors to purchase 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 $1.0 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.



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##### Table of Contents

ACCESS WORLDWIDE COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)



11. INCOME TAXES



The effective tax rate used by us for the six month periods ended June 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, Access Medica Group (AMG), formerly AM Medica Communications Group (AM Medica), 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 six months ended
June 30, 2005 and 2004.



|                        |  |      |  |                |            |          |   |            |               |  |                |            |  |       |            |   |  |   |            |  
|----------------------- |  | ---- |  | -------------- | ---------- | -------- | - | ---------- | ------------- |  | -------------- | ---------- |  | ----- | ---------- | - |  | - | ---------- | -
|                        |  |      |  | Pharmaceutical |            | Business |   |            | Segment Total |  | Reconciliation |            |  | Total |           
|Revenues                |  |      |  |                |            |          |   |            |               |  |                |            |  |       |            |   |  |   |            |  
|Three months ended      |  | 2005 |  | $              | 6,247,995  |          | $ | 3,287,230  |               |  | $              | 9,535,225  |  | $     |           |   |  | $ | 9,535,225  |  
|                        |  | 2004 |  |                | 7,390,480  |          |   | 6,569,870  |               |  |                | 13,960,350 |  |       |           |   |  |   | 13,960,350 |  
|Six months ended        |  | 2005 |  |                | 13,032,084 |          |   | 6,853,935  |               |  |                | 19,886,019 |  |       |           |   |  |   | 19,886,019 |  
|                        |  | 2004 |  |                | 13,608,767 |          |   | 13,332,445 |               |  |                | 26,941,212 |  |       |           |   |  |   | 26,941,212 |  
|Gross profit            |  |      |  |                |            |          |   |            |               |  |                |            |  |       |            |   |  |   |            |  
|Three months ended      |  | 2005 |  |                | 2,887,613  |          |   | 1,053,994  |               |  |                | 3,941,607  |  |       |           |   |  |   | 3,941,607  |  
|                        |  | 2004 |  |                | 3,697,884  |          |   | 2,616,584  |               |  |                | 6,314,468  |  |       |           |   |  |   | 6,314,468  |  
|Six months ended        |  | 2005 |  |                | 6,356,424  |          |   | 2,426,504  |               |  |                | 8,782,928  |  |       |           |   |  |   | 8,782,928  |  
|                        |  | 2004 |  |                | 6,234,465  |          |   | 5,036,916  |               |  |                | 11,271,381 |  |       |           |   |  |   | 11,271,381 |  
|Operating (loss) income |  |      |  |                |            |          |   |            |               |  |                |            |  |       |            |   |  |   |            |  
|Three months ended      |  | 2005 |  |                | 1,821,826  |          |   | (591,647   | )             |  |                | 1,230,179  |  |       | (1,480,717 | ) |  |   | (250,538   | )
|                        |  | 2004 |  |                | 1,402,755  |          |   | 465,248    |               |  |                | 1,868,003  |  |       | (1,104,489 | ) |  |   | 763,514    |  
|Six months ended        |  | 2005 |  |                | 2,444,216  |          |   | (1,493,315 | )             |  |                | 950,901    |  |       | (1,382,462 | ) |  |   | (431,561   | )
|                        |  | 2004 |  |                | 2,121,727  |          |   | 587,920    |               |  |                | 2,709,647  |  |       | (1,879,314 | ) |  |   | 830,333    |  
|EBITDA(1)               |  |      |  |                |            |          |   |            |               |  |                |            |  |       |            |   |  |   |            |  
|Three months ended      |  | 2005 |  |                | 1,948,760  |          |   | (405,041   | )             |  |                | 1,543,719  |  |       | (1,475,629 | ) |  |   | 68,090     |  
|                        |  | 2004 |  |                | 1,525,114  |          |   | 688,285    |               |  |                | 2,213,399  |  |       | (1,073,185 | ) |  |   | 1,140,214  |  
|Six months ended        |  | 2005 |  |                | 2,712,053  |          |   | (1,128,811 | )             |  |                | 1,583,242  |  |       | (1,373,192 | ) |  |   | 210,050    |  
|                        |  | 2004 |  |                | 2,348,762  |          |   | 1,033,127  |               |  |                | 3,381,889  |  |       | (1,816,868 | ) |  |   | 1,565,021  |  
|Depreciation expense    |  |      |  |                |            |          |   |            |               |  |                |            |  |       |            |   |  |   |            |  
|Three months ended      |  | 2005 |  |                | 126,934    |          |   | 186,606    |               |  |                | 313,540    |  |       | 5,088      |   |  |   | 318,628    |  
|                        |  | 2004 |  |                | 122,359    |          |   | 223,037    |               |  |                | 345,396    |  |       | 31,304     |   |  |   | 376,700    |  
|Six months ended        |  | 2005 |  |                | 267,837    |          |   | 364,504    |               |  |                | 632,341    |  |       | 9,270      |   |  |   | 641,611    |  
|                        |  | 2004 |  |                | 227,035    |          |   | 445,207    |               |  |                | 672,242    |  |       | 62,446     |   |  |   | 734,688    |  



10



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##### Table of Contents

ACCESS WORLDWIDE COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)



---

|(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 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. SUBSEQUENT EVENT



As of August 12, 2005 we have received approximately $2.25 million in cash for, and are in the process of closing, a private placement for approximately
$2.25 million of Convertible Notes (the Notes) and Warrants (Convertible Notes III) to Accredited Investors; as such term is defined in the Securities and Exchange Act of 1933, as amended. The Notes will be convertible at a
ratio of 2 shares of common stock for $1.00 invested. The Notes will automatically convert upon the Conversion Event, which is defined as that date upon which the majority of our stockholders, pursuant to Delaware General Corporations Law, vote to
amend the Amended and Restated 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. Should the Conversion Event not occur, the purchase price
of the Convertible Notes III, and a 20% non-conversion fee, will be due and payable by the Company on the earlier of thirty six (36) months from the issuance date, or a Change of Control (as defined), upon written consent of the Companys
Senior Lender, CapitalSource. In the event of non payment upon the Maturity Date, the purchase price and 20% non-conversion fee will immediately bear interest at a rate of 15% annually, payable quarterly in arrears, provided that the Company is in
compliance with its loan covenants under its Debt Agreement with CapitalSource, and that such payments will not cause the Company to violate such covenants. The proceeds of the private placement will be used to fund working capital and operations.



Each note holder will receive a warrant to purchase 2 shares
of the Companys common stock for each $1.00 invested in the Convertible Notes III. The warrants will have an exercise price of $0.75 per share, a term of ten years, and will be 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.





11



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##### Table of Contents

|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;
| | - |  | --------------------------------------------------------------------------



| |  |  | 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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| |  |  | 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, Access 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 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.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In March of 2005, we entered into a lease agreement for space to establish a 350 seat communications center based in Manila,
Philippines, which will provide us with an off-shore presence. This location is a part of our Business Services segment and became operational during the second quarter of 2005. We are expected to begin generating revenues out of this communications
center toward the end of the third quarter or beginning of the fourth quarter of 2005.



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 also being 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



13



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##### Table of Contents

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 during the second quarter of 2005.



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



The following is a tabular presentation of our revenue, gross profit and SG&A by operating segment for the three and six months ended June 30, 2005 and 2004.



|                          |  |                            |     |                           |   |      |  |      |      |  |   |     
|------------------------- |  | -------------------------- | --- | ------------------------- | - | ---- |  | ---- | ---- |  | - | ----
|(in millions)             |  | Three Months EndedJune 30, |     | Six Months Ended June 30,
|                          |  | 2005                       |     | 2004                      |   | 2005 |  | 2004
|Revenue                   |  |                            |     |                           |   |      |  |      |      |  |   |     
|Pharmaceutical Segment    |  | $                          | 6.2 |                           | $ | 7.4  |  | $    | 13.0 |  | $ | 13.6
|Business Services Segment |  |                            | 3.3 |                           |   | 6.6  |  |      | 6.9  |  |   | 13.3
|                          |  |                            |     |                           |   |      |  |      |      |  |   |     
|Total Revenue             |  | $                          | 9.5 |                           | $ | 14.0 |  | $    | 19.9 |  | $ | 26.9
|                          |  |                            |     |                           |   |      |  |      |      |  |   |     
|Gross Profit              |  |                            |     |                           |   |      |  |      |      |  |   |     
|Pharmaceutical Segment    |  | $                          | 2.9 |                           | $ | 3.7  |  | $    | 6.4  |  | $ | 6.2 
|Business Services Segment |  |                            | 1.0 |                           |   | 2.6  |  |      | 2.4  |  |   | 5.1 
|                          |  |                            |     |                           |   |      |  |      |      |  |   |     
|Total Gross Profit        |  | $                          | 3.9 |                           | $ | 6.3  |  | $    | 8.8  |  | $ | 11.3
|                          |  |                            |     |                           |   |      |  |      |      |  |   |     
|SG&A                      |  |                            |     |                           |   |      |  |      |      |  |   |     
|Pharmaceutical Segment    |  | $                          | 1.6 |                           | $ | 2.3  |  | $    | 3.9  |  | $ | 4.1 
|Business Services Segment |  |                            | 2.0 |                           |   | 2.2  |  |      | 3.9  |  |   | 4.4 
|Other                     |  |                            | 0.6 |                           |   | 1.1  |  |      | 1.4  |  |   | 1.9 
|                          |  |                            |     |                           |   |      |  |      |      |  |   |     
|Total SG&A                |  | $                          | 4.2 |                           | $ | 5.6  |  | $    | 9.2  |  | $ | 10.4
|                          |  |                            |     |                           |   |      |  |      |      |  |   |     



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



Pharmaceutical
Services



Revenues for the Pharmaceutical Services
(Pharmaceutical) Segment decreased 16.2% in the three months ended June 30, 2005 compared to the three months ended June 30, 2004. The decrease was primarily attributed to the launch of a major DTC program for one of our clients in 2004
with no similar launch in 2005.



Gross profit as a
percentage of revenues for the Pharmaceutical Segment for the three months ended June 30, 2005 decreased to 46.8%, compared to 50.0% for the three months ended June 30, 2004. The decrease was primarily attributed to a change in the mix of programs
performed by our medical education division.



Selling,
general and administrative expenses as a percentage of revenues for the Pharmaceutical Segment decreased to 25.8% for the three months ended June 30, 2005, compared to 31.1% for the three months ended June 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 50% for the three months ended June 30, 2005 compared to the three months
ended June 30, 2004. The decrease was primarily attributed to the lengthy 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 new business development activity from each of these individuals.



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##### Table of Contents

Gross profit as a percentage of revenues for the Business Segment decreased to 30.3% for the three months
ended June 30, 2005, from 39.4% for the three months ended June 30, 2004. The decrease was primarily attributed to the significant decrease in revenue.



Selling, general and administrative expenses as a percentage of revenues for the Business Segment increased 27.3% for the three months ended June 30, 2005
compared to the three months ended June 30, 2004. The increase was primarily attributed to our Maryland communication center ceasing revenue and profit generating operations, while we continue to incur overhead expenses such as rent, utilities and
depreciation of fixed assets. Management continues their effort to closely manage costs without severely impacting business needs and operating efficiencies.



Interest Expense



Our net interest expense increased slightly to $0.4 million for the three months ended June 30, 2005, compared to $0.3 million for the three months ended
June 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.



Six Months Ended June 30, 2005 Compared to Six Months Ended June 30, 2004



Pharmaceutical Services



Revenues for the Pharmaceutical Segment decreased 4.4% in the six months ended June 30, 2005, compared to the six months ended June 30, 2004. The decrease
was primarily attributed to a reduction of $0.6 million in our medical education revenues.



Gross profit as a percentage of revenues for the Pharmaceutical Segment for the six months ended June 30, 2005 increased to 49.2%, compared to 45.6% for
the six months ended June 30, 2004. The increase was primarily attributed to an increase in productivity on our pharmacy and physician programs offset by a change in the mix of programs performed by our medical education division.



Selling, general and administrative expenses as a percentage of revenues
for the Pharmaceutical Segment did not change significantly for the six months ended June 30, 2005, compared to the six months ended June 30, 2004.



Business Services



Revenues for the Business Segment decreased 48.1% in the six months ended June 30, 2005, compared to the six months ended June 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 new business development
activity from each of these individuals.



Gross profit as a
percentage of revenues for the Business Segment decreased to 34.8% for the six months ended June 30, 2005, from 38.3% for the six months ended June 30, 2004. The decrease was primarily attributed to the significant decrease in revenue.



Selling, general and administrative expenses as a percentage of revenues
for the Business Segment increased 23.4% for the six months ended June 30, 2005, compared to the six months ended June 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 continues their effort to closely manage costs without severely impacting business needs and operating
efficiencies.



Interest Expense



Our net interest expense increased slightly to $0.8 million for the six
months ended June 30, 2005, compared to $0.7 million for the six months ended June 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.



15



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##### Table of Contents

Liquidity and Capital Resources



At June 30, 2005 and December 31, 2004, we had a working capital deficit of approximately $2.1 million and $1.8 million,
respectively. Cash and cash equivalents were $2.4 million at June 30, 2005, compared to $2.6 million at December 31, 2004.



Net cash used in operating activities during the first half of 2005 was $3.7 million, compared to net cash provided by operating activities during the
first half of 2004 of $3.4 million. The net decrease was primarily due to an increase in unbilled receivables of $1.3 million and a decrease in grants payable of $2.2 million. These changes were primarily the result of delays in reconciling
completed projects and in collection of accounts receivable from our clients, coupled with less grant payments to be made to recipients on behalf of our clients.



Net cash used in investing activities did not change significantly during the first half of 2005 compared to the first half
of 2004.



Net cash provided by financing activities was $4.2
million for the first half of 2005, compared $1.9 million for the first half of 2004. The change was primarily due to an increase in net borrowing under the Debt Agreement of $3.1 million, as well as an increase due to proceeds from a private
placement of $1.0 million. The increased borrowing was primarily a result of the delays being experienced in reconciling completed projects, 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, as defined under Regulation D, including Company officers and directors. 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 is for an 18 month period commencing on January 28, 2004 and bears 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 contains an Overadvance Participation Fee of the greater of $150,000 or 1.5% of the product of 5 times consolidated annualized earnings
before interest, taxes, depreciation and amortization (EBITDA) if paid at maturity or the occurrence of a triggering event as defined, or the greater of $300,000 or 3% of the product of 5 times consolidated annualized EBITDA, if Overadvance is not
paid in full at the maturity date or a triggering event as defined. The Overadvance is collateralized by the personal assets of Mr. Shawkat Raslan, Chief Executive Officer of the Company.



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, provided we are in compliance with the covenants
of our Debt Agreement. 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.



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##### Table of Contents

On March 4, 2005, we sold subscriptions to issue to accredited investors 1,000,000 shares of Access
Worldwide Communications, Inc. 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 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 client. On August 12, 2005, we entered into the Fourth Amendment (Fourth Amendment) to our Debt Agreement. The
Fourth Amendment modified the financial covenants, 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 required to be maintained in a deposit
account with Merrill Lynch. The account will be pledged as collateral under the Debt Agreement and will be 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:



|                  |  |   |        
|----------------- |  | - | -------
|September 1, 2005 |  | $ | 213,000
|October 1, 2005   |  |   | 203,000
|November 1, 2005  |  |   | 180,000
|December 1, 2005  |  |   | 180,000
|January 1, 2005   |  |   | 191,000
|                  |  |   |        
|                  |  | $ | 967,000
|                  |  |   |        



As of August 12, 2005
we have received approximately $2.25 million in cash for, and are in the process of closing, a private placement for approximately $2.25 million of Convertible Notes (the Notes) and Warrants (Convertible Notes III) to
Accredited Investors; as such term is defined in the Securities and Exchange Act of 1933, as amended. The Notes will be convertible at a ratio of 2 shares of common stock for $1.00 invested. The Notes will automatically convert upon the Conversion
Event, which is defined as that date upon which the majority of our stockholders, pursuant to Delaware General Corporations Law, vote to amend the Amended and Restated 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. Should the Conversion Event not occur, the purchase price of the Convertible Notes III, and a 20% non-conversion fee, will be due and payable by the Company on the earlier
of thirty six (36) months from the issuance date, or a Change of Control (as defined), upon written consent of the Companys Senior Lender, CapitalSource. In the event of non payment upon the Maturity Date, the purchase price and 20%
non-conversion fee will immediately bear interest at a rate of 15% annually, payable quarterly in arrears, provided that the Company is in compliance with its loan covenants under its Debt Agreement with CapitalSource, and that such payments will
not cause the Company to violate such covenants. The proceeds of the private placement will be used to fund working capital and operations.



Each note holder will receive a warrant to purchase 2 shares of the Companys common stock for each $1.00 invested in the Convertible Notes III. The
warrants will have an exercise price of $0.75 per share, a term of ten years, and will be 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 of June 30, 2005, as a result of the Fourth Amendment, we were in compliance with all of our debt covenants under the Debt Agreement. We expect to meet our short-term liquidity requirements through net cash provided by operations, the
release of restricted cash as collateral under lease arrangement (see Note 3in our Notes to the Consolidated Financial Statements), borrowings under the Debt Agreement, Convertible Notes I and II and funds raised through the Convertible
Notes III private placement. We believe that these sources of cash will be sufficient to meet the Companys operating needs and planned capital expenditures for at least the next twelve months.



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 June 30, 2005:



|                              |  |                        |            |        |   |           |  |         |           |               |   |           |  |   |        
|----------------------------- |  | ---------------------- | ---------- | ------ | - | --------- |  | ------- | --------- | ------------- | - | --------- |  | - | -------
|                              |  | Payments Due by Period
|                              |  | Total                  |            | 1 year |   | 2-4 years |  | 5 years |           | After 5 years
|Long-term debt                |  | $                      | 6,246,000  |        | $ | 6,246,000 |  | $       |          |               | $ |          |  | $ |       
|Convertible debt              |  |                        | 3,250,000  |        |   |          |  |         | 3,250,000 |               |   |          |  |   |       
|Capital lease obligations1    |  |                        | 1,221,000  |        |   | 264,000   |  |         | 939,000   |               |   | 18,000    |  |   |       
|Operating leases2             |  |                        | 9,315,000  |        |   | 2,284,000 |  |         | 5,301,000 |               |   | 1,013,000 |  |   | 717,000
|Purchase obligation           |  |                        | 308,000    |        |   | 308,000   |  |         |          |               |   |          |  |   |       
|                              |  |                        |            |        |   |           |  |         |           |               |   |           |  |   |        
|Total contractual obligations |  | $                      | 20,340,000 |        | $ | 9,102,000 |  | $       | 9,490,000 |               | $ | 1,031,000 |  | $ | 717,000
|                              |  |                        |            |        |   |           |  |         |           |               |   |           |  |   |        

---

|1 | Includes capital lease obligation payments of approximately $37,000 per month through May 2008 under the capital equipment lease entered into on May 27, 2005, as
disclosed in Form 8-K filed on June 2, 2005, for which a liability will not be recorded until equipment installation is complete, which is expected to occur during the third or fourth quarter of 2005.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2 | 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.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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 minimum rent payments of approximately $20,000 per month. Additionally, we have approximately $41,000 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.



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.



PART IIOTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS



We
and our subsidiaries are parties to legal proceedings that we believe to be either ordinary, routine litigation incidental to the business of present and former operations or immaterial to our consolidated financial condition, results of operations
or cash flows.



Certain of our subsidiaries are defendants or plaintiffs in
lawsuits that have arisen in the normal course of business. While certain of these matters involve substantial amounts, it is managements opinion, based on the advice of counsel, that the ultimate resolution of such litigation will not have a
material adverse effect on our financial condition, results of operations or cash flows, with the exception of 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 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.

Settled Litigation



On July 18, 2003,
we filed suit against MTI Information Technologies, LLC (MTI) in Broward County, Florida. The lawsuit was seeking enforcement of a pharmaceutical telemarketing service contract (the Contract) with MTI for services rendered.
Services were terminated after payments due from MTI became severely delinquent. The lawsuit alleged that MTI breached its Contract with the Company by not paying for services rendered. The lawsuit was seeking payment for work performed of
approximately $0.6 million. On July 21, 2003, MTI filed a counter suit against us in Bucks County, Pennsylvania for breach of contract and tortuous interference for our failure to complete telemarketing campaigns. The two cases were subsequently
combined in the Circuit Court of the 17th Judicial Circuit in Broward County, FL 03-12385. In May of 2005 the case settled out of court. The Company received the courts final order of dismissal May 21, 2005, and as of that date the case was
officially closed, resulting in a recovery of approximately $363,000 to the Company.



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



On May 25 2004, the Company held an annual meeting of the stockholders of the Common Stock to vote on the following matters: (1) to elect eight persons to the Companys Board of Directors, and (2) ratify the
selection of BDO Seidman, LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2005.



The following table sets forth the votes for, against or withheld with respect to the election of the directors (Total shares outstanding 10,841,719):

|                       |  |                |  |               
|---------------------- |  | -------------- |  | --------------
|Director Nominee       |  | Votes Cast For |  | Votes Withheld
|Liam S. Donohue        |  | 7,409,137      |  | 650           
|Michael Dornemann      |  | 7,299,237      |  | 110,550       
|Shawkat Raslan         |  | 7,295,437      |  | 114,350       
|Orhan Sadik-Khan       |  | 7,409,237      |  | 550           
|Frederick Thorne       |  | 7,299,237      |  | 110,550       
|Carl Tiedemann         |  | 7,299,237      |  | 110,550       
|Charles Henri Weil     |  | 7,409,237      |  | 550           
|Alfonso Yuchengco, III |  | 7,298,987      |  | 110,800       



With respect to the
ratification of the selection of BDO Seidman, LLP as the independent registered public accounting firm, 7,408,687 votes were cast for this matter (68.33% of outstanding), 1,050 votes were cast against this matter (0.01% of outstanding) and there
were 50 (0.00% of outstanding) abstentions.



ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



(a)
Exhibits



|         |  |                                                                                                  
|-------- |  | -------------------------------------------------------------------------------------------------
|         | 
|10(hhhh) |  | Fourth Amendment to the Revolving Credit, Term Loan and Security Agreement dated August 12, 2005.
|         | 
|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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SIGNATURES



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



|                      |  |                                       |  |                                                                                                                   
|--------------------- |  | ------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------
|                      |  | ACCESS WORLDWIDE COMMUNICATIONS, INC.
|                      |  |                                      
|Date: August 15, 2005 |  | By:                                   |  | /s/    SHAWKAT
RASLAN                                                                                             
|                      |  |                                       |  | Shawkat Raslan, Chairman of the Board, President and Chief Executive Officer (principal executive
officer)        
|                      |  |                                      
|Date: August 15, 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                                                                                      
|               | 
|10(hhhh)       |  | Fourth Amendment to the Revolving Credit, Term Loan and Security Agreement dated August 12, 2005.
|               | 
|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                                            



20