##### Table of Contents

---

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



---



FORM 10-Q



---



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



For the quarterly period ending March 31,
2004



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



For the transition period from
 to



Commission file number 0-23489



---



Access Worldwide Communications, Inc.

(Exact Name of Registrant as Specified in its Charter)



---



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 52-1309227                          
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)



|                                                       |  |           
|------------------------------------------------------ |  | ----------
|4950 Communication Ave., Suite 300 Boca Raton, Florida |  | 33431     
|(Address of Principal Executive Offices)               |  | (Zip Code)



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



---



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



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



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



Common
Stock, $0.01 par value

Title of Class



---



Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period as the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈



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



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 May 5, 2004 was 9,740,501.



---



---

##### Table of Contents

ACCESS WORLDWIDE COMMUNICATIONS, INC.



INDEX



|                             |  |                                                                                                                   |  |     
|---------------------------- |  | ----------------------------------------------------------------------------------------------------------------- |  | ----
|                             |  |                                                                                                                   |  | Page
|Part I-Financial Information |  |                                                                                                                  
|                             |  |                                                                                                                  
|Item 1.                      |  | Financial Statements                                                                                              |  | 1   
|                             |  |                                                                                                                  
|                             |  | Consolidated Balance Sheets-March 31, 2004 (unaudited) and December 31, 2003                                      |  | 1   
|                             |  |                                                                                                                  
|                             |  | Consolidated Statements of Operations (unaudited)-Three Months Ended March 31, 2004 and March 31, 2003            |  | 2   
|                             |  |                                                                                                                  
|                             |  | Consolidated Statement of Changes in Common Stockholders Deficit (unaudited)  Three Months Ended March 31, 2004 |  | 3   
|                             |  |                                                                                                                  
|                             |  | Consolidated Statements of Cash Flows (unaudited)  Three Months Ended March 31, 2004 and March 31, 2003          |  | 4   
|                             |  |                                                                                                                  
|                             |  | Notes to Consolidated Financial Statements                                                                        |  | 5-6 
|                             |  |                                                                                                                  
|Item 2.                      |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                             |  | 7-8 
|                             |  |                                                                                                                  
|Item 3.                      |  | Quantitative and Qualitative Disclosures About Market Risk                                                        |  | 8   
|                             |  |                                                                                                                  
|Item 4.                      |  | Controls and Procedures                                                                                           |  | 8-9 
|                             | 
|Part II-Other Information    |  |                                                                                                                  
|                             |  |                                                                                                                  
|Item 6.                      |  | Exhibits and Reports on Form 8-K                                                                                  |  | 10  
|                             |  |                                                                                                                  
|                             |  | Signatures                                                                                                        |  | 10  
|                             |  |                                                                                                                  
|                             |  | Certifications                                                                                                    |  |     



---

##### Table of Contents

PART IFINANCIAL INFORMATION



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



ACCESS WORLDWIDE COMMUNICATIONS, INC.



CONSOLIDATED BALANCE SHEETS



|                                                                                                                          |  |                           |             |   |                  |   |             |  
|------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                                          |  | March 31, 2004(Unaudited) |             |   | December 31,2003 |  
|ASSETS                                                                                                                    |  |                           |             |   |                  |   |             |  
|Current assets:                                                                                                           |  |                           |             |   |                  |   |             |  
|Cash and cash equivalents                                                                                                 |  | $                         | 1,027,309   |   |                  | $ | 472,722     |  
|Restricted cash                                                                                                           |  |                           | 123,000     |   |                  |   | 123,000     |  
|Accounts receivable, net of allowance for doubtful accounts of $712,876 and $707,372, respectively                        |  |                           | 8,577,670   |   |                  |   | 11,069,284  |  
|Unbilled receivables                                                                                                      |  |                           | 1,474,629   |   |                  |   | 1,176,797   |  
|Taxes receivable                                                                                                          |  |                           | 658,666     |   |                  |   | 658,666     |  
|Other assets, net                                                                                                         |  |                           | 931,943     |   |                  |   | 950,761     |  
|                                                                                                                          |  |                           |             |   |                  |   |             |  
|Total current assets                                                                                                      |  |                           | 12,793,217  |   |                  |   | 14,451,230  |  
|Property and equipment, net                                                                                               |  |                           | 3,665,778   |   |                  |   | 3,881,954   |  
|Restricted cash                                                                                                           |  |                           | 711,000     |   |                  |   | 711,000     |  
|Other assets, net                                                                                                         |  |                           | 490,958     |   |                  |   | 434,769     |  
|                                                                                                                          |  |                           |             |   |                  |   |             |  
|Total assets                                                                                                              |  | $                         | 17,660,953  |   |                  | $ | 19,478,953  |  
|                                                                                                                          |  |                           |             |   |                  |   |             |  
|LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK AND COMMON STOCKHOLDERS DEFICIT                                      |  |                           |             |   |                  |   |             |  
|Current liabilities:                                                                                                      |  |                           |             |   |                  |   |             |  
|Current portion of indebtedness                                                                                           |  | $                         | 3,464,095   |   |                  | $ | 5,098,999   |  
|Current portion of indebtedness - related parties                                                                         |  |                           | 352,334     |   |                  |   | 383,334     |  
|Accounts payable and accrued expenses                                                                                     |  |                           | 5,887,537   |   |                  |   | 7,672,764   |  
|Accrued salaries, wages and related benefits                                                                              |  |                           | 1,428,885   |   |                  |   | 1,347,385   |  
|Deferred revenue                                                                                                          |  |                           | 4,305,481   |   |                  |   | 2,852,628   |  
|Accrued interest and related party expenses                                                                               |  |                           | 33,113      |   |                  |   | 13,304      |  
|                                                                                                                          |  |                           |             |   |                  |   |             |  
|Total current liabilities                                                                                                 |  |                           | 15,471,445  |   |                  |   | 17,368,414  |  
|Long-term portion of indebtedness                                                                                         |  |                           | 354,338     |   |                  |   | 97,768      |  
|Other long-term liabilities                                                                                               |  |                           | 777,619     |   |                  |   | 775,109     |  
|Convertible Notes, net                                                                                                    |  |                           | 1,080,782   |   |                  |   | 987,336     |  
|Mandatorily redeemable preferred stock, $.01 par value: 2,000,000 shares authorized, 40,000 shares issued and outstanding |  |                           | 4,000,000   |   |                  |   | 4,000,000   |  
|                                                                                                                          |  |                           |             |   |                  |   |             |  
|Total liabilities                                                                                                         |  |                           | 21,684,184  |   |                  |   | 23,228,627  |  
|                                                                                                                          |  |                           |             |   |                  |   |             |  
|Commitments and contingencies                                                                                             |  |                           |             |   |                  |   |             |  
|Common stockholders deficit:                                                                                             |  |                           |             |   |                  |   |             |  
|Common stock, $.01 par value: voting: 20,000,000 shares authorized; 9,740,501 shares issued and outstanding               |  |                           | 97,405      |   |                  |   | 97,405      |  
|Additional paid-in capital                                                                                                |  |                           | 64,950,294  |   |                  |   | 64,950,294  |  
|Accumulated deficit                                                                                                       |  |                           | (69,046,180 | ) |                  |   | (68,770,973 | )
|Deferred compensation                                                                                                     |  |                           | (24,750     | ) |                  |   | (26,400     | )
|                                                                                                                          |  |                           |             |   |                  |   |             |  
|Total common stockholders deficit                                                                                        |  |                           | (4,023,231  | ) |                  |   | (3,749,674  | )
|                                                                                                                          |  |                           |             |   |                  |   |             |  
|Total liabilities and common stockholders deficit                                                                        |  | $                         | 17,660,953  |   |                  | $ | 19,478,953  |  
|                                                                                                                          |  |                           |             |   |                  |   |             |  



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



1



---

##### Table of Contents

ACCESS WORLDWIDE COMMUNICATIONS, INC.



CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)



FOR THE THREE MONTHS ENDED MARCH 31,



|                                             |  |      |            |   |      |   |            |  
|-------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                             |  | 2004 |            |   | 2003 |  
|Revenues                                     |  | $    | 12,980,862 |   |      | $ | 12,236,508 |  
|Cost of revenues                             |  |      | 7,928,149  |   |      |   | 8,284,239  |  
|                                             |  |      |            |   |      |   |            |  
|Gross profit                                 |  |      | 5,052,713  |   |      |   | 3,952,269  |  
|Selling, general and administrative expenses |  |      | 4,985,894  |   |      |   | 4,460,460  |  
|Amortization expense                         |  |      |           |   |      |   | 37,014     |  
|                                             |  |      |            |   |      |   |            |  
|Income (loss) from operations                |  |      | 66,819     |   |      |   | (545,205   | )
|Interest income                              |  |      | 2,618      |   |      |   | 5,919      |  
|Interest expense  related parties           |  |      | (22,344    | ) |      |   | (40,865    | )
|Interest expense                             |  |      | (322,300   | ) |      |   | (119,053   | )
|                                             |  |      |            |   |      |   |            |  
|                                             |  |      |           |   |      |   |           |  
|                                             |  |      |            |   |      |   |            |  
|Net loss                                     |  | $    | (275,207   | ) |      | $ | (699,204   | )
|                                             |  |      |            |   |      |   |            |  
|Basic loss per share of common stock:        |  |      |            |   |      |   |            |  
|Net loss                                     |  | $    | (0.03      | ) |      | $ | (0.07      | )
|                                             |  |      |            |   |      |   |            |  
|Weighted average common shares outstanding   |  |      | 9,740,501  |   |      |   | 9,740,168  |  
|                                             |  |      |            |   |      |   |            |  
|Diluted loss per share of common stock:      |  |      |            |   |      |   |            |  
|Net loss                                     |  | $    | (0.03      | ) |      | $ | (0.07      | )
|                                             |  |      |            |   |      |   |            |  
|Weighted average common shares outstanding   |  |      | 9,740,501  |   |      |   | 9,740,168  |  
|                                             |  |      |            |   |      |   |            |  



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



2



---

##### Table of Contents

ACCESS WORLDWIDE COMMUNICATIONS, INC.



CONSOLIDATED STATEMENT OF CHANGES IN COMMON STOCKHOLDERS DEFICIT

(UNAUDITED)



FOR THE THREE MONTHS ENDED MARCH 31, 2004



|                                      |        |              |        |                           |        |                    |   |            |                      |   |             |       |  |   |         |   |  |   |            |  
|------------------------------------- | ------ | ------------ | ------ | ------------------------- | ------ | ------------------ | - | ---------- | -------------------- | - | ----------- | ----- |  | - | ------- | - |  | - | ---------- | -
|                                      |        | Common Stock |        | AdditionalPaid-in-Capital |        | AccumulatedDeficit |   |            | DeferredCompensation |   |             | Total | 
|                                      | Shares |              | Amount |                           |        |                    |  
|Balance, December 31, 2003            |        | 9,740,501    |        | $                         | 97,405 |                    | $ | 64,950,294 |                      | $ | (68,770,973 | )     |  | $ | (26,400 | ) |  | $ | (3,749,674 | )
|Amortization of deferred compensation |        |             |        |                           |       |                    |   |           |                      |   |            |       |  |   | 1,650   |   |  |   | 1,650      |  
|Net loss                              |        |             |        |                           |       |                    |   |           |                      |   | (275,207    | )     |  |   |        |   |  |   | (275,207   | )
|                                      |        |              |        |                           |        |                    |   |            |                      |   |             |       |  |   |         |   |  |   |            |  
|Balance, March 31, 2004               |        | 9,740,501    |        | $                         | 97,405 |                    | $ | 64,950,294 |                      | $ | (69,046,180 | )     |  | $ | (24,750 | ) |  | $ | (4,023,231 | )
|                                      |        |              |        |                           |        |                    |   |            |                      |   |             |       |  |   |         |   |  |   |            |  



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



3



---

##### Table of Contents

ACCESS WORLDWIDE COMMUNICATIONS, INC.



CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)



FOR THE THREE MONTHS ENDED MARCH 31,



|                                                                                             |  |      |            |   |      |   |            |  
|-------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                                             |  | 2004 |            |   | 2003 |  
|Cash flows from operating activities:                                                        |  |      |            |   |      |   |            |  
|Net loss                                                                                     |  | $    | (275,207   | ) |      | $ | (699,204   | )
|Adjustments to reconcile net loss to net cash provided by (used in) in operating activities: |  |      |            |   |      |   |            |  
|Depreciation and amortization                                                                |  |      | 357,988    |   |      |   | 426,646    |  
|Amortization of deferred financing costs                                                     |  |      | 69,318     |   |      |   | 11,597     |  
|Amortization of deferred compensation                                                        |  |      | 1,650      |   |      |   | 1,650      |  
|Accretion of discount on Convertible Notes                                                   |  |      | 93,446     |   |      |   |           |  
|Allowance for doubtful accounts                                                              |  |      | 5,504      |   |      |   | 39,111     |  
|Changes in operating assets and liabilities:                                                 |  |      |            |   |      |   |            |  
|Accounts receivable                                                                          |  |      | 2,486,110  |   |      |   | (478,996   | )
|Unbilled receivables                                                                         |  |      | (297,832   | ) |      |   | 32,595     |  
|Other assets                                                                                 |  |      | (106,689   | ) |      |   | (556,223   | )
|Accounts payable and accrued expenses                                                        |  |      | (1,782,717 | ) |      |   | (1,776,116 | )
|Accrued salaries, wages and related benefits                                                 |  |      | 81,500     |   |      |   | (735,632   | )
|Accrued interest and related party expenses                                                  |  |      | 19,809     |   |      |   | (4,235     | )
|Deferred revenue                                                                             |  |      | 1,452,853  |   |      |   | 2,740,895  |  
|                                                                                             |  |      |            |   |      |   |            |  
|Net cash provided by (used in) operating activities                                          |  |      | 2,105,733  |   |      |   | (997,912   | )
|                                                                                             |  |      |            |   |      |   |            |  
|Cash flows from investing activities:                                                        |  |      |            |   |      |   |            |  
|Additions to property and equipment                                                          |  |      | (141,812   | ) |      |   | (114,139   | )
|                                                                                             |  |      |            |   |      |   |            |  
|Net cash used in investing activities                                                        |  |      | (141,812   | ) |      |   | (114,139   | )
|                                                                                             |  |      |            |   |      |   |            |  
|Cash flows from financing activities:                                                        |  |      |            |   |      |   |            |  
|Payments on capital leases                                                                   |  |      | (16,332    | ) |      |   | (9,621     | )
|Issuance of common stock                                                                     |  |      |           |   |      |   | 230        |  
|Net (payments) borrowings under Debt Agreement and Credit Facility                           |  |      | (1,362,002 | ) |      |   | 89,037     |  
|Payments of deferred financing costs                                                         |  |      |           |   |      |   | (120,000   | )
|Payment of related party debt                                                                |  |      | (31,000    | ) |      |   | (415,729   | )
|                                                                                             |  |      |            |   |      |   |            |  
|Net cash used in financing activities                                                        |  |      | (1,409,334 | ) |      |   | (456,083   | )
|                                                                                             |  |      |            |   |      |   |            |  
|Net increase (decrease) in cash and cash equivalents                                         |  |      | 554,587    |   |      |   | (1,568,134 | )
|Cash and cash equivalents, beginning of period                                               |  |      | 472,722    |   |      |   | 2,197,209  |  
|                                                                                             |  |      |            |   |      |   |            |  
|Cash and cash equivalents, end of period                                                     |  | $    | 1,027,309  |   |      | $ | 629,075    |  
|                                                                                             |  |      |            |   |      |   |            |  



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



4



---

##### Table of Contents

ACCESS WORLDWIDE COMMUNICATIONS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)



1. BASIS OF PRESENTATION



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



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



2. RECLASSIFICATIONS



Certain reclassifications have been made to the 2003 consolidated
financial statements to conform to the March 31, 2004 presentation. Such reclassifications did not change our net loss or total common stockholders deficit as previously reported.



3. RESTRICTED CASH



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



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



|                      |  |   |        
|--------------------- |  | - | -------
|May 2004              |  | $ | 711,000
|May 2005              |  |   | 589,000
|May 2006              |  |   | 466,000
|May 2007              |  |   | 343,000
|May 2008 through 2010 |  |   | 221,000



4. STOCK-BASED COMPENSATION



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



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



Had the fair value based method been used to account for such compensation, compensation costs would have increased net loss and loss per share for the
three months ended March 31 to the following pro forma amounts:



|                                                                                                                                     |  |      |          |   |      |   |          |  
|------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | -------- | - | ---- | - | -------- | -
|                                                                                                                                     |  | 2004 |          |   | 2003 |  
|Net loss, as reported                                                                                                                |  | $    | (275,207 | ) |      | $ | (699,204 | )
|Add: stock-based employee compensation expense included in reported net loss, net of related tax effect                              |  |      | 1,650    |   |      |   | 1,650    |  
|                                                                                                                                     |  |      |          |   |      |   |          |  
|Deduct: total stock-based employee compensation expense determined under fair value method for all awards, net of related tax
effect |  |      | (41,408  | ) |      |   | (48,206  | )
|                                                                                                                                     |  |      |          |   |      |   |          |  
|Pro forma net loss                                                                                                                   |  | $    | (314,965 | ) |      | $ | (745,760 | )
|                                                                                                                                     |  |      |          |   |      |   |          |  
|Loss per share:                                                                                                                      |  |      |          |   |      |   |          |  
|Basic  as reported                                                                                                                  |  | $    | (0.03    | ) |      | $ | (0.07    | )
|Basic  pro forma                                                                                                                    |  | $    | (0.03    | ) |      | $ | (0.08    | )
|Diluted  as reported                                                                                                                |  | $    | (0.03    | ) |      | $ | (0.07    | )
|Diluted  pro forma                                                                                                                  |  | $    | (0.03    | ) |      | $ | (0.08    | )



5



---

##### Table of Contents

5. INCOME TAXES



The effective tax rate used by us for the three month periods ended March 31, 2004 and 2003 differs from the federal statutory rate primarily due to the
valuation allowance recorded in connection with the Companys deferred tax assets.



6. LOSS PER COMMON SHARE



Loss per common
share are calculated using the following weighted average common shares:



|                                                                 |  |                                     
|---------------------------------------------------------------- |  | ------------------------------------
|                                                                 |  | For the Three Months Ended March 31,
|                                                                 |  | Shares                              
|2004:                                                            |  |                                     
|Weighted average number of common shares outstanding  basic     |  | 9,740,501                           
|                                                                 |  |                                     
|Weighted average number of common shares outstanding  dilutive* |  | 9,740,501                           
|                                                                 |  |                                     
|2003:                                                            |  |                                     
|Weighted average number of common shares outstanding  basic     |  | 9,740,168                           
|                                                                 |  |                                     
|Weighted average number of common shares outstanding  dilutive* |  | 9,740,168                           
|                                                                 |  |                                     

---

|* | Since the effects of the stock options, warrants, and Convertible Notes are anti-dilutive for the three months ended March 31, 2004, and 2003, these effects have not been included
in the calculation of dilutive earnings per share.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



7.
INDEBTEDNESS



On January 29, 2004, the Debt
Agreement with CapitalSource Finance LLC (CapitalSource) was amended to include an Overadvance Agreement (the Overadvance) with CapitalSource for a maximum amount of $0.6 million to fund the expansion of TelAc Teleservices
Group (TelAc) into Augusta, Maine. The Overadvance is for an 18 month period commencing on January 28, 2004 and bears interest at 11%. Monthly payments of interest only are due until August 1, 2004, when additional monthly principal
payments of $50,000 will commence. The Overadvance agreement contains an Overadvance Participation Fee of the greater of $150,000 or 1.5% of the product of 5 times consolidated annualized earnings before interest, taxes, depreciation and
amortization (EBITDA) if paid at maturity or the occurrence of a triggering event as defined, or the greater of $300,000 or 3% of the product of 5 times consolidated annualized EBITDA, if 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. As of March 31, 2004, $0.6 million was outstanding under the Overadvance.



8. SEGMENTS



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



The table below presents information about our reportable segments for our continuing operations used by the chief operating decision-maker of the Company
for the three months ended March 31, 2004 and 2003.



|                              |  |                |           |   |          |   |               |  |                |            |  |       |          |   |  |   |            |  
|----------------------------- |  | -------------- | --------- | - | -------- | - | ------------- |  | -------------- | ---------- |  | ----- | -------- | - |  | - | ---------- | -
|                              |  | Pharmaceutical |           |   | Business |   | Segment Total |  | Reconciliation |            |  | Total |         
|2004:                         |  |                |           |   |          |   |               |  |                |            |  |       |          |   |  |   |            |  
|Revenues                      |  | $              | 6,218,287 |   |          | $ | 6,762,575     |  | $              | 12,980,862 |  | $     |         |   |  | $ | 12,980,862 |  
|Gross profit                  |  |                | 2,632,381 |   |          |   | 2,420,332     |  |                | 5,052,713  |  |       |         |   |  |   | 5,052,713  |  
|Income from operations        |  |                | 718,972   |   |          |   | 122,672       |  |                | 841,644    |  |       | (774,825 | ) |  |   | 66,819     |  
|EBITDA (1)                    |  |                | 823,648   |   |          |   | 344,842       |  |                | 1,168,490  |  |       | (743,683 | ) |  |   | 424,807    |  
|Depreciation expense          |  |                | 104,676   |   |          |   | 222,170       |  |                | 326,846    |  |       | 31,142   |   |  |   | 357,988    |  
|Amortization expense          |  |                |          |   |          |   |              |  |                |           |  |       |         |   |  |   |           |  
|                              |  |                |           |   |         
|2003:                         |  |                |           |   |          |   |               |  |                |            |  |       |          |   |  |   |            |  
|Revenues                      |  | $              | 5,764,774 |   |          | $ | 6,471,734     |  | $              | 12,236,508 |  | $     |         |   |  | $ | 12,236,508 |  
|Gross profit                  |  |                | 1,631,965 |   |          |   | 2,320,304     |  |                | 3,952,269  |  |       |         |   |  |   | 3,952,269  |  
|(Loss) income from operations |  |                | (290,298  | ) |          |   | 422,494       |  |                | 132,196    |  |       | (677,401 | ) |  |   | (545,205   | )
|EBITDA (1)                    |  |                | (153,261  | ) |          |   | 682,813       |  |                | 529,552    |  |       | (648,111 | ) |  |   | (118,559   | )
|Depreciation expense          |  |                | 100,023   |   |          |   | 260,319       |  |                | 360,342    |  |       | 29,290   |   |  |   | 389,632    |  
|Amortization expense          |  |                | 37,014    |   |          |   |              |  |                | 37,014     |  |       |         |   |  |   | 37,014     |  

---

|(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.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



6



---

##### Table of Contents

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



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



Three Months Ended March 31, 2004 Compared to Three Months Ended March 31, 2003



Our revenues increased $0.8 million, or 6.6%, to $13.0 million for the three months ended March 31, 2004, compared to $12.2 million for the three months
ended March 31, 2003. Revenues for the Pharmaceutical Services (Pharmaceutical) Segment increased $0.4 million, or 6.9%, to $6.2 million for the three months ended March 31, 2004, compared to $5.8 million for the three months ended March
31, 2003. The increase was primarily attributed to an increase in new inbound programs which was offset by a reduction of $0.6 million in medical education revenue. Management is working diligently to hire additional medical education sales
personnel. Revenues for the Business Services (Business) Segment increased $0.3 million or, 4.6%, to $6.8 million for the three months ended March 31, 2004, compared to $6.5 million for the three months ended March 31, 2003. The increase
was primarily attributed to larger telecommunications programs and more production hours performed for an existing client.



Our gross profit increased $1.1 million, or 27.5%, to $5.1 million for the three months ended March 31, 2004, compared to $4.0 million for the three
months ended March 31, 2003. Gross profit as a percentage of revenues increased to 39.2% for the three months ended March 31, 2004, from 32.8% for the three months ended March 31, 2003. Gross profit as a percentage of revenues for the Pharmaceutical
Segment for the three months ended March 31, 2004 increased to 41.9%, compared to 27.6% for the three months ended March 31, 2003. The increase was primarily attributed to an increase in productivity on our pharmacy and physician programs offset by
a decrease in our medical education revenue. Gross profit as a percentage of revenues for the Business Segment decreased slightly to 35.3% for the three months ended March 31, 2004, from 35.4% for the three months ended March 31, 2003.



Our selling, general and administrative expenses increased by $0.5
million, or 11.1%, to $5.0 million for the three months ended March 31, 2004, compared to $4.5 million for the three months ended March 31, 2003. Selling, general and administrative expenses as a percentage of revenues increased to 38.5% for the
three months ended March 31, 2004, compared to 36.9% for the three months ended March 31, 2003. Selling, general and administrative expenses as a percentage of revenues for the Pharmaceutical Segment decreased to 30.7% for the three months ended
March 31, 2004, from 32.8% for the three months ended March 31, 2003. The decrease was primarily attributed to the increase in revenues combined with managements efforts to control costs. Selling, general and administrative expenses as a
percentage of revenues for the Business Segment increased to 33.8% for the three months ended March 31, 2004, compared to 29.2% for the three months ended March 31, 2003. The increase was primarily attributed to the expansion of the customer sales
and service facility in Arlington, Virginia which resulted in an increase in salaries and rent expense.



Our net interest expense increased slightly to $0.3 million for the three months ended March 31, 2004, compared to $0.2 million for the three months ended
March 31, 2003 due primarily to the accretion of the discount on Convertible Notes.



Liquidity and Capital Resources



At March 31,
2004 and December 31, 2003, we had negative working capital of $2.7 million and $2.9 million, respectively. Cash and cash equivalents were $1.0 million at March 31, 2004, compared to $0.5 million at December 31, 2003.



Net cash provided by operating activities during the first quarter of 2004
was $2.1 million, compared to net cash used in operating activities during the first quarter of 2003 of $1.0 million. The increase in net cash provided by operating activities was primarily due to an increase in the change of accounts receivable of
$3.0 million offset by a decrease in the change of deferred revenue of $1.2 million.



Net cash used in investing activities was $0.1 million for the first quarter of 2004, compared to $0.1 million for the first quarter of 2003.



7



---

##### Table of Contents

Net cash used in financing activities was $1.4 million for the first quarter of 2004, compared to $0.5
million for the first quarter of 2003. The increase was primarily due to the pay down of our Debt Agreement during the first quarter of 2004.



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 are due
until August 1, 2004, when additional monthly principal payments of $50,000 will commence. The Overadvance agreement contains an Overadvance Participation Fee of the greater of $150,000 or 1.5% of the product of 5 times consolidated annualized
earnings before interest, taxes, depreciation and amortization (EBITDA) if paid at maturity or the occurrence of a triggering event as defined, or the greater of $300,000 or 3% of the product of 5 times consolidated annualized EBITDA, if 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.



As of March 31, 2004, 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, an income tax refund, the release of restricted cash as collateral under lease arrangement (Note 3), and borrowings under the
Debt Agreement and the Overadvance. We believe that these sources of cash will be sufficient to meet the Companys operating needs and planned capital expenditures for at least the next twelve months.



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 March 31, 2004:



Contractual Cash Obligations



|                              |  |                        |            |        |   |           |  |         |           |               |   |         |  |   |          
|----------------------------- |  | ---------------------- | ---------- | ------ | - | --------- |  | ------- | --------- | ------------- | - | ------- |  | - | ---------
|                              |  | Payments Due by Period
|                              |  | Total                  |            | 1 year |   | 2-4 years |  | 5 years |           | After 5 years
|Long-term debt                |  | $                      | 4,029,000  |        | $ | 3,758,000 |  | $       | 271,000   |               | $ |        |  | $ |         
|Convertible debt              |  |                        | 2,100,000  |        |   |          |  |         | 2,100,000 |               |   |        |  |   |         
|Capital lease obligations     |  |                        | 141,000    |        |   | 58,000    |  |         | 83,000    |               |   |        |  |   |         
|Operating leases              |  |                        | 10,936,000 |        |   | 2,235,000 |  |         | 5,965,000 |               |   | 974,000 |  |   | 1,762,000
|                              |  |                        |            |        |   |           |  |         |           |               |   |         |  |   |          
|Total contractual obligations |  | $                      | 17,206,000 |        | $ | 6,051,000 |  | $       | 8,419,000 |               | $ | 974,000 |  | $ | 1,762,000
|                              |  |                        |            |        |   |           |  |         |           |               |   |         |  |   |          



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



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 $0.04 million.



ITEM 4. CONTROLS AND PROCEDURES



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



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



8



---

##### Table of Contents

Risk Factors That May Affect Future Results



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



9



---

##### Table of Contents

PART IIOTHER INFORMATION



Item 6. Exhibits and Reports on Form 8-K



(a) Exhibits



|         |  |                                                                                                                        
|-------- |  | -----------------------------------------------------------------------------------------------------------------------
|10(xxx)  |  | Employment Agreement, dated January 21, 2004, by and between Access Worldwide Communications, Inc. and Richard Lyew. * 
|         | 
|10(yyy)  |  | Employment Agreement, dated December 18, 2003, by and between Access Worldwide Communications, Inc. and Ted Jordan. *  
|         | 
|10(zzz)  |  | Employment Agreement, dated January 20, 2004, by and between Access Worldwide Communications, Inc. and Georges André. *
|         | 
|10(aaaa) |  | Employment Agreement, dated January 1, 2004, by and between Access Worldwide Communications, Inc. and Guy Amato. *     
|         | 
|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                                                                  

---

|* | Management contract or compensatory plan or arrangement.
|- | --------------------------------------------------------



(b) Reports on Form 8-K



On February 4, 2004, a report on Form 8-K was filed, reporting under Item 4. Changes in Registrants Certifying Accountant that the
Company hired BDO Seidman, LLP as its independent accountants for the 2003 fiscal year. BDO Seidman, LLP succeeded PricewaterhouseCoopers LLP who resigned its position on December 5, 2003, as described on the Companys report on form 8-K filed
on December 12, 2003.



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: May 5, 2004 |  | By:                                   |  | /s/    SHAWKAT
RASLAN                                                                                     
|                  |  |                                       |  | Shawkat Raslan, Chairman of the Board, President and Chief Executive Officer (principal executive
officer)



|                  |  |     |  |                                                                                                                 
|----------------- |  | --- |  | ----------------------------------------------------------------------------------------------------------------
|Date: May 5, 2004 |  | By: |  | /s/    JOHN
HAMERSKI                                                                                            
|                  |  |     |  | John Hamerski, Executive Vice President and Chief Financial Officer (principal financial and accounting officer)



10



---

##### Table of Contents

Exhibit Index



|               |  |                                                                                                                        
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description                                                                                                            
|10(xxx)        |  | Employment Agreement, dated January 21, 2004, by and between Access Worldwide Communications, Inc. and Richard Lyew. * 
|               | 
|10(yyy)        |  | Employment Agreement, dated December 18, 2003, by and between Access Worldwide Communications, Inc. and Ted Jordan. *  
|               | 
|10(zzz)        |  | Employment Agreement, dated January 20, 2004, by and between Access Worldwide Communications, Inc. and Georges André. *
|               | 
|10(aaaa)       |  | Employment Agreement, dated January 1, 2004, by and between Access Worldwide Communications, Inc. and Guy Amato. *     
|               | 
|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