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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 ended September 30, 2002
 
¨    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 Jurisdiction of
 
(I.R.S. Employer
Incorporation or Organization)
 
Identification No.)
 
4950 Communication Avenue, Suite 300
   
Boca Raton, Florida
 
33431
(Address of Principal Executive Offices)
 
(Zip Code)
 
(561) 226-5000
Registrant’s telephone number, including area code
 

 
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 the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
 
9,740,001 shares of Common Stock, $.01 par value, as of November 5, 2002
 


Table of Contents
 
ACCESS WORLDWIDE COMMUNICATIONS, INC.
 
INDEX
 
         
    Pages    

Part I—Financial Information
Item 1.
  
Financial Statements
    
       
1
       
2
       
3
       
4-8
Item 2.
     
9-12
Item 3.
     
12
Item 4.
     
12
Part II—Other Information
Item 6.
     
14
       
14
       
15-16
 


Table of Contents
 
PART I—FINANCIAL INFORMATION
 
ITEM 1.    FINANCIAL STATEMENTS
 
ACCESS WORLDWIDE COMMUNICATIONS, INC.
 
CONSOLIDATED BALANCE SHEETS
 
    
September 30, 2002

    
December 31, 2001

 
    
(Unaudited)
        
ASSETS
                 
Current assets:
                 
Cash and cash equivalents
  
$
1,216,258
 
  
$
3,373,422
 
Accounts receivable, net of allowance for doubtful accounts of $153,019 and $80,723, respectively
  
 
11,706,869
 
  
 
15,358,920
 
Unbilled receivables
  
 
3,653,678
 
  
 
3,795,943
 
Other assets, net
  
 
2,090,206
 
  
 
2,286,600
 
    


  


Total current assets
  
 
18,667,011
 
  
 
24,814,885
 
Property and equipment, net
  
 
4,453,243
 
  
 
10,114,449
 
Intangible assets, net
  
 
9,123,434
 
  
 
21,420,624
 
Other assets, net
  
 
53,677
 
  
 
1,181,570
 
    


  


Total assets
  
$
32,297,365
 
  
$
57,531,528
 
    


  


LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK
AND COMMON STOCKHOLDERS’ EQUITY (DEFICIT)
                 
Current liabilities:
                 
Current portion of indebtedness
  
$
5,071,527
 
  
$
30,471,375
 
Current portion of indebtedness—related parties
  
 
2,121,113
 
  
 
1,543,079
 
Accounts payable and accrued expenses
  
 
10,311,452
 
  
 
10,215,514
 
Accrued interest and other related party expenses
  
 
27,544
 
  
 
32,253
 
Accrued salaries, wages and related benefits
  
 
1,968,506
 
  
 
2,573,213
 
Deferred revenue
  
 
2,147,915
 
  
 
2,635,890
 
Warrant payable
  
 
—  
 
  
 
1,321,326
 
    


  


Total current liabilities
  
 
21,648,057
 
  
 
48,792,650
 
Long-term portion of indebtedness
  
 
47,641
 
  
 
3,951,973
 
Long-term portion of indebtedness—related parties
  
 
6,485
 
  
 
1,724,292
 
Other long-term liabilities
  
 
341,834
 
  
 
350,405
 
Mandatorily redeemable preferred stock, $.01 par value:
                 
2,000,000 shares authorized, 40,000 shares issued and outstanding
  
 
4,000,000
 
  
 
4,000,000
 
    


  


Total liabilities and mandatorily redeemable preferred stock
  
 
26,044,017
 
  
 
58,819,320
 
    


  


Commitments and contingencies
                 
Common stockholders’ equity (deficit):
                 
Common stock, $.01 par value: voting: 20,000,000 shares authorized; 9,740,001 shares issued and outstanding
  
 
97,400
 
  
 
97,400
 
Additional paid-in capital
  
 
63,636,632
 
  
 
63,636,069
 
Accumulated deficit
  
 
(57,480,684
)
  
 
(65,021,261
)
    


  


Total common stockholders’ equity (deficit)
  
 
6,253,348
 
  
 
(1,287,792
)
    


  


Total liabilities, mandatorily redeemable preferred stock and common stockholders’ equity (deficit)
  
$
32,297,365
 
  
$
57,531,528
 
    


  


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

1


Table of Contents
 
ACCESS WORLDWIDE COMMUNICATIONS, INC.
 
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 
    
Three Months Ended
September 30,

    
Nine Months Ended
September 30,

 
    
2002

    
2001

    
2002

    
2001

 
Revenues
  
$
11,246,562
 
  
$
9,781,348
 
  
$
35,510,638
 
  
$
39,791,912
 
Cost of revenues
  
 
6,849,312
 
  
 
6,551,901
 
  
 
22,474,875
 
  
 
27,371,753
 
    


  


  


  


Gross profit
  
 
4,397,250
 
  
 
3,229,447
 
  
 
13,035,763
 
  
 
12,420,159
 
Selling, general and administrative expenses
  
 
4,321,703
 
  
 
3,402,360
 
  
 
12,889,203
 
  
 
10,972,474
 
Amortization expense
  
 
60,534
 
  
 
532,489
 
  
 
181,602
 
  
 
1,598,529
 
    


  


  


  


Income (loss) from operations
  
 
15,013
 
  
 
(705,402
)
  
 
(35,042
)
  
 
(150,844
)
Interest income
  
 
9,532
 
  
 
9,923
 
  
 
26,189
 
  
 
37,707
 
Interest income—related parties
  
 
—  
 
  
 
317,331
 
  
 
197,484
 
  
 
1,019,100
 
Interest expense—related parties
  
 
(66,091
)
  
 
(115,714
)
  
 
(230,556
)
  
 
(359,791
)
Interest expense
  
 
(107,397
)
  
 
(1,645,995
)
  
 
(401,420
)
  
 
(4,048,728
)
Other expense
  
 
—  
 
  
 
(60,000
)
  
 
—  
 
  
 
(60,000
)
    


  


  


  


Loss before income tax benefit
  
 
(148,943
)
  
 
(2,199,857
)
  
 
(443,345
)
  
 
(3,562,556
)
Income tax benefit
  
 
—  
 
  
 
(387,796
)
  
 
—  
 
  
 
(704,078
)
    


  


  


  


Loss from continuing operations
  
 
(148,943
)
  
 
(1,812,061
)
  
 
(443,345
)
  
 
(2,858,478
)
    


  


  


  


Discontinued operations (Note 8):
                                   
(Loss) income from discontinued operations, net of income tax (benefit) expense of $0, $(71,040), $(107,873) and $17,178, respectively
  
 
—  
 
  
 
(222,128
)
  
 
(467,838
)
  
 
69,742
 
Gain on disposal of segments, net of income tax expense of $45,458 and $1,594,638 for the three and nine month periods ended September 30, 2002, respectively
  
 
97,543
 
  
 
—  
 
  
 
8,451,760
 
  
 
—  
 
    


  


  


  


    
 
97,543
 
  
 
(222,128
)
  
 
7,983,922
 
  
 
69,742
 
    


  


  


  


Net (loss) income
  
$
(51,400
)
  
$
(2,034,189
)
  
$
7,540,577
 
  
$
(2,788,736
)
    


  


  


  


Basic (loss) earnings per share of common stock:
                                   
Continuing operations
  
$
(0.02
)
  
$
(0.19
)
  
$
(0.05
)
  
$
(0.29
)
Discontinued operations
  
 
0.01
 
  
 
(0.02
)
  
 
0.82
 
  
 
0.01
 
Net (loss) income
  
$
(0.01
)
  
$
(0.21
)
  
$
0.77
 
  
$
(0.29
)
Weighted average common shares outstanding
  
 
9,740,001
 
  
 
9,740,001
 
  
 
9,740,001
 
  
 
9,740,001
 
Diluted (loss) earnings per share of common stock:
                                   
Continuing operations
  
$
(0.02
)
  
$
(0.19
)
  
$
(0.05
)
  
$
(0.29
)
Discontinued operations
  
 
0.01
 
  
 
(0.02
)
  
 
0.82
 
  
 
0.01
 
Net (loss) income
  
$
(0.01
)
  
$
(0.21
)
  
$
0.77
 
  
$
(0.29
)
Weighted average common shares outstanding
  
 
9,740,001
 
  
 
9,740,001
 
  
 
9,740,001
 
  
 
9,740,001
 
 
The accompanying notes are an integral part of these financial statements.

2


Table of Contents
 
ACCESS WORLDWIDE COMMUNICATIONS, INC.
 
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
 
    
2002

    
2001

 
Cash flows from operating activities:
                 
Net income (loss)
  
$
7,540,577
 
  
$
(2,788,736
)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
                 
Depreciation and amortization
  
 
1,365,057