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<SEC-DOCUMENT>0000950133-04-002157.txt : 20040525
<SEC-HEADER>0000950133-04-002157.hdr.sgml : 20040525
<ACCEPTANCE-DATETIME>20040525161606
ACCESSION NUMBER:		0000950133-04-002157
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20040524
ITEM INFORMATION:		Other events
FILED AS OF DATE:		20040525

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ACCERIS COMMUNICATIONS INC
		CENTRAL INDEX KEY:			0000849145
		STANDARD INDUSTRIAL CLASSIFICATION:	TELEGRAPH & OTHER MESSAGE COMMUNICATIONS [4822]
		IRS NUMBER:				592291344
		STATE OF INCORPORATION:			FL
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-17973
		FILM NUMBER:		04830110

	BUSINESS ADDRESS:	
		STREET 1:		9775 BUSINESS PARK AVENUE
		STREET 2:		X
		CITY:			SAN DIEGO
		STATE:			CA
		ZIP:			92131
		BUSINESS PHONE:		8585475700

	MAIL ADDRESS:	
		STREET 1:		1001 BRINTON ROAD
		STREET 2:		X
		CITY:			PITTSBURGH
		STATE:			PA
		ZIP:			15221

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	I LINK INC
		DATE OF NAME CHANGE:	19971020

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	MEDCROSS INC
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>w97680e8vk.htm
<DESCRIPTION>FORM 8-K
<TEXT>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="center" style="font-size: 14pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>



<DIV align="center" style="font-size: 11pt">WASHINGTON, D.C. 20549
</DIV>


<P align="center" style="font-size: 12pt"><B>FORM 8-K</B>
<DIV align="center" style="font-size: 11pt"><B>CURRENT REPORT</B>
</DIV>


<P align="center" style="font-size: 11pt"><B>Pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934</B>


<DIV align="center">
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<TR valign="bottom">
    <TD align="center" valign="top"><B>May&nbsp;24, 2004</B></TD>
</TR>
<TR valign="bottom" style="font-size: 9pt">
    <TD align="center" valign="top">Date of Report (Date of Earliest Event Reported)</TD>
</TR>

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<TABLE style="font-size: 14pt" cellspacing="0" border="0" cellpadding="0" width="55%">
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    <TD align="center" valign="top"><B>ACCERIS COMMUNICATIONS
INC.</B></TD>

<TR valign="bottom" style="font-size: 9pt">
    <TD align="center" valign="top">(Exact Name of Registrant as Specified in its Charter)</TD>
</TR>

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<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Florida</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>0-17973</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>59-2291344</b></TD>
</TR>

<TR valign="bottom" style="font-size: 9pt">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">(State or Other Jurisdiction of<BR>
Incorporation or Organization)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Commission File No.)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(I.R.S. Employer Identification No.)</TD>
</TR>

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</TABLE>
</DIV>


<DIV align="center">
<TABLE style="font-size: 12pt" cellspacing="0" border="0" cellpadding="0" width="55%">
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<TR valign="bottom">
    <TD align="center" valign="top"><B>9775 Businesspark Avenue, San Diego, CA 92131</B></TD>
</TR>
<TR valign="bottom" style="font-size: 9pt">
    <TD align="center" valign="top">(Address of principal executive offices and zip code)</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><B>(858)&nbsp;547-5700</B></TD>
</TR>

<TR valign="bottom" style="font-size: 9pt">
    <TD align="center" valign="top">(Registrant&#146;s telephone number, including area code)</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><B>N/A</B></TD>
</TR>
<TR valign="bottom" style="font-size: 9pt">
    <TD align="center" valign="top">(Former name or former address, if changed from last report)</TD>
</TR>

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</TABLE>
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="left" style="font-size: 10pt"><B>Item&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other Events</B>



<P align="left" style="font-size: 10pt">The following summary contains additional information relating to our
business:


<P align="left" style="font-size: 10pt"><B><I>Forward-Looking Information</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>This report contains certain &#147;forward-looking statements&#148; within the
meaning of Section&nbsp;27A of the Securities Act of 1933, as amended and Section
21E of the Exchange Act of 1934, as amended, that are based on management&#146;s
exercise of business judgment as well as assumptions made by and information
currently available to management. When used in this document, words
such as &#147;may,&#148;</I>
<I>&#147;will,&#148; &#147;anticipate,&#148; &#147;believe,&#148; &#147;estimate,&#148; &#147;expect,&#148; &#147;intend&#148; and words of
similar import, are intended to identify any forward-looking statements. You
should not place undue reliance on these forward-looking statements. These
statements reflect our current view of future events and are subject to certain
risks and uncertainties as more fully discussed in our most recent </I><I>Form 10-Q</I><I>,
including, but not limited to, our ability to finance and manage expected
growth, our ability to maintain relationships with telecommunications carriers
and changes in governmental regulations. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
our actual results could differ materially from those anticipated in these
forward-looking statements. We undertake no obligation and do not intend to
update, revise or otherwise publicly release any revisions to these
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of any unanticipated events. Although we
believe that our expectations are based on reasonable assumptions, we can give
no assurance that our expectations will materialize.</I>


<P align="left" style="font-size: 10pt"><B>Company Overview</B>



<P align="left" style="font-size: 10pt">We are a broad-based communications company, servicing residential, small and
medium-sized businesses and large corporate accounts in the United States. We
provide a range of products from local dial tone and domestic and international
long-distance voice services to fully managed, integrated data and enhanced
services. We are a facilities-based carrier with points of presence in 30 major
U.S. cities. We currently have 11 voice switches and 17 data switches located
throughout the United States. Our operational expertise and our focus on
first-rate customer support enable us to provide high quality voice and data
communications.


<P align="left" style="font-size: 10pt">We currently manage our company through two business segments. Our
Telecommunications segment provides voice and data services to our residential
customers and large corporate accounts, while the Technologies segment is
responsible for commercialization of our proprietary soft-switch technology and
underlying intellectual property. In the three months ended March&nbsp;31, 2004,
our Telecommunications segment contributed $34.7&nbsp;million and our Technologies
segment contributed $0.5&nbsp;million in revenues.


<P align="left" style="font-size: 10pt"><I>Telecommunications</I>



<P align="left" style="font-size: 10pt">Our Telecommunications segment delivers a broad range of voice and data
products and services to residential, small office/home office (&#147;SOHO&#148;) and
small-medium sized enterprises (&#147;SME&#148;) and commercial customers through a
network of multi-level marketing (&#147;MLM&#148;), commercial agents, affinity groups
and outbound telemarketing. Our customers are serviced through direct sales and
support teams who offer fully managed and fully integrated voice and data
solutions.


</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">We have capitalized upon a unique synthesis of marketing and network
capabilities. Through the strength of our agent network we are adding new
customers each month, most of them with a strong international usage component.
Due to our favorable cost structure and network optimization, we can offer
extremely competitive rates to selected international regions.


<P align="left" style="font-size: 10pt">We differentiate ourselves to our residential customers by offering
attractively priced bundles of international minutes, both on a stand alone
basis and as part of a local dial tone &#043; long-distance package
to preferred destinations,
and specialized customer service, which includes in-language customer support.
By using this targeted strategy, we have acquired a substantial number of ethnic users
whose monthly spending on telecommunications services is generally
higher than the average retail customer. These subscribers also tend
to exhibit
higher brand loyalty, resulting in lower customer turnover
(&#147;churn&#148;) than average retail consumers for these types of
our products.


<P align="left" style="font-size: 10pt">Our proprietary technology
generally enables us to offer unbundled value-added
services such as voicemail, unified messaging and on-the-fly conferencing at a
low cost, creating another competitive advantage when targeting retail customers.
These features distinguish us from mass-market providers that typically offer
higher priced, &#147;one-size-fits-all&#148; national and international rate plans.


<P align="left" style="font-size: 10pt">Our direct sales force focuses on multi-location customers with limited
Information Technology (&#147;IT&#148;) resources. By taking a consultative approach to
network solutions and providing in-depth analysis of our customers&#146; business
needs and operating environments, we are able to design and deliver
competitively priced and customized voice and data solutions. Our commercial
customers also benefit from our relationships with multiple
providers, which
ensure superior service with respect to network redundancy, cost and supplier
risk. Our ability to offer strong customer service results in easy access to
information, and to our engineering, technical and administrative staffs.






<P align="left" style="font-size: 10pt">We are a facilities-based carrier with points of presence in 30 major U.S.
cities. Our voice network features 11 voice switches and nationwide Feature
Group D (&#147;FGD&#148;) access, which enables low cost call origination. Our data
network consists of 17 Nortel Passports that have recently been upgraded to
support multi-protocol label switching (&#147;MPLS&#148;). Finally, we have relationships
with multiple tier I and tier II providers in the U.S. and abroad, which allows
for efficient call management and least-cost routing.

<P align="left" style="font-size: 10pt"><I>Technologies</I>


<P align="left" style="font-size: 10pt">Our Technologies segment offers a proven network convergence solution for the
deployment of IP-based voice and data services over a single network.
We have over
nine years of experience developing Voice over Internet Protocol (&#147;VoIP&#148;)
technologies. Our proprietary soft-switch solution enables existing telecom
service providers to reduce telecommunications costs and permits new
communications service providers to enter the enhanced communications market
with limited capital investment. In addition, we have a patent portfolio that
includes two VoIP patents which we believe are foundational VoIP
patents. We are pursuing opportunities to leverage our patents through a
focused licensing strategy that targets carriers, equipment vendors and customers
who are deploying IP for phone-to-phone communication.

</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt"><B>Business Strategy</B>



<P align="left" style="font-size: 10pt">Our business strategy is to build a large, profitable base of residential, SME
and corporate accounts that purchase bundled telecommunications services.
As part of our strategy, we have consolidated our high quality
communications networks and restructured our operations in order to leverage
our infrastructure across branded sales channels.


<P align="left" style="font-size: 10pt">To achieve our goals through both organic and acquisition growth, we
plan to:

<P align="left" style="font-size: 10pt"><I>Penetrate our distribution channels: </I>Our distribution channels, which we have
built over the last three years, continue to grow and mature. Our recently
launched Platinum Agent Program rewards agents for substantial and persistent
production. The equity incentives available under the program are
expected to increase both the number of commercial agents and the revenue contribution per
commercial agent. The program provides for stock purchase warrants
accruing for the benefit of selected agents, resulting in
recurring revenue for us and providing incentives for our agents so that their objectives and ours are aligned.


<P align="left" style="font-size: 10pt"><I>Expand our product portfolio: </I>We have recently expanded our product set to
include local dial tone in order to extend the  average life and
monthly average revenues of current and future customers. We are currently
delivering local dial tone services to customers via the Unbundled Network Element Service Platform
(&#147;UNE-P&#148;). In addition, we intend to roll-out VoIP and related services to our
residential, SME and enterprise customers beginning in the later
part of
2004 and continuing into 2005. Products will include an IP origination service with enhanced features
such as call screening and find me/follow me and multimedia business services
that integrate voice, video and text in a single communication session.


<P align="left" style="font-size: 10pt"><I>Enter new geographic markets: </I>In first quarter of 2004, we launched our local &#043;
long-distance bundled product set in New York and New Jersey. In the second
quarter of 2004, we entered the Pennsylvania, Massachusetts and Florida
markets. We anticipate adding additional states in the Verizon, SBC and
BellSouth territories in the second half of 2004. We currently offer
stand alone long-distance services nationwide in the U.S.


<P align="left" style="font-size: 10pt"><I>License our intellectual
property: </I>We have four issued patents and two pending patent
applications,
which we utilize to provide our proprietary solutions. We believe that we hold
foundational patents for the manner in which a significant portion of VoIP traffic is
routed in the marketplace today. We have licensed portions of our technology
to third parties on a non-exclusive basis. We plan to further monetize our
intellectual property by offering licenses to service providers, equipment
companies, and end-users who are deploying VoIP networks for phone-to-phone
communications.


<P align="left" style="font-size: 10pt">In connection with our efforts to enforce our patent rights, Acceris
Communications Technologies Inc., our wholly-owned subsidiary, filed a patent
infringement lawsuit against ITXC Corp. (&#147;ITXC&#148;) in the United States District
Court of the District of New Jersey on April&nbsp;14, 2004. The complaint alleges
that ITXC&#146;s VoIP services and systems infringe our U.S. Patent No.
6,243,373, entitled &#147;Method and Apparatus for Implementing a Computer
Network/Internet Telephone System.&#148; On May&nbsp;7, 2004, ITXC filed a lawsuit
against Acceris Communications Technologies Inc., and Acceris, in the United
States District Court for the District of New Jersey for infringement of five
ITXC patents relating to VoIP technology, directed generally to the
transmission of telephone calls over the Internet and the completion of
telephone calls by switching them off the Internet and onto a public switched
telephone network. We strongly believe that the allegations contained in
the ITXC complaint are, in their entirety, without merit and we
intend to provide a vigorous defense to the ITXC claims.


<P align="left" style="font-size: 10pt"><I>Leverage our existing scalable infrastructure: </I>We have created a network and
back office infrastructure that satisfies the needs of our existing customers
and that will support additional revenue growth without significant incremental
capital investment. We continue to reduce our network costs and are completing the consolidation of duplicate back office functions. Our IT strategy is
expected to ensure efficiency and integrity internally by eliminating redundant
costs and mitigating strategic risks. We expect to make significant
incremental capital investments pursuant to our expanded product
portfolio outlined above, and we have a base level of annual capital
investment necessary to keep our infrastructure efficient and
maintained.


</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt"><B>Litigation</B>



<P align="left" style="font-size: 10pt">
On April&nbsp;16, 2004, certain of our shareholders filed a putative derivative
complaint in the Superior Court of the State of California in and for the
County of San Diego, (the &#147;Complaint&#148;) against us, WorldxChange Corporation,
Counsel Communications LLC, and Counsel Corporation as well as certain of
our present and former officers and directors, some of whom also are or were
directors and/or officers of the other corporate defendants (collectively,
the &#147;Defendants&#148;). The Complaint alleges, inter alia, that the
Defendants, in their respective roles as our controlling shareholder and
directors and officers committed breaches of the fiduciary duties of care,
loyalty and good faith and were unjustly enriched, and that the individual
Defendants committed waste of corporate assets, abuse of control and gross
mismanagement. The Plaintiffs seek compensatory damages, restitution,
disgorgement of allegedly unlawful profits, benefits and other compensation,
attorneys&#146; fees and expenses in connection with the Complaint. We
believe that these claims in their entirety are without merit and we intend
to vigorously defend this action. There is no assurance that this matter
will be resolved in our favor and an unfavorable outcome of this matter
could have a material adverse impact on our business, results of operations,
financial position or liquidity.


<P align="left" style="font-size: 10pt">
In addition to the derivative suit above, we and several of our current and former executives and board members were
named in a securities action filed in the Superior Court of the State of
California in and for the County of San Diego on April&nbsp;16, 2004, in
which the plaintiffs made claims nearly identical to those set forth in the
derivative suit above, seeking compensatory, punitive and exemplary
damages. We believe that these claims in their entirety are
without merit and we intend to vigorously defend this action. There is no
assurance that this matter will be resolved in our favor and an unfavorable
outcome of this matter could have a material adverse impact on our business,
results of operations, financial position or liquidity.



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<P align="center" style="font-size: 10pt"><B>SIGNATURES</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.

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<TR style="font-size: 10pt">
    <TD valign="top">Date: May&nbsp;24, 2004</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">/s/ Gary M. Clifford
<hr size="1" noshade width="28%" align="left"></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:<BR>
Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Gary M. Clifford<BR>
Chief Financial Officer and<BR>
Vice President of Finance</TD>
</TR>
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