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U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2003

For the transition period from              to             

Commission File Number 0-27560

ACT Teleconferencing, Inc.

(Exact name of registrant as specified in its charter)

Securities registered under Section 12(g) of the Exchange Act:

Common stock, no 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 past 12 months (or for such shorter period that 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ¨

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

The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2003 was $30.7 million based on the closing price of the Company’s common stock on the Nasdaq National Market on June 30, 2003 of $2.99 per share.

The number of shares outstanding of the Company’s Common Stock, no par value was 14,625,963 shares as of March 31, 2004.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information called for by Part III is incorporated by reference to specified portions of the definitive Proxy Statement for the Registrant’s 2004 Annual Meeting of Stockholders, which is expected to be filed not later than 120 days after the Registrant’s fiscal year ended December 31, 2003.

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ACT Teleconferencing, Inc.

Form 10-K

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Caution Regarding Forward-Looking Statements

This annual report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as may, will, should, expect, plan, intend, anticipate, believe, estimate, predict, potential or continue, the negative of such terms, or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. In evaluating these statements, you should specifically consider various factors, including the risks outlined in “Risk Factors” herein. These factors may cause our actual results to differ materially from any forward-looking statement.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Important factors that could cause actual results to differ materially from such expectations described in this report include: the capital requirements required for the development and expansion of the Company’s business; risks relating to obtaining additional financing; risks associated with the expansion of the Company’s business and the possible inability of the Company to manage its growth; risks related to the Company’s expansion into new products and new technologies; the competitive nature of the teleconferencing business; and the Company’s dependence on its significant customers. Moreover, we do not assume responsibility for the accuracy and completeness of the forward-looking statements. We are under no duty to update any of the forward-looking statements after the date of this annual report to conform such statements to actual results or to changes in our expectations.

Throughout this report, ACT Teleconferencing may be referred to as “ACT”, “The Company”, “We”, or “Our”.

PART I

Item 1. Business

Overview

General. We are a full-service provider of audio, video, data and web-based conferencing services to businesses and organizations in North America, Europe and Asia Pacific. Our conferencing services enable our clients to cost-effectively conduct full service international conferences exchanging video, data and audio, by linking participants in geographically dispersed locations. We are present in nine countries and provide local access dial in access from a total of 45 countries. Our primary focus is to provide high quality conferencing services to organizations such as professional service firms, investment banks, high tech companies, law firms, investor relations firms, telecommunications companies and other domestic and multinational companies.

We were incorporated in December 1989 and began offering audio teleconferencing services at our Denver location in January 1990. In 1992 we invested in an audio teleconferencing operation in the United Kingdom, and in 1995 we invested in a similar operation in the Netherlands. In 1997 we announced a capacity expansion plan through which we intended to grow from our then three locations in three countries (United States, United Kingdom and the Netherlands) into Canada, France, Germany, Belgium, Australia, Hong Kong and Singapore offering a full range of audio, video data and web-based conferencing services. In 2001 we acquired the assets of 1414c, the worldwide videoconferencing service delivery business of PictureTel Corporation. The assets acquired include equipment, software and customer contracts. The assets were previously used by PictureTel Corporation to provide videoconferencing bridging services to its customers.

In 2002 we acquired Proximity, Inc., which provides room-based videoconferencing services in over 3,500 locations worldwide. With these acquisitions, we are able to offer a full range of video conferencing services to augment our existing audioconferencing services. In 2002 we also signed an outsourcing agreement with AT&T to provide audioconferencing services to AT&T and its customers in 45 countries outside of the United States.

Our financial results for the last three fiscal years, including geographic breakdown, is presented under Item 15, Exhibits, Financial Statements and Schedules.

Teleconferencing Market Growth Factors

Several key trends in today’s business world are driving growth in the world market for teleconferencing services:

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Audioconferencing Services. Our attended ActionCall^sm and automated Ready Connect^SM audioconferencing services include full-service attended conferencing; reservationless unattended conferencing; and a comprehensive suite of enhanced audioconferencing management services. Our web conferencing services supplement these offerings. Enhanced audioconferencing services, which are available on request, include:

We generate revenues by charging clients a fee-per-minute for bridging, call management and various additional conferencing services, as well as charges related to long distance transmission.

Videoconferencing Services. We offer videoconferencing services through multipoint video bridging centers worldwide. We have video service delivery centers in the United States, United Kingdom, Singapore and Australia; and secondary network operating facilities in other locations.

Our videoconferencing offerings include full-service advanced technical management features such as:

Revenue generation for videoconferencing is similar to audioconferencing, however the per-minute rate and transmission costs are more expensive. Although videoconferencing is more expensive than audioconferencing, the shift to Internet Protocol will decrease transport costs and associated revenues. We expect that improvements in equipment, increased familiarity with video, stable or declining transmission and equipment costs, and technology are expected to drive growth.

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Videoconferencing is the preferred medium in certain conferencing applications. Examples of professional and industry applications include: law (witness depositions), medicine (diagnosis and treatment through telemedicine), business (executive searches, meetings of executives, boards and committees), and education (distance learning discussions).

Web Conferencing: ACT offers its global customers a full suite of web-based conferencing products and services. Services include on-demand web conferencing (web-based visual plus telephone conference call), event web conferencing, as well as, web casting or streaming services. These services are used by ACT customers globally to support Investor Relations, Medical Marketing, Distance Learning and Event programs. ACT has yet to realize significant revenues from these services and combines these services with audio and video conferencing, when applicable.

Total Conferencing Services Market. We service a niche of the teleconferencing services market by focusing on high value-added services for large, multinational customers and large global telecommunications providers.

Audioconferencing Services Market. We are planning our growth based on the expectation that audioconferencing revenues will continue to grow at or above an estimated 9%.

Videoconferencing Services Market. Based on industry sources and independent research, we believe that worldwide videoconferencing revenues will be flat in 2004.

Web Conferencing Market: We believe based on industry sources and independent research that the overall web conferencing market will continue to grow at more than 20% through 2005. Web conferencing grew approximately 44% in 2003 compared with 2002.

Strategy. Our strategy is to provide high quality conferencing with a broad product line globally. Specifically, we aim to:

Service Quality and Client Care

We train all employees in the principles of client care management, including continuous service quality monitoring and the development of positive relationships with clients. We pursue a philosophy of continuous process improvement, and we consistently measure our performance and endeavor to improve it. We actively monitor, analyze and control all facets of a conference including: reservations, conference execution, and billing and follow-up with customer satisfaction surveys.

We also review our performance with our customers on a regular basis, set specific performance improvement goals, and modify our operations accordingly. Feedback from our customers indicates that these factors contribute to a high customer retention rate.

Sales and Marketing

Our global sales and marketing targets customers that can be acquired through direct acquisition, and through multiple channel partners. As our revenues are generated on a worldwide basis, and local countries have seasonal variations, there has been little consistent seasonal fluctuation in revenues on a worldwide basis, except for the month of August in Europe.

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We attract our customers through direct and indirect sales efforts such as customer referrals, telemarketing, trade show promotions, and advertising. Our direct sales force focuses on multinational and mid-market accounts. We also have several outsource relationships with telecommunications companies globally.

Our customer base is approximately 5,000 established accounts ranging from small manufacturing firms to Fortune 500 companies. Each customer is unique, with end-user populations ranging from 20 to 20,000 users. We cross-sell services to our global customer base, and specialize in supporting vertical applications.

We target the following customer groups for our conferencing services and applications:

Global Accounts. Our global account managers are responsible for some 50 multinational accounts. We focus on the home country or headquarters of these multinationals as a base for developing our global business relationships. Each account manager deals with the customer’s home country office or headquarters when establishing service. All sales directors and staffs participate in the account acquisition and implementation globally.

Our largest global account customer accounted for 7%, 7%, and 25%, of our consolidated revenues for the years ended December 2003, 2002 and 2001. Our second largest global account customer accounted for 6%, 7%, and 9% of our consolidated revenues for the same years. In 2003, our third and fourth largest global account customers each accounted for 6% of total revenues and all other customers individually accounted for less than 5% of total consolidated revenues for the year. In 2002 and 2001, all customers, other than the top two, individually amounted to less than 5% of total consolidated revenues for the year.

Direct Accounts. Our direct sales staff targets medium to large companies with a high volume of teleconferencing, as well as smaller companies with lower demand for our services. As in any business, purchasers of higher-volume sales benefit from volume discounts. While we continue to promote sales to our global accounts, we also seek situations in which we can provide competitive services to mid-sized companies at higher margins.

Outsourced and Co-Marketing Relationships. We participate in outsourcing and co-marketing relationships with major telecommunications companies globally.

Intellectual Property

We seek to protect our proprietary information and business practices as trade secrets. We have developed customized software that we consider proprietary for our service and quality control functions and also have developed in-depth technical know-how with respect to the operation of telecommunications equipment and the coordination of large-volume conference calls. We currently have two provisional patent applications pending before the United States Patent and Trademark Office. We also require each of our employees to execute a nondisclosure agreement for the protection of confidential information.

We own the following United Kingdom trademark registrations (some of which include words that are intentionally repeated): ACT and design; ACTIONCAST ACTIONCAST; ACTIONCALL ACTIONCALL; ACTIONSHOW ACTIONSHOW; ACTION FAX ACTION FAX and ACTION VIEW. We also own a Benelux trademark registration for ACT TELECONFERENCING. We own two pending U.S. trademark applications for the terms CLARIONCALL and READY CONNECT. We do not own a federal trademark registration for the term ACT in the United States. Since a wide variety of companies use the term in their corporate name or advertising, the trademark registration could be prohibitively expensive. We do claim a number of common law marks that use the terms ACT or ACTION as a part of such marks. We also believe that we are the only enterprise currently using ACT in the teleconferencing industry.

Suppliers

We are not dependent on any single carrier or supplier for any of the services we sell. We have negotiated volume discounts with our primary long distance carriers and believe we could negotiate similar arrangements at similarly competitive prices with one or more other carriers should our current carriers be unable to continue to provide service at competitive prices. For example, we have a three-year agreement to purchase the bulk of our network services from AT&T. However, we have the right to negotiate our commitments down to the level of actual usage — without penalty — in the event of a business downturn or volume reductions beyond our control.

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The equipment we purchase for use in our operations also is available from a variety of suppliers, some of which compete in the teleconferencing services business.

Competition

We compete with major long distance companies, independently-owned conferencing companies, in-house services such as company-operated bridges and private-branch exchange equipment.

The principal competitive factors in the conferencing market are: service, quality, reliability, price, name recognition, value added features and available capacity. The location of an operations center can also be a competitive factor, as a local presence will reduce transmission costs and reflect the language, accent or business practices of local customers. In certain cities and countries we have opened local sales offices to ensure that marketing is more personal and effective.

Our competition comes from large companies such as British Telecom, AT&T, France Telecom, Deutsche Telekom, Telstra, Hong Kong Tel, MCI and Sprint. We also face competition from independent conferencing companies similar to us, including Premiere Technologies, Intercall, V-Span and Raindance. In the United States we also may face additional competition from the regional carriers which, under the Telecommunications Act of 1996, eventually will be allowed to provide long distance services nationwide under certain conditions, and whose long distance customers would expect access to conferencing services. This may become an additional opportunity for us, as certain carriers may choose to outsource their customers’ needs to independent conferencing providers.

Although the major long distance carriers hold a large share of the conferencing services market, we have been able to compete on the basis of quality of service for the large-volume business of prestigious companies such as investment banks, accounting and consulting firms, and law firms. Excess long distance line capacity enables the long distance companies to offer discounted prices to high-volume conferencing customers, but they generally charge higher conferencing prices to smaller- and medium-volume customers. This creates a pricing structure that supports competition on a price-and-service basis for the conferencing business of medium and smaller businesses.

There are few regulatory barriers to entry in the countries in which we operate, but new entrants into the conferencing business will face various economic barriers. The complex planning, installation and operation of a global conferencing platform involving multiple facilities and office locations such as ours, together with the implementation of network technology and coordination of operations that is required to operate such a global platform would likely require extensive funding, management, and time to replicate.

Some companies own and operate their own conferencing bridges, but many companies find that the costs of operating their own bridge outweigh the benefits and prefer to outsource their conferencing services. Technology is available to enhance private branch exchange conferencing capability (usually up to six calls), but this type of conference call typically has poor sound quality, and each additional line weakens the overall sound volume. Additional competition also may develop from more sophisticated telephone sets and other centralized switching devices. These alternative techniques may enable our customers to conduct some of their own conferences, but we believe they will continue to outsource larger conferences, particularly if their remote meetings require a collaboration of audio, video and web conferencing techniques.

Regulation

Although the telecommunications industry has historically been subject to extensive regulation, deregulation in the countries in which we currently operate has resulted in no material regulatory impact on the delivery of our teleconferencing services.

All of our foreign subsidiaries are established as statutory reporting companies incorporated under the laws of their local jurisdiction. We operate each foreign subsidiary in the local currency. Material subsidiaries are subject to statutory audits once a year, and these statutory results are reconciled to Generally Accepted Accounting Principles for consolidated reporting in the United States. We also pay excise taxes, import duties, sales taxes, payroll taxes and other taxes as required in each jurisdiction. We are in good standing in all the countries in which we operate.

Apart from company administration, tax laws and telecommunications laws the other major area of regulation that impacts us is employment legislation. Labor laws, especially in Europe, are particularly complex and expensive to administer in comparison to the flexibility of the US labor markets. From time to time we incur a significant cost when there is a need to reduce our personnel in overseas jurisdictions. This cost is dependent upon the employee’s status, the employee’s history, and the reason for dismissal, retrenchment or layoff.

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Employees

As of December 31, 2003 we had a total of 371 full-time equivalent employees worldwide. Our entry into new markets eventually will require new employees, but we expect growth in the number of employees to be slow. We do not anticipate any material change in the number of employees in the near future. None of our employees are represented by labor unions. We have not experienced any work stoppages and consider our employee relations to be good.

Item 2. Facilities

Our development of local facilities serves the dual purpose of providing local language, local currency and local time zone services to the areas served by each service delivery center, as well as backup and overflow capacity among other centers in the event all or part of a conference needs to be re-routed from a service delivery center that is at full capacity.

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We currently lease office and service delivery space at all of our locations which are listed in the table below.

Our development of local facilities serves the dual purpose of providing local language, local currency and local time zone services to the areas served by each service delivery center, as well as, backup and overflow capacity among other centers in the event all or part of a conference needs to be re-routed from a service delivery center that is at full capacity.

We believe that our existing facilities are adequate for our current operations.

Item 3. Legal Proceedings

We are engaged from time to time in minor legal proceedings such as employee dispute and arbitration. These are in the normal course of business and we are not currently aware of any legal proceedings that we would consider material to our business or results of operations.

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Item 4. Submission of Matters to a Vote of Security Holders

None

PART II

Item 5. Market for Common Equity and Related Stockholder Matters

Our common stock has been traded on the Nasdaq National Market under the symbol ACTT since September 24, 2001. We were listed on the Nasdaq SmallCap Market from March 11, 1996 to September 21, 2001. On March 31, 2004, the last reported sale price of our common stock was $2.78 per share.

Shareholders. As of December 31, 2003 we had approximately 350 common shareholders of record and an estimated 3,200 additional beneficial holders whose stock was held in street-name by brokerage houses.

Dividends. We have never paid any dividends on our common stock. We have paid dividends on our Series A and Series C Preferred Stock. Any future decision as to the payment of dividends will be at the discretion of our Board of Directors and will depend upon our earnings, financial position, capital requirements, plans for expansion, loan covenants and such other factors as the Board of Directors deems relevant. The terms of our indebtedness currently prohibit us from paying any dividends.

Sales of Securities.

In conjunction with the issuance of $7,308,000 in subordinated promissory notes dated May 12, 2003, we issued stock purchase warrants for the purchase of 2,333,334 shares of our common stock at an exercise price of $2.50 per share to the following investors: KCEP Ventures II, L.P. – 916,667 warrants, NewWest Mezzanine Fund LP – 541,667 warrants, Convergent Capital Partners I L.P. – 541,667 warrants, and James F. Seifert Management trust dated October 8, 1992 – 333,333 warrants. At December 31, 2003 all 2,333,334 warrants were outstanding and are scheduled to expire on May 12, 2010.

In conjunction with the settlement of a lawsuit in September 2003, we issued 150,000 shares of common stock and 300,000 warrants to purchase common stock. The warrants are exercisable at $2.50 and expire on September 26, 2008.

Item 6. Selected Consolidated Financial Data

Selected Consolidated Financial Data

The following selected consolidated financial data should be read in conjunction with the Consolidated Financial Statements and related Notes to the Consolidated Financial Statements appearing elsewhere in the filing and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Additionally, quarterly selected financial data is presented in the Notes to the Consolidated Financial Statements.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Components of Major Revenue and Expense Items

Revenues. We earn revenues from fees charged to clients for audio, video, data and web-based teleconference bridging services, from charges for enhanced services, and from rebilling certain long-distance telephone costs. We also earn revenue on conferencing product sales and video event services.

Cost of Sales. Cost of sales consists of long distance telephony costs, depreciation on our teleconferencing bridges and equipment, equipment product costs, operator and operations management salaries and office expenses for operations staff.

Selling, General and Administration Expense. Selling, general and administration expense consist of: salaries, benefits, professional fees and office expenses of our selling and administrative organizations.

Significant Accounting Policies

Internal Use Software—Under the guidance provided in Statement of Position 98-1, we capitalize costs incurred in developing internal use computer software. We capitalized internal use software development costs of $1.0 million, $1.0 million, and $1.1 million for the years ended December 31, 2003, 2002, and 2001, respectively.

Goodwill—Goodwill represents the excess of purchase price over tangible and other intangible assets acquired less liabilities assumed arising from business combinations. In compliance with SFAS No. 142 , Goodwill and Other Intangible Assets”‘ (“SFAS 142”), issued in June 2001, we have not amortized goodwill for business combinations after June 2001 and we have ceased amortizing all such goodwill effective January 1, 2002. Prior to the adoption of SFAS 142, goodwill was amortized on a straight-line basis over 15 or 25 years.

As required by SFAS 142, we completed, as of January 1, 2002, the initial goodwill impairment test required by SFAS 142. In completing this assessment, we compared the estimated fair value to the current carrying value of goodwill.

As of December 31, 2003 the Company had a total of $18.3 million in net goodwill. $14.5 million is attributed to acquisitions occurring in 2001 (40% minority interest in UK subsidiary and PictureTel 1414c video conferencing business) and $1.9 million is related to the acquisition of Proximity in January, 2002. (See notes 1 and 15 to Consolidated Financial Statements).

Transactions with Related Parties as Defined by SFAS No. 57— These are disclosed in our Proxy Statement for Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year ended December 31, 2003.

Foreign Currency Conversion— We and our U.S. operating subsidiaries use the U.S. dollar as their functional currency and our international subsidiaries use their local currencies as their respective functional currencies. Financial statements of foreign subsidiaries are translated into U.S. dollars at current rates, except that revenues, costs and expenses are translated at average current rates during each reporting period.

All intercompany transactions throughout 2003 were billed at one standard exchange rate for the year. The intercompany accounts were settled using spot rates in effect at the date of settlement. In accordance with FASB 52. gains and losses resulting from these foreign currency transactions are included in the consolidated statement of income. In addition, exchange gains arising from the restatement into US dollars of the net intercompany accounts at the balance sheet date are also included in the consolidated statement of income as though such accounts had been settled on the balance sheet date. The foreign exchange gain arising from such transactions in 2003 was $460 thousand.

The effect of translating all other accounts of our foreign subsidiaries into U.S. dollars has been included in stockholders’ equity as a cumulative foreign currency translation adjustment. Prior to 2003, we treated intercompany transactions as investments, and gains and losses from remeasurement of those accounts were also were included in the cumulative foreign translation adjustment. Gains (losses) due to foreign currency translation for the years ended December 31, 2003, 2002 and 2001 were $1,552, $558 and ($961), thousand.

Employee Stock Options—We have elected to follow Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25) instead of FASB Statement No. 123, “Accounting for Stock-Based Compensation.” If we had elected to adopt

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FASB Statement No. 123, our net income/(loss) available to common shareholders would have been approximately $(9,900), $(9,061), and $(1,314) or $(0.97), $(1.01), and $(0.20) per diluted share for the years ended December 31, 2003, 2002, and 2001 respectively, as compared to our actual reported net income/(loss) of $(9,219), $(8,285), and $(594) or $(0.90), $(0.93), and $(0.09) per diluted share for the years ended December 31, 2003, 2002, and 2001, respectively.

Significant Business Activities

During 2003 and the first quarter of 2004, the following developments were of significance:

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The following table summarizes our most important revenue trends:

Concert Downsizing

Concert was a major customer in 2001 when revenues reached their peak at an annualized revenue run rate of approximately $12 million. During 2002, Concert was closed and merged into AT&T. Throughout this period, we continued to maintain our worldwide infrastructure, telecommunications network and dedicated employee base that we had originally installed to provide services through our relationship with Concert. In 2002, our estimated costs including depreciation were approximately $5 million. The reason for continuing to incur this significant infrastructure cost was due to the anticipation of additional conferencing volumes from all other sources, which were ultimately achieved as a result of the signing of an outsourced agreement with AT&T in August 2002.

AT&T Outsourcing Contract

Among many other telecommunications services, AT&T provides high quality teleconferencing services to large corporate customers in the U.S. With over four million corporate customers, many of these use teleconferencing services domestically but also have international requirements

As AT&T was previously a 50 percent shareholder in Concert and due to the existence of ACT’s established and extensive global service platform built for Concert, it was decided that ACT’s worldwide teleconferencing network with established and dedicated local facilities would be an effective way to provide conferencing services to those subsidiaries of American multinationals who are already AT&T customers in the U.S. but who require conferencing services overseas.

We started implementing this outsource contract in August, 2002 and have seen rapid revenue growth since then. Current monthly revenues are at an estimated annualized run rate of approximately $4.8 million as of January 2004 with significant additional potential growth opportunities expected in 2004 and 2005.

The outsource contract requires ACT to provide detailed levels of quality, sales and service positioning, customer provisioning and comprehensive pricing for a number of different conferencing products, services and applications. The relationship between both contracting parties is excellent; and in the absence of any (presently unknown) adverse factors, we expect this contract, which expired on March 31, 2004, to be extended through the end of 2006. We also expect this revenue stream to continue to grow.

Audioconferencing Revenues

Automated voice conferencing volumes continued to grow at a rapid rate for 2003 and pricing remained competitive. Most of our U.S. and Canadian customers have already made the transition to automated services, and we now expect strong growth in automated services in the European and Asian Pacific markets over the next few years. We expect that the growth of automated services at reduced prices will continue unabated, but the emergence of this product line nevertheless has highlighted some fundamental applications whereby operator-attended services will continue to be required by our customers. Our strategy remains to provide a broad range of services to our customers which fit their different communications needs. We expect our automated services to complement our fully-attended offering, and vice versa.

Attended voice conferencing services remains one of our core business and still accounts for approximately 40 percent of total revenues. We are focused on developing new markets and applications for customers in the attended voice conferencing services especially in areas such as training, education and large participant calls. While we do

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expect this overall market will grow at a much lower rate over the next few years we also believe that we may be able to achieve a higher growth rate in attended services than the overall market because we are one of the specialized, niche players and have the capacity for faster growth internationally.

Videoconferencing revenues

Videoconferencing revenues have become a more important component of our business, now comprising 33% of total revenue, due to our acquisition of PictureTel’s 1414c videoconferencing division in October 2001 and renamed ACT Videoconferencing, and our acquisition of Proximity in January 2002.

Total videoconferencing revenues grew by 3% in 2003. As with audioconferencing, we expect to see continued growth in the videoconferencing areas—especially as companies continue to reduce travel costs and executives prefer to avoid non-essential travel. In today’s uncertain climate with the threat of terrorism and warfare, videoconferencing remains an attractive proposition for high-level executives unwilling to travel.

We believe we have identified good opportunities for further cost reduction and network rationalization in our videoconferencing business especially in the telecommunications costs area. We have also identified opportunities to cross-sell our services from audioconferencing to videoconferencing, and vice versa.

We expect that our videoconferencing business will see a strong stimulus for usage as large-volume users transition their telecom usage over to the Internet thus significantly lowering telecom costs. Internet transmission not only lowers telecom costs for videoconferencing users but also provides higher-quality transmission and lower network failure rates. As transmission costs are fixed, these users are able to utilize videoconferencing services for as long as they need to without incurring the significant additional long distance telephony costs which, up to now, have been a major impediment to the development of videoconferencing.

The much awaited high-growth rates in videoconferencing, nevertheless, may be tempered by the emergence of web conferencing applications. Many applications which were previously more suited to a videoconference can now be handled by combining voice and web conferencing at a less expensive price. We believe therefore that videoconferencing will continue to only be used in situations where it is specifically required by business executives for a specific reason. Web and audioconferencing will be used in most other conferencing situations.

Results of Operations

Fiscal Year Ended December 31, 2003, compared to Fiscal Year Ended December 31, 2002

Net Revenues. Net revenues increased 3 percent to $55.8 million for the year ended December 31, 2003, compared to $53.9 million for 2002. Concert audioconferencing revenues ceased in 2003. This loss of revenue was offset by a $3.4 million increase in global service channel audioconferencing. Audioconferencing accounted for 67%, 67%, and 89% percent of revenue in 2003, 2002, and 2001 respectively. Videoconferencing and other revenue grew by $0.6 million, or 3% in 2003. It accounted for the balance of our revenue. For a detailed discussion of changes in our revenue streams refer to Significant Business Activities, above.

Geographic Breakdown: In 2003 North America, Europe and Asia/Pacific—the Company’s three primary geographic markets—generated approximately 58 percent, 32 percent and 10 percent, respectively, of our revenue, compared with 61 percent, 31 percent and 8 percent in 2002.

Gross Profit. Gross profit increased 7 percent to $19.8 million for the year ended December 31, 2003, compared to $18.5 million for the prior year. Gross profit percentage increased to 35 percent of net revenues for the year ended December 31, 2003, compared to 34 percent of net revenues for 2002. This gross profit increase reflects reduced network costs, and increased usage of our worldwide infrastructure as a result of the AT&T contract, and the further stabilization of our operating costs. We anticipate continuing reductions in our video and audio network costs, so that our gross margins will eventually improve back towards our target of 50 percent of net revenues.

Selling, General and Administrative Expense. Selling, general and administrative expense for the year ended December 31, 2003 was $24.4 million or 44 percent of revenue, compared to $22.5 million or 42 percent of revenue for 2002. A large part of the 8 percent increase in such expense was incurred as legal settlement and staff severance costs. We expect, with continued strong control of our operating expenses and the benefit of programs implemented in the forth quarter of 2003, that our selling, general and administrative costs will decrease as a percentage of revenues during 2004.

Operating Loss. Operating loss declined by $1.5 million to a loss of $4.6. A non-recurring goodwill impairment charge of $2 million in 2002 negatively impacted that year’s results. Other operating costs were comparable with 2002.

Interest Expense. Net interest expense grew by 100 percent to $3.1 million from $1.5 million. This is due primarily to an increase in debt during the year of approximately 25% at interest rates substantially higher than prior debt, and recognition as a finance cost of the earned performance provision in connection with subordinated debt issues in June 2003.

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Provision for Income Taxes. Provision for income taxes increased to approximately $342,000 from $125,000 for the year ended December 31, 2003, compared to 2002, as a result of increased taxable income earned by our United Kingdom and Canada subsidiaries. We paid no other income taxes due to available domestic and international tax loss carry-forwards of approximately $14 million.

NetLoss. Net loss increased by $0.9 million for the reasons discussed under Operating Loss, above, plus the effects of a loss on foreign currency transactions of $0.5 million.

Fiscal Year Ended December 31, 2002, compared to Fiscal Year Ended December 31, 2001

Net Revenues. Net revenues increased 16 percent to $53.9 million for the year ended December 31, 2002, compared to $46.6 million for 2001. The 16 percent revenue growth resulted from an increase in video conferencing revenues due to two acquisitions, but was offset by the decline in Concert audio conferencing revenues. Concert revenues declined by $9.6 million or 83% in 2002. This was somewhat offset by a $4.2 million increase in Global Service Channel audioconferencing. Audioconferencing accounted for 67 percent, 89 percent and 93 percent of revenue in 2002, 2001 and 2000 respectively. Videoconferencing and other revenue grew by $12.9 million, or 256% in 2002. It accounted for the balance of our revenue.

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Geographic Breakdown: In 2002 North America, Europe and Asia/Pacific—our three primary geographic markets—generated approximately 61 percent, 31 percent and 8 percent, respectively, of our revenue.

Gross Profit. Gross profit declined 16 percent to $18.5 million for the year ended December 31, 2002, compared to $22.1 million for the prior year. Gross profit percentage decreased to 34 percent of net revenues for the year ended December 31, 2002, compared to 47 percent of net revenues for 2001. This gross profit decrease reflects the increased volume of higher cost videoconferencing volumes due to the higher network costs associated with videoconferencing. The decline in gross profit also highlights the loss of Concert business which had high margins, and the residual high fixed costs as a result of keeping our telecom network, and our capital and operating infrastructure intact worldwide as discussed above (pending implementation of the AT&T contract).

Selling, General and Administrative Expense. Selling, general and administrative expense for the year ended December 31, 2002 was $22.5 million or 42 percent of revenue, compared to $20.1 million or 43 percent of revenue for 2001. The 12 percent increase in such expense was incurred mainly as a result of the increase in selling, general and administrative staff arising as a result of our two videoconferencing acquisitions—namely, the 1414c division of PictureTel and Proximity, Inc.

Operating Income (Loss). Operating income (loss) declined by $8 million to a loss of $6.1 million and reflected the following:

Interest Expense. Net interest expense grew by 15 percent from $1.3 million to $1.5 million. This is due primarily to an increase in debt during the year as well as the addition of debt for acquisitions during 2001.

Provision for Income Taxes. Provision for income taxes decreased to approximately $125,000 from $875,000 for the year ended December 31, 2002, compared to 2001, due to reduced taxable income earned by our United Kingdom and Canada subsidiaries. We paid no other income taxes due to available domestic and international tax loss carry-forwards of approximately $12 million.

Net Income (Loss). Net loss increased by $7.4 million for the same reasons discussed under Operating Income (Loss), above.

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Liquidity, Capital Resources and Cashflow

Sources and Uses of Funds

For the year ended December 31, 2003 we generated and used cash proceeds as follows:

At December 31, 2003 we had approximately $13.2 million in current assets, in relation to $18.7 million in current liabilities (excluding the deferred income of $1.6 million which is not a cash liability). Subsequent to year end, we raised $3.3 million of equity financing in the first quarter of 2004.

We have assessed our cashflow needs for 2004 as follows:

Many of our debt instruments are interconnected, and if there is default on any one of them, they must all be repaid. In addition, our revolving line of credit of $2 million which was due on March 31, 2004 has been extended to May 31, 2004. This is currently being re-negotiated, but failure to obtain a further renewal might cause the company to need to seek additional funds.

With the expected growth in our business and existing debt repayment requirements, we may need to seek additional sources of financing which may include: additional public or private debt, equity financing by us and/or our subsidiaries, or other financing arrangements. However, there is no assurance that the financing will be available to us and/or on acceptable terms should we decide to seek it.

The facilities-based teleconferencing service business is a capital intensive business. Our operations have required and will continue to require capital investment for: (i) the purchase and installation of conferencing bridges and other equipment in existing bridging networks and in additional bridging networks to be constructed in new service areas; (ii) the acquisition and expansion of conferencing platforms currently owned and operated by other companies; and (iii) the evolution of the platform to support new products, services and technologies. Our expected capital expenditures for general corporate and working capital purposes include: (i) expenditures with respect to our management information system and corporate service support infrastructure and (ii) operating and administrative expenses with respect to new bridging platforms, networks and debt service. We plan to make substantial capital investments in connection with plans to construct and develop new bridging networks, as well as for technology upgrades. Expansion of our bridging networks will include the geographic expansion of our existing operations, and we will consider the development of new markets. In addition, we may desire to acquire existing conferencing companies and their bridging platforms and networks in the future.

Occasionally we evaluate potential acquisitions of conferencing assets currently owned and operated by other companies, and expect to continue to do so. In the event we enter into a definitive agreement with respect to any acquisition, it may require additional financing.

In the event that our plans or assumptions change or prove to be inaccurate, or the foregoing sources of funds prove to be insufficient to fund our growth and operations, or if we complete acquisitions or joint ventures, we will be required to seek additional capital sooner than currently anticipated. Our revenue and costs are dependent upon factors that are not within our control, such as regulatory changes, changes in technology, customer mergers and acquisitions and increased competition. Due to the uncertainty of these and other factors, actual revenue and costs may vary from expected amounts, possibly to a material degree, and such variations are likely to affect the level of our future capital expenditures and expansion plans.

The financial statements do not include any adjustments that could be required if the Company were unable to continue as a going concern. The company has recorded net losses of $9.2 million in 2003 and $7.6 million in 2002. These losses and deficit cash flows have required the Company to seek additional financing and has significantly affected its continued ability to obtain financing at desirable terms . Management believes that it will be able to return the Company to a position of profitability and positive cash flow in 2004 based on actions that have been taken and the following considerations.

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Our Contractual Obligations as of December 31, 2003 are as follows:

Recent Accounting Pronouncements

In January 2003, the FASB issued FASB Interpretation No. (FIN) 46, Consolidation of Variable Interest Entities. FIN 46 addresses the requirements for business enterprises to consolidate related entities, for which they do not have controlling interests through voting or other rights, if they are determined to be the primary beneficiary as a result of variable economic interests. FIN 46 provides guidance for determining the primary beneficiary for entities with multiple economic interests. FIN 46 is effective at the time of investment for interests obtained in a variable economic entity after January 31, 2003. Beginning in fiscal 2004, FIN 46, as amended, will be applied to interests in variable interest entities (VIEs) acquired prior to February 1, 2003. We currently have no contractual relationship or other business relationship with a variable interest entity and therefore the adoption of FIN No. 46 will not have a material effect on our consolidated financial position, results of operations or cash flows. However, if we enter into any such arrangement with a variable interest entity in the future, our consolidated financial position or results of operations may be adversely effected.

In May 2003, the FASB issued Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity SFAS 150 requires that certain financial instruments, which under previous guidance were accounted for as equity, must now be accounted for as liabilities. The financial instruments affected include mandatory redeemable stock, certain financial instruments that require or may require the issuer to buy back some of its shares in exchange for cash or other assets and certain obligations that can be settled with shares of stock. SFAS 150 is effective for all financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS 150 did not have a material impact on our consolidated financial position, results of operations or cash flows.

RISK FACTORS

An investment in our common stock involves a high degree of risk. Investors evaluating us and our business should carefully consider the factors described below and all other information contained in this Annual Report on Form 10-K before purchasing our common stock. Any of the following factors could materially harm our business, operating results and financial condition. Additional factors and uncertainties not currently known to us or that we currently consider immaterial could also harm our business, operating results and financial condition. Investors could lose all or part of their investment as a result of these factors. As defined in the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, except for the historical information contained herein, some of the matters discussed in this Annual Report on Form 10-K contain forward looking statements regarding future events that are subject to risks and uncertainties. The following factors, among others, could cause actual results to differ materially from those described by such statements.

We may fail to meet market expectations because of large fluctuations in our quarterly operating results.

As a result of increased competition, changes in the mix of automated versus attended audio conferences, competitive price pressure, and the other risks described in this section, our quarterly operating results have varied significantly from period to period in the past and are likely to continue to vary significantly in future periods. The primary factors that may cause fluctuations in our quarterly operating results include increased competition, continued pricing pressure, and ongoing market demand for conferencing services. Additionally, we expect our results to fluctuate based on seasonal sales patterns. The usage of our services declines during the northern hemisphere summer (especially in Europe in August) and around the Thanksgiving and December holidays. Our revenue during these seasons historically does not maintain the same pace as other periods of the year because of less use of our services by business customers. Quarterly variations in our operating results may make it difficult to project our future performance and could result in increased volatility in our stock price.

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We may be adversely affected by downward price pressure in the teleconferencing industry.

The prices for our services are subject to rapid and frequent changes. In many cases, competitors provide their services at significantly reduced rates, or even free of charge, or on a trial basis in order to win customers. In addition, major telecommunications providers enjoy lower telephony costs as a result of their ownership of the underlying telecommunications network. As a result, these carriers can offer services similar to ours with certain volume discounts or substantially reduced prices. Price competition in the long distance market has had a negative impact on our ability to mark-up our wholesale prices on long distance transport. In response to these factors, we have reduced our pricing in certain circumstances and may be required to reduce prices further. Reductions in the prices we are able to charge may not be offset by increases in the volumes we handle, and accordingly may decrease our operating margins.

Increased use of automated teleconferencing services may result in a decrease in the average prices we charge our customers.

The trend toward increased use of teleconferencing has been accompanied by more demand for low priced automated conferencing. As the volumes of all types of teleconferences have grown, the percentage of conferences that are higher-priced, operator-attended conferences has declined, and we expect this trend to continue at least for the near term. Migration to automated services has the effect of decreasing our price per minute and may reduce our margins.

Our plans to operate and grow may be limited if we are unable to obtain sufficient financing.

Our growth into automated conferencing, web-conferencing services, video, and as an outsource provider for international calls has strained our financial resources. Nonetheless, we may need to be prepared to expand our business through further strategic acquisitions and new markets when we identify desirable opportunities. We may need additional equity and debt financing, collaborative arrangements with channel partners, or funds from other sources for these purposes. We may not be able to obtain such financing on acceptable terms, or at all. Recent debt financing has added interest expense that has further burdened our cost structure. Failure to obtain additional financing could weaken our operations or prevent us from achieving our expansion goals. Equity financings, as well as debt financing with accompanying warrants, can be dilutive to our shareholders and may make it difficult to sell additional equity at depressed prices, and certain debt financings may impose restrictive covenants on the way we operate our business.

We may not be able to fully comply with all applicable loan covenants.

We have relied on bank financing, preferred stock issuances, and debt transactions to provide needed capital while the equity markets have been depressed. These financings require compliance with certain covenants. If we are out of compliance to a material degree with any of these covenants, we may not be able to obtain waivers of non-compliance from our lenders or holders of our preferred stock. This could result in penalties ranging from the issuance of shares or warrants to these lenders or a default on our loans, which would allow certain lenders to accelerate the due date of our indebtedness to them. We may not have sufficient capital to repay any amounts of accelerated indebtedness. Our senior subordinated lenders have agreed to waive breaches of covenants of which we and they are aware, as of March 31, 2004. We cannot guarantee that any of our lenders will waive any future failures to comply with applicable covenants.

We face operational and financial risks relating to our international operations.

International sales comprise a significant portion of our revenues, and we anticipate that this will continue. As a result of their distance from the United States, different time zones, culture, management and language differences, international operations pose greater risk than our domestic operations. For example:

Our major competitors in the telecommunications industry have greater capital resources and brand name recognition than we have, which makes it difficult for us to compete with them.

The telecommunications industry is highly competitive, and most of our competitors and potential competitors have substantially greater capital resources and name recognition than we have. Accordingly, we cannot compete with them in terms of

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advertising, marketing, sales, and deployment of capital. Certain of our competitors that have emphasized automated conferencing services have achieved operating efficiencies through volumes that we do not yet have. To compete successfully against other telecommunications and teleconferencing providers, we must maintain competitive pricing while at the same time offering significantly higher quality services. Pricing pressures may result in a reduction in our operating margins. Alternatively, if our service quality does not meet customer expectations, our customers may move away from us in favor of more established competitors. Either of these could hinder our ability to grow our revenues and to achieve our operating goals.

Third party vendor dependency.

We rely on third party telecommunications providers for transmission of our conferencing calls. The failure of any of these providers could have an adverse effect on our ability to seamlessly service our customers.

Our revenues may fluctuate because we draw significant revenues from major clients, who may transfer their business away from us.

As disclosed in Item 1 under “Sales and Marketing” our two largest customers accounted for 14 percent of our revenues, and we expect revenues from our largest customer to grow rapidly over the near term. Due to concentration of our revenues, the loss of any one of our largest customers or one of our principal outsource channel partners would have a significant adverse effect on our conference volumes. The loss of several of our larger customers would also have an adverse effect on our volumes and this risk will increase if our largest customers increase their volumes of business with us faster than we increase volumes from other sources. Any such reduction in our volumes would have a material adverse effect on our revenues and results of operations.

Our agreements with customers generally do not contain minimum purchase commitments, and customers can easily switch to a competing provider or allocate their business among several vendors. Our customers may discontinue business with us in the future if our products and services become obsolete or technological advances allow our customers to satisfy their own teleconferencing needs. Mergers, consolidations, or other changes in ownership or alliances that impact any of our customers may also cause our customers to curtail or cease doing business with us. To the extent we lose customers due to any of these factors, our revenues will be adversely affected.

We have made only a limited entry into the web conferencing market.

We have recently entered the web or Internet based conferencing market. The annual market for Internet based conferencing services is growing rapidly. Although still small in relation to the audio conferencing market that we serve, our customers are increasingly demanding a full range of conferencing services and our web-based conferencing services are beginning to grow. However, if we do not fully develop this market, especially in web conferencing and Internet telephony, we may experience a slowdown in our overall conferencing revenue growth and our competitors may grow faster than we are able to grow. The expansion of our business into Internet-based service offerings, simultaneously with other growth needs, will place a strain on our current financial and staff resources. If we are not able to deploy the assets and personnel needed to fully support web-based services, we expect to miss out on significant growth opportunities.

If our Internet telephony conferencing services do not gain market acceptance or we are unable to finance this opportunity, our potential for growth in this market sector will be limited.

We estimate that over the next 3 years we will convert certain of our existing high volume multinational customers to an Internet telephony based conferencing service with the ability to handle higher volumes at lower prices. We cannot be certain that Internet telephony services will continue to gain worldwide corporate acceptance or prove to be a viable alternative to traditional telephone service. If the Internet telephony market fails to develop or develops slower than we expect, our future revenues from teleconferencing over the Internet will be limited. This could adversely affect the revenue growth rate that we currently expect to achieve. Our prospective Internet telephony solutions also will be affected by the availability of capital.

Other technological innovations could render our current services obsolete.

We expect technical innovations to stimulate new developments in teleconferencing services. Such technical innovations include the development of more sophisticated computers, telephone sets, private branch exchanges, customer-owned bridges, centralized office switching equipment, and Internet telephony services. Other technology-based competitive developments within the telecommunications industry, such as low-priced long distance services and new uses for the Internet, may lead the major telecommunications companies to offer low-cost teleconferencing services as a strategy to obtain greater market share in other product areas. These innovations and developments could render our current service offerings obsolete or uneconomic, which could cause us to lose customers and revenues.

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We occasionally experience technical malfunctions and other hazards which adversely affect our operations and create costs.

We depend upon our software systems, communications hardware, and enhanced services platform to conduct our conferencing business on a worldwide basis. Our systems, communications hardware, vendors’ services, and platform are vulnerable to damage or interruption from:

In previous years our business has been affected by occasional network failures with consequent poor service and loss of customer goodwill. We estimate that we usually have 6 to 10 major failures every year as a result of the factors listed above. Any increase in outages or failures due to these types of hazards would result in additional costs resulting from business interruption, and we could lose customers affected by these outages.

There are few regulatory barriers to entry into our current markets, and new competitors may enter at any time.

There are few regulatory barriers to competition in our markets. Recent federal legislation in the United States allows local exchange carriers to offer teleconferencing services. This legislation may result in additional competition if some or all of the local exchange carriers, including any of the regional Bell operating companies, choose to enter or expand their activities in the teleconferencing market in the United States.

Moreover, there are no significant regulatory barriers to enter the foreign markets we serve in Australia, Canada, France, Germany, Hong Kong, the Netherlands, Singapore, or the United Kingdom, and competitors may enter at any time. To the extent that our customers or potential customers choose to do business with these competitors, their entry into our markets would adversely affect our ability to grow our conferencing volumes and generate revenue.

Our common stock price has been highly volatile, and we expect this volatility to continue.

The market price of our common stock is highly volatile and may decline further. For example, from January 1, 2002 through December 31, 2003 our stock price ranged from a high of $8.68 to a low of $.65, and closed on December 31, 2003 at $1.08. On April 8, 2004 our common stock closed at $2.99. We anticipate that the volatility of our common stock price may continue due to factors such as:

These factors are in addition to significant price and volume fluctuations in the securities markets that may be unrelated to our operating performance.

Provisions of our articles of incorporation and agreements we have entered could delay or prevent a change in control of ACT.

Certain provisions of our articles of incorporation, and certain agreements we have entered, may discourage, delay, or prevent a merger or acquisition that a shareholder may consider favorable. These provisions include:

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Our interest expense is sensitive to changes in the general level of interest rates. In this regard, changes in interest rates can affect the interest paid on our long term debt. To mitigate the impact of fluctuations in interest rates, we generally enter into fixed rate financing arrangements. We believe the fair value of long-term debt approximates the related carrying amount based on market interest rates available to us. Almost all our long term debt is denominated in United States dollars. The following table provides information about our financial instruments that are sensitive to changes in interest rates:

We are also subject to foreign exchange currency rate risk as a result of our international operations. Our foreign subsidiaries financial statements have been translated into United States dollars at the average exchange rate during the year for the statement of operations and year-end rate for the balance sheet. Our policy for the long term is to invest in the international teleconferencing market as it is a growth market. For as long as this policy remains in effect, our net income, assets, and liabilities in overseas markets will continue to fluctuate in accordance with exchange rate fluctuations. We historically have not entered into any derivative arrangements to hedge foreign currency risks and have no firmly committed future sales exposures.

Item 8. Financial Statements and Supplementary Data

See “Index to Consolidated Financial Statements” at page F-1.

Item 9. Changes in and Disagreements with Accountants

The Board of Directors of ACT Teleconferencing, Inc. directed the Audit Committee of the Board to select a new independent auditing firm. On October 28, 2003, ACT engaged the firm selected by the Audit Committee, Hein + Associates LLP, as independent auditors for the remainder of the fiscal year ending on December 31, 2003, to replace the firm of Ernst & Young (“E&Y) who were dismissed as ACT’s accountant on that date for the remainder of the fiscal year ending December 31, 2003.

The audit reports of E&Y regarding ACT’s financial statements, including reports of E&Y, for the years ended December 31, 2002 and 2001, do not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. ACT has not had any disagreements with E&Y on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to E&Y’s satisfaction, would have caused E&Y to make reference to the subject matter of the disagreement in connection with its reports.

None of the reportable events described under Item 304(a)(1)(v) of Regulation S-K occurred within ACT’s two most recent fiscal years or the interim period from December 31, 2002 through October 20, 2003, and ACT has not consulted with Hein & Associates, LLP regarding any of the matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.

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Item 9A. Controls and Procedures

We have carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2003. Based upon that evaluation, our Chief Executive Officer, who is currently serving on an interim basis as our principal Financial Officer as well, concluded that our disclosure controls and procedures are effective in causing information to be recorded, processed, summarized, and reported to ensure that the quality and timeliness of our public disclosures comply with our SEC disclosure obligations. There have been no significant changes in internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

PART III

Item 10. Directors and Executive Officers of the Registrant

Incorporated by reference from the Company’s Proxy Statement for Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year ended December 31, 2003.

Item 11. Executive Compensation

Incorporated by reference from the Company’s Proxy Statement for Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year ended December 31, 2003.

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Item 12. Security Ownership of Certain Beneficial Owners and Management

Incorporated by reference from our Proxy Statement for Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year ended December 31, 2003.

Item 13. Certain Relationships and Related Transactions

Incorporated by reference from our Proxy Statement for Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year ended December 31, 2003.

Item 14. Disclosure, Controls and Procedures

Incorporated by reference from our Proxy Statement for Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year ended December 31, 2003.

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PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)(1), (2) The Financial Statements and Schedule I –Condensed Financial Information of Registrant and Schedule II –Valuation and Qualifying Accounts listed on the index on Page F-1 following are included herein by reference. All other schedules are omitted, either because they are not applicable or because the required information is shown in the financial statements or the notes thereto.

(a) (3) Exhibits:

Index to Exhibits

All exhibits are filed electronically or incorporated by reference.

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(b) Reports on Form 8-K—We filed the following reports on Form 8-K with the Securities and Exchange Commission during the last quarter of 2003:

On October 16, 2003, we furnished a press release on Form 8-K under Item 12, reporting our third quarter financial performance and our downsizing.

On November 3, 2003, we filed a Form 8-K, and an amended Form 8-K on November 5, 2003, and December 2003 reporting our change in accountants.

On November 20, 2003, we furnished a press release on Form 8-K under Item 12, reporting our third quarter financial results.

On December 19, 2003, we furnished a press release on Form 8-K under Item 9, reporting our management transition.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant, and in the capacities and on the dates indicated.

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Item 15A. ACT Teleconferencing, Inc. Index to Consolidated Financial Statements

Contents

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INDEPENDENT AUDITOR’S REPORT

Board of Directors

ACT Teleconferencing, Inc.

Golden, Colorado

We have audited the accompanying consolidated balance sheet of ACT Teleconferencing, Inc. and subsidiaries as of December 31, 2003, and the related consolidated statements of operations, shareholders’ equity, and cash flows for the year ended December 31, 2003. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of ACT Teleconferencing, Inc. and subsidiaries as of December 31, 2003 and the results of their operations and their cash flows for the year ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America.

Our audits were made for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The schedules listed in the index of consolidated financial statements are presented for purposes of complying with the Securities and Exchange Commission’s rules and are not part of the basic consolidated financial statements. These schedules have been subjected to the auditing procedures applied in the audit of the basic consolidated financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic consolidated financial statements taken as a whole.

HEIN & ASSOCIATES LLP

Denver, Colorado

April 14, 2004

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ACT Teleconferencing, Inc.

Consolidated Balance Sheets

December 31, 2003 and 2002

See accompanying notes to consolidated financial statements.

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ACT Teleconferencing, Inc.

Consolidated Statements of Operations

For the years ended December 31, 2003, 2002, and 2001

See accompanying notes to consolidated financial statements.

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ACT Teleconferencing, Inc.

Consolidated Statements of Shareholders’ Equity

For the years ended December 31, 2003, 2002, and 2001