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SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, DC 20549

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FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2002

OR

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

For the transition period
from                        to

Commission File No. 000-23221

CENTIV, INC.(Exact name of Registrant as specified in its charter)

|Georgia(State or other jurisdiction
of incorporation or organization) |  | 58-2033795(IRS Employer
Identification Number)
|--------------------------------------------------------------------- |  | ----------------------------------------------

998 Forest Edge Drive, Vernon Hills, Illinois 60061

(Address of Principal Executive Offices, including Zip Code)

(847) 876-8300(Registrant's telephone number, including area code)

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

The
number of shares outstanding of the Registrant's common stock, par value $.001, as of April 22, 2002 the latest practicable date, was 4,956,535 shares.

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CENTIV, INC.  TABLE OF CONTENTS

|ITEM                         |  |                                                                                          |  | PAGE
|---------------------------- |  | ---------------------------------------------------------------------------------------- |  | ----
|PART I FINANCIAL INFORMATION |  |                                                                                         
|Item 1.                      |  | Consolidated Financial Statements (unaudited):                                           |  |     
|                             |  | Consolidated Balance Sheets as of March 31, 2002 and December 31, 2001                   |  | 3   
|                             |  | Consolidated Statements of Operations for the three months ended March 31, 2002 and 2001 |  | 4   
|                             |  | Consolidated Statements of Cash Flows for the three months ended March 31, 2002 and 2001 |  | 5   
|                             |  | Notes to Consolidated Financial Statements                                               |  | 6   
|Item 2.                      |  | Management's Discussion and Analysis of Financial Condition and Results of Operations    |  | 11  
|Item 3.                      |  | Quantitative and Qualitative Disclosures about Market Risks                              |  | 14  
|PART II OTHER INFORMATION    |  |                                                                                         
|Item 1.                      |  | Legal Proceedings                                                                        |  | 15  
|Item 2.                      |  | Changes in Securities and Use of Proceeds                                                |  | 15  
|Item 3.                      |  | Defaults upon Senior Securities                                                          |  | 16  
|Item 4.                      |  | Submission of Matters to a Vote of Security Holders                                      |  | 16  
|Item 5.                      |  | Other Information                                                                        |  | 16  
|Item 6.                      |  | Exhibits and Reports on Form 8-K                                                         |  | 16  
|Signatures                   |  | 18                                                                                      

2

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PART IFINANCIAL INFORMATION        CENTIV, INC.        CONSOLIDATED BALANCE SHEETS        ($ in thousands)

|                                                                                                                                                                                                                             |                                                                                                                                | March 31,
2002                             |         | December 31,
2001 |      
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | ------- | ----------------- | -----
|
|ASSETS                                                                                                                                                                                                                       |                                                                                                                                |                                            |         |                   |      
|Current assets:                                                                                                                                                                                                              |                                                                                                                                |                                            |         |                   |      
|                                                                                                                                                                                                                             | Cash and cash equivalents                                                                                                      |                                            | $       | 743               |      
|                                                                                                                                                                                                                             | Accounts receivable, less allowance for doubtful accounts of $47 and $43 at March 31, 2002 and December 31, 2001, respectively |                                            |         | 1,402             |      
|                                                                                                                                                                                                                             | Inventories, net                                                                                                               |                                            |         | 1,128             |      
|                                                                                                                                                                                                                             | Prepaid expenses and other assets                                                                                              |                                            |         | 605               |      
|                                                                                                                                                                                                                             | Income taxes receivable                                                                                                        |                                            |         | 44                |      
|                                                                                                                                                                                                                             | Deferred income taxescurrent                                                                                                  |                                            |         | 205               |      
|                                                                                                                                                                                                                             | Net current assets, discontinued operations                                                                                    |                                            |         | 0                 |      
|                                                                                                                                                                                                                             |                                                                                                                                |                                            |         |                   |      
|                                                                                                                                                                                                                             |                                                                                                                                | Total current assets                       |         |                   | 4,127
|                                                                                                                                                                                                                             |                                                                                                                                |                                            |         |                   |      
|Property and equipment, net                                                                                                                                                                                                  |                                                                                                                                |                                            | 2,102   |                   |      
|Other assets                                                                                                                                                                                                                 |                                                                                                                                |                                            | 419     |                   |      
|Net other assets, discontinued operations                                                                                                                                                                                    |                                                                                                                                |                                            | 0       |                   |      
|                                                                                                                                                                                                                             |                                                                                                                                |                                            |         |                   |      
|                                                                                                                                                                                                                             |                                                                                                                                | Total assets                               |         | $                 | 6,648
|                                                                                                                                                                                                                             |                                                                                                                                |                                            |         |                   |      
|LIABILITIES                                                                                                                                                                                                                  |                                                                                                                                |                                            |         |                   |      
|Current liabilities:                                                                                                                                                                                                         |                                                                                                                                |                                            |         |                   |      
|                                                                                                                                                                                                                             | Current debt                                                                                                                   |                                            | $       | 0                 |      
|                                                                                                                                                                                                                             | Accounts payable                                                                                                               |                                            |         | 2,599             |      
|                                                                                                                                                                                                                             | Accrued expenses                                                                                                               |                                            |         | 877               |      
|                                                                                                                                                                                                                             | Contract obligation and deferred income                                                                                        |                                            |         | 109               |      
|                                                                                                                                                                                                                             | Net current liabilities, discontinued operations                                                                               |                                            |         | 0                 |      
|                                                                                                                                                                                                                             |                                                                                                                                |                                            |         |                   |      
|                                                                                                                                                                                                                             |                                                                                                                                | Total current liabilities                  |         |                   | 3,585
|                                                                                                                                                                                                                             |                                                                                                                                |                                            |         |                   |      
|Deferred income taxes                                                                                                                                                                                                        |                                                                                                                                |                                            | 157     |                   |      
|                                                                                                                                                                                                                             |                                                                                                                                |                                            |         |                   |      
|                                                                                                                                                                                                                             | Total liabilities                                                                                                              |                                            |         | 3,742             |      
|                                                                                                                                                                                                                             |                                                                                                                                |                                            |         |                   |      
|STOCKHOLDERS' EQUITY                                                                                                                                                                                                         |                                                                                                                                |                                            |         |                   |      
|Class A Common Stock $.001 par value, 35,000,000 shares authorized; 4,956,535 shares issued and outstanding at March 31, 2002 and December 31, 2001, respectively                                                            |                                                                                                                                |                                            | 5       |                   |      
|Preferred Stock, $.001 par value, 5,000,000 shares authorized; 216,000 shares and no shares issued and outstanding at March 31, 2002 and December 31, 2001, respectively (liquidation value of $2,160,000 at March 31, 2002) |                                                                                                                                |                                            | 0       |                   |      
|Due from stockholders                                                                                                                                                                                                        |                                                                                                                                |                                            | (2,411  | )                 |      
|Additional paid-in capital                                                                                                                                                                                                   |                                                                                                                                |                                            | 22,454  |                   |      
|Accumulated deficit                                                                                                                                                                                                          |                                                                                                                                |                                            | (17,142 | )                 |      
|                                                                                                                                                                                                                             |                                                                                                                                |                                            |         |                   |      
|                                                                                                                                                                                                                             |                                                                                                                                | Total stockholders' equity                 |         |                   | 2,906
|                                                                                                                                                                                                                             |                                                                                                                                |                                            |         |                   |      
|                                                                                                                                                                                                                             |                                                                                                                                | Total liabilities and stockholders' equity |         | $                 | 6,648
|                                                                                                                                                                                                                             |                                                                                                                                |                                            |         |                   |      

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

3

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CENTIV, INC.        CONSOLIDATED STATEMENTS OF OPERATIONS        ($ in thousands, except per share data)

|                                                                                 |                                     | Three Months Ending March 31, |      
|-------------------------------------------------------------------------------- | ----------------------------------- | ----------------------------- | -----
|
|
|Net sales                                                                        |                                     | $                             | 3,807
|Cost of goods sold                                                               |                                     |                               | 2,849
|                                                                                 |                                     |                               |      
|                                                                                 | Gross profit                        |                               |      
|Operating expenses:                                                              |                                     |                               |      
|                                                                                 | Selling, general and administrative |                               |      
|                                                                                 | Depreciation                        |                               |      
|                                                                                 |                                     |                               |      
|Loss from operations                                                             |                                     |                               | (378 
|Other Income (expense)                                                           |                                     |                               | 283  
|Interest income (expense)                                                        |                                     |                               | 28   
|                                                                                 |                                     |                               |      
|Loss before income taxes from continuing operations                              |                                     |                               | (67  
|Benefit for income taxes from continuing operations                              |                                     |                               | 0    
|                                                                                 |                                     |                               |      
|Loss from continuing operations                                                  |                                     |                               | (67  
|Income from discontinued operations (net of $98 tax in 2002 and $96 tax in 2001) |                                     |                               | 380  
|                                                                                 |                                     |                               |      
|Net Income (loss)                                                                |                                     | $                             | 313  
|                                                                                 |                                     |                               |      
|Effect of beneficial conversion feature of preferred stock                       |                                     |                               | (810 
|                                                                                 |                                     |                               |      
|Net loss attributable to common shareholders                                     |                                     | $                             | (497 
|                                                                                 |                                     |                               |      
|Basic and Diluted Income/(Loss) applicable to common shares                      |                                     |                               |      
|                                                                                 | Weighted average shares outstanding |                               |      
|                                                                                 | Continuing operations per share     |                               | $    
|                                                                                 | Discontinued operations per share   |                               | $    
|                                                                                 |                                     |                               |      
|                                                                                 | Net Income (loss) per share         |                               | $    
|                                                                                 |                                     |                               |      

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

4

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CENTIV, INC.        CONSOLIDATED STATEMENTS OF CASH FLOWS        ($ in thousands)

|                                                                                                   |                                                | Three Months Ending March 31,           |       
|-------------------------------------------------------------------------------------------------- | ---------------------------------------------- | --------------------------------------- | ------
|
|
|Cash flows from operating activities:                                                              |                                                |                                         |       
|Net income (loss)                                                                                  |                                                | $                                       | 313   
|Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: |                                                |                                         |       
|                                                                                                   | Provision for doubtful accounts receivable     |                                         |       
|                                                                                                   | Depreciation                                   |                                         |       
|                                                                                                   | Non-cash interest on note payable (receivable) |                                         |       
|                                                                                                   | Gain on sale of CalGraph Business              |                                         |       
|                                                                                                   | Changes in net assets and liabilities          |                                         |       
|                                                                                                   |                                                | Accounts receivable                     |       
|                                                                                                   |                                                | Inventories                             |       
|                                                                                                   |                                                | Prepaid expenses and other assets       |       
|                                                                                                   |                                                | Accounts payable and accrued expenses   |       
|                                                                                                   |                                                | Deferred income and contract obligation |       
|                                                                                                   |                                                | Income taxes                            |       
|                                                                                                   |                                                | Net assets, discontinued operations     |       
|                                                                                                   |                                                |                                         |       
|Total adjustments                                                                                  |                                                |                                         | (1,647
|                                                                                                   |                                                |                                         |       
|Net cash (used in) provided by operating activities                                                |                                                |                                         | (1,334
|                                                                                                   |                                                |                                         |       
|Cash flows from investing activities:                                                              |                                                |                                         |       
|Purchase of property and equipmentcontinuing operations                                           |                                                |                                         | (164  
|Proceeds from Sale of CalGraph Business                                                            |                                                |                                         | 1,050 
|                                                                                                   |                                                |                                         |       
|Net cash provided by (used in) investing activities                                                |                                                |                                         | 886   
|                                                                                                   |                                                |                                         |       
|Cash flows from financing activities:                                                              |                                                |                                         |       
|Proceeds/(repayment), net, from credit facility                                                    |                                                |                                         | (796  
|Net Proceeds from Private Equity Financing                                                         |                                                |                                         | 1,776 
|Proceeds/(repayment), net, from capital lease                                                      |                                                |                                         | 28    
|Dissenters' settlement payments                                                                    |                                                |                                         | 0     
|Interest on loan to stockholders                                                                   |                                                |                                         | (45   
|                                                                                                   |                                                |                                         |       
|Net cash provided by (used in) financing activities                                                |                                                |                                         | 963   
|                                                                                                   |                                                |                                         |       
|Increase (decrease) in cash and cash equivalents                                                   |                                                |                                         | 515   
|Cash and cash equivalents, beginning of year                                                       |                                                |                                         | 228   
|                                                                                                   |                                                |                                         |       
|Cash and cash equivalents, end of year                                                             |                                                | $                                       | 743   
|                                                                                                   |                                                |                                         |       

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

5

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial statements. The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. In the opinion of
management, all adjustments considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2002 are not necessarily indicative of the
results that may be expected for the full year ending December 31, 2002. For further information, refer to the consolidated financial statements and the footnotes included in the
Form 10-K for the year ended December 31, 2001.

2. INVENTORIES

Inventories, net of reserves, at March 31, 2002 and December 31, 2001 consist of the following ($ in thousands):

March 31,
2002

December 31,
2001Finished goods

1,128

978


3. NET LOSS PER COMMON SHARE

Basic and diluted net income/(loss) per common share are computed by dividing net income (loss) by the weighted average number of common shares and common share
equivalents outstanding during the period. Since the Company has a net loss from continuing operations, there were no common share equivalents that were dilutive during any of the periods presented.
At March 31, 2002, the weighted average common shares were determined as follows:

Three Months Ending March 31,2002

2001Weighted average common sharesBasicOutstanding at beginning of period

4,956,535

5,061,998Shares Issued during the period

0

0Basic weighted average shares

4,956,535

5,061,998Weighted average common sharesDilutedBasic weighted average shares from above

4,956,535

5,061,998Effect of stock options and warrants

0

0Diluted weighted average shares

4,956,535

5,061,998


The
weighted average common shares exclude securities that would be upon conversion anti-dilutive. Accordingly, there are 1,076,837 stock options, 2,160,000 common shares
(216,000 preferred shares convertible at 10 common shares each), and 4,332,000 warrants that are not included in the number of weighted average common shares outstanding as of March 31, 2002.

6

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Earnings
(loss) per share is computed as follows:

Three Months Ending March 31,2002

2001Income Available to common shareholders:Loss from continuing operations

(67
)
(413
)Effect of Beneficial Conversion Feature of convertible preferred stock

(810
)
0Loss from continuing operations attributable to common shareholders

(877
)
(413
)Income from discontinued operations

380

98Net loss attributable to common shareholders

(497
)
(315
)Earnings (loss) per shareBasic and Diluted:Continuing Operations

(0.17
)
(0.08
)Discontinued Operations

0.07

0.02Net Loss

(0.10
)
(0.06
)


4. INCOME TAXES

The Company's effective tax rate was a benefit of 0% and 36.4% for the three months ended March 31, 2002 and 2001, respectively. The tax rate was 0% for
the three months ended March 31, 2002 as the Company's tax provision was offset by a corresponding reduction in the valuation allowance for deferred income taxes that was established in 2001.

5. CURRENT DEBT

The Company used the proceeds from the private equity transaction (see Note 17) to pay off the outstanding bank debt and cancel the credit facility. The
Company is currently pursuing a new credit facility and expects to have a new agreement in place during the second quarter of 2002.

6. ESCROW SHARES

This number of outstanding shares does not include 228,266 shares held in escrow in connection with an acquisition by the Company pursuant to a Pledge, Security
and Escrow Agreement dated June 2, 1997. All of the interest in and title to these 228,266 shares was transferred to Anita Ltd. and then subsequently transferred to the Company as part
of a Settlement Agreement and Mutual Releases dated as of December 21, 2000. These shares will ultimately be released from the escrow to the Company and will be cancelled. Therefore, the
Company has, for accounting purposes, treated these shares as cancelled effective as of December 21, 2000.

7. PATENT APPLICATION

On March 20, 2002, the Company filed a patent application with the United States Patent and Trademark Office for a "Method and System for Point of Purchase
Sign Creation and Delivery." In addition, the Company filed an international patent application for the same invention to protect patent rights in foreign countries. The Company expects that after
examination, it will be awarded a patent to protect its valuable intellectual property. Centiv has developed this system which allows a user access to an information database for selecting sign
templates, inputting data for the sign templates and selecting and ordering signage products for production of the sign templates having the data input.

7

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8 RESTRUCTURING CHARGES

During the fourth quarter of 2000, the Company consolidated and centralized its operations and, therefore, recorded a restructuring charge of $541,000 for
employee severance and leased premises no longer necessary. The restructuring charges were recorded in discontinued operations for the year ended December 31, 2000.

The
following table provides a roll forward of the liabilities incurred in connection with the 2000 business restructuring.

|Type of Cost         |       | December 31, 2001 Balance |    | 2002 Restructuring Charges Against the Reserve |   | 2002 Restructuring Accrual |     | March 31, 2002 Balance
|-------------------- | ----- | ------------------------- | -- | ---------------------------------------------- | - | -------------------------- | --- | ----------------------
|
|Employee Separations |       | $                         | 11 |                                                | $ | (11                        | )   | $                     
|Facility Closings    |       |                           | 84 |                                                |   | (34                        | )   |                       
|                     |       |                           |    |                                                |   |                            |     |                       
|                     | Total |                           | $  | 95                                             |   | $                          | (45 | )                     
|                     |       |                           |    |                                                |   |                            |     |                       

For
the three months ended March 31, 2002, the restructuring reserve balances were reduced by $45,000. Employee separations of $11,000 and facility closings of $34,000 were
charged against the restructuring reserve for the three months ended March 31, 2002. The restructuring reserve balance is $50,000 as of March 31, 2002.

9. SEGMENT DISCLOSURES

During 2001, the Company decided to focus on and dedicate its resources to its POP business. To further that goal, in December 2001, the Company sold the
Channels Business and, effective January 31, 2002, sold Calgraph Technology Services, Inc. As a result of these divestitures, the Company currently operates as a single business unit.

Centiv
offers web services for consumer brand companies to manage their in-store and on-premise point-of-purchase (POP) process. The final
product is high quality digitally produced signage that is mass customized for the unique requirements of each retail location.

10. RECLASSIFICATIONS

Certain amounts in the March 31, 2001 financial statements have been reclassified to conform to the March 31, 2002 presentation.

11. DISCONTINUED OPERATIONS

Channels Business

As of December 31, 2001, the Company sold the assets of its Channels Business to TK Acquisition Corporation, as successor by merger to SCB Acquisitions, in
exchange for a purchase price of $7,905,000 in cash, subject to a post-closing adjustment based upon fluctuations in working capital from June 30, 2001 and December 31, 2001.
The post closing adjustment was $1,598,573. Another adjustment to the purchase price is the net asset value adjustment, which is the amount by which the book value of the net assets (defined as
accounts receivable, inventory, prepaid expenses and other assets included in the purchased assets excluding fixed assets less the liabilities and accrued expenses assumed by TK Acquisition) has
increased or decreased from June 30, 2001 to the closing of the Channels Business transaction of December 31, 2001. This net asset adjustment is estimated to be a further reduction in
the purchase price of $54,000, bringing the net purchase price after adjustments to $6,252,427 before

8

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transaction costs. The Company recorded $404,000 of transaction costs associated with financial advisor fees, legal and accounting fees.

The
Channels Business produced $48.4 million in revenue and had a pre-tax operating loss of $722,000 for the year ended December 31, 2001. The sale of the
Channels Business resulted in a pre-tax loss of $2,175,000, which is comprised of the difference between the purchase price and the book value of the net assets and transaction fees
associated with the sale of the business. The Company wrote off the deferred tax asset of $184,000 associated with the Channels Business.

CalGraph Technology Services Business

Effective January 31, 2002, the Company sold the assets of the Calgraph Technology Services Business to Graphic Enterprises of Ohio, Inc. Centiv
received consideration for the sale of the Calgraph assets in the amount of $1,050,000 in cash plus a minimum royalty of $625,000 to be paid over a 25 month period beginning in May 2002.
Graphic Enterprises also assumed certain liabilities of Calgraph. The Company realized a pre-tax gain on the sale of $586,000, which is the cash received plus the present value of the
royalty payments less the book value of the net assets and less transaction fees associated with the sale of the business. In addition, the Company wrote off the deferred tax asset of $98,000 relating
to the Calgraph Technology Services Business. The pretax loss from operations for Calgraph Technology Services Business in January 2002 was $108,000.

The
Company's consolidated financial statements for the period ending March 31, 2001 have been reclassified to report separately the results of operations for the Channels
Business and the Calgraph Technology Services Business. The operating results (in thousands) for the three months ended March 31, 2001 consist of:

Three months ended March 31, 2001Channels

Calgraph

TotalNet sales:

$
14,446

$
2,140

$
16,586Income/(Loss) from operations before income taxes


92


102


194Provision/(Benefit) from income taxes


57


39


96Loss from discontinued operations

$
35

$
63

$
98


12. CAPITAL INVESTMENT

On March 28, 2002, the Company sold, in a private placement, 216,000 units, each consisting of one share of convertible preferred stock and one warrant to
purchase one additional share of convertible preferred stock. The purchase price for each unit was $10.00 per unit. Because each share of convertible preferred stock is convertible, initially, into
ten shares of common stock, the effective purchase price was $1.00 for each share of common stock purchased. The warrant that is included in each unit gives the holder the right, until five years
after the issuance of the warrant, to purchase one share of convertible preferred stock at a purchase price of $15.00 per share (the equivalent of $1.50 per share of common stock). Neither the
convertible preferred stock nor the warrants have been registered under the Securities Act of 1933. Therefore, they may not be offered or sold in the United States absent registration or an applicable
exemption from registration requirements.

The
convertible preferred stock has a liquidation preference over common stock equal to the purchase price of the convertible preferred stock plus any accrued but unpaid dividends. If
not previously converted, the convertible preferred stock will begin to accrue dividends on March 31, 2003 at an annual rate equal to 8% of the purchase price of the convertible preferred
stock. In addition, if not previously converted into common stock, the convertible preferred stock is subject to redemption at

9

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the option of the Company on the fourth anniversary of the issuance of the convertible preferred stock at a redemption price equal to the purchase price plus any accrued but unpaid dividends. If the
Company fails to redeem the convertible preferred stock on that date, the holders of the convertible preferred stock become entitled to elect a majority of the board of directors. Notwithstanding the
foregoing, directors elected by virtue of the voting rights of the convertible preferred stock would have to recuse themselves from any vote to redeem all or a portion of the convertible preferred
stock.

The
convertible preferred stock is initially convertible into ten shares of common stock for each share of the convertible preferred stock. This conversion ratio, however, is subject to
anti-dilution adjustment for stock splits, combinations and other similar changes and if the Company issues, except in limited circumstances, any capital stock for a per share price less
than the then current conversion price.

The
convertible preferred stock is automatically converted if (i) holders of 2/3 of the outstanding shares of such preferred stock agree to convert, (ii) the
Company's revenues for the Centiv Business exceed $5 million for any two consecutive quarters, or (iii) the Company recognizes $20 million in revenues for the Centiv Business for
the 12-month period ending March 31, 2003.

The
Company has agreed, by April 28, 2002, to file a registration statement to cover the resale of the shares of common stock issuable upon conversion of the convertible
preferred stock and the shares of common stock issuable upon exercise of the warrants or upon conversion of the convertible preferred stock issuable upon exercise of the warrants. The Company will use
its best efforts to have the registration statement declared effective and will maintain the effectiveness of the registration statement until the earlier of (a) the later of (i) two
years after all of the warrants have been redeemed or exercised, or (ii) two years after all of the preferred stock has been converted, or (b) six years from the closing date. The
Company has also granted the purchasers of the convertible preferred stock piggy-back registration rights on any other Registration Statement filed by the Company (other than on Forms
S-8 or S-4). The Company will bear all expenses of each registration, including the costs of one special counsel to the holders of registrable securities.

Proceeds
to the Company from the sale of the convertible preferred stock were $2,160,000, of which $1,910,000 was received on March 28, 2002 and the remaining $250,000 was
received in April 2002. Transaction costs of $136,000 representing legal, accounting and registration fees were incurred bringing the net proceeds to $2,024,000. The net proceeds were used to
pay off and cancel the Company's current credit facility with the bank. The Company is currently pursuing a new credit facility and anticipates that a new agreement will be in place during the second
quarter of 2002. There can be no assurance that the Company will be able to enter into a new credit facility or, if it is able to do so, that it will be on terms favorable to the Company.

The
Company has recorded a beneficial conversion feature on the convertible preferred stock and warrants based on the fair value of the common stock of $1.00 per share as of the date of
commitment. The warrants with an exercise price of $1.50 per share, were valued at $810,000 using the Black-Scholes valuation method. The beneficial conversion feature was calculated to be $810,000 at
the commitment date of March 28, 2002 and has been recorded as Additional Paid in Capital. As the preferred shares
are convertible immediately, the entire amount of the beneficial conversion feature has been accreted into the Accumulated Deficit at March 31, 2002.

10

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the information contained in the Consolidated Financial Statements, including the related notes.

Overview

We are a developer and provider of Web-enabled point-of-purchase (POP) solutions used by manufacturers and mass retailers. The
delivered product is high quality, digitally produced signage that is mass-customized for the unique requirements of each retail location. With our premier product, Instant Impact, a
company gains the ability to target important consumer segments at the point of purchase by allowing brand managers or retailers to order mass-customized, on-demand, color POP
materials and receive quantitative feedback on the success of their in-store or on-premise marketing campaigns.

Instant
Impact allows a marketing manager, brand manager or retailer to create, edit and schedule delivery of POP materials by using pre-approved, field-editable sign
templates. This Internet-based user interface is clear, flexible, user-friendly and changeable to allow control of the message at a corporate or local store level. The signage can either
be printed in a Centiv print center, or an industry-standard print-formatted file can be delivered via the Internet to any print provider in the world. This rapid delivery of signage results in a
dramatic reduction in POP lead time and the costs associated with launching or changing in-store or on-premises messaging.

The
roots of Instant Impact were formed in 1998 when Centiv partnered with Anheuser-Busch to design, configure, deliver and implement POP signage systems to Anheuser-Busch wholesale
distributors in the United States and 16 foreign countries. Since the formal launch of the Internet-based Instant Impact in March 2001, Centiv and DuPont Tyvek have formed a strategic alliance
and co-branding agreement that includes company-wide implementation of Instant Impact.

During
2001, the Company decided to focus on and dedicate its resources to its POP business. To further that goal, in December 2001, the Company sold our Channels Business and,
effective January 31,
2002, sold Calgraph Technology Services, Inc. As a result of these divestitures, the Company currently operates as a single business unit.

Three Months Ended March 31, 2002 Compared With Three Months Ended March 31, 2001

Net Sales from continuing operations.Total net sales from continuing operations increased 30% or
$873,000, to $3.8 million for the three months ended March 31, 2002, compared to $2.9 million for the three months ending March 31, 2001. The increase in attributable to
the new web based services offered through the new Instant Impact product launched in 2001 as well as growth in the supplies revenue for Point of Purchase (POP) systems that are installed at customer
sites.

Gross Profit from continuing operations.Gross profit from continuing operations increased 58% or
$350,000 for the three months ended March 31, 2002 to $958,000 as compared to $608,000 for the three months ended March 31, 2001. The gross profit as a percentage of sales increased
4 percentage points to 25% for the three months ended March 31, 2002 compared to 21% for the three months ended March 31, 2001. The margin improvement relates to higher margin web
based sales. In addition, the margin improvement is due to the technical support call center now being handled directly by Centiv instead of outsourcing this activity to another entity.

SG&A Expenses from continuing operations.SG&A expenses from continuing operations increased $238,000
or 25% to $1.2 million for the three months ended March 31, 2002 compared to $965,000 for the three months ended March 31, 2001. The increase in SG&A expenses is due to
administrative costs that are now being absorbed by Centiv as the other businesses were divested.

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Depreciation Expense from continuing operations.Depreciation expense from continuing operations
increased $75,000, to $133,000 for the three months ended March 31, 2002, as compared to $58,000 for the three months ended March 31, 2001. The increase in depreciation expense relates
to the Company implementing a new state of the art enterprise wide software package as well as the cost of the new online Instant Impact point-of-purchase system.

Other Income from continuing operations.Other Income of $283,000 represents the settlement of
outstanding liabilities associated with the termination of vendor contracts relating to the sale of the Channels Business.

Income Taxes from continuing operations.The Company's effective tax rate for continuing operations
was 0% for the three months ended March 31, 2002 compared to a benefit of 36% for the three months ended March 31, 2001. The tax rate was 0% for the three months ended March 31,
2002 as the Company's tax provision was offset by a corresponding reduction of the valuation allowance for deferred income taxes that was established in 2001.

Net Income (Loss) from continuing operations.The Company had a net loss from continuing operations
of $67,000 for the three months ended March 31, 2002, as compared to a net loss of $413,000 for the three months ended March 31, 2001. The decrease in the net loss is attributable to the
improvement in gross profit as well as the other income and reduced interest expense.

Discontinued Operations:

The Company had net income from discontinued operations of $380,000 for the three months ended March 31, 2002 compared to $98,000 net income for the three
months ended March 31, 2001. See Note 11 of the Notes to Consolidated Financial Statements for a description and breakdown of the discontinued operations.

LIQUIDITY AND CAPITAL RESOURCES

On March 31, 2002, the Company had a positive working capital of $542,000, compared to a negative working capital of $2.2 million as of
December 31, 2000.

The
Company used $1.3 million of cash from operations for the three months ended March 31, 2002 compared to cash generated of $2.3 million from operations for the
three months ended March 31, 2001. During the three months ended March 31, 2002, the growth in accounts receivable due to higher sales used cash of $440,000 and accounts payable and
accrued expenses used cash of $1.3 million. The accounts payable/accrued expense cash usage was primarily from the payment of transaction costs as well as other payments relating to vendor
settlements associated with the sale of the Channels Business.

For
the three months ended March 31, 2002, the Company generated cash of $886,000 from investing activities. The Company received cash of $1,050,000 from the sale of the CalGraph
Business (see Note 11 of the Notes to Consolidated Financial Statements), partially offset by cash used of $164,000 for the purchase of software licenses, computer hardware and production
equipment. Approximately $89,000 of the $164,000 of purchases related to one-time expenditures for splitting the software licenses and computer hardware due to the divestitures of Channels
and CalGraph business units. The cash used for the three months ended March 31, 2001 of $463,000 relates to the Company implementing a new state of the art enterprise wide software package as
well as the cost of the new online Instant Impact point-of-purchase system.

For
the three months ended March 31, 2002, the Company generated cash of $963,000 from financing activities. The Company received $1,776,000 from private equity (see
Note 12 of the Notes to Consolidated Financial Statements). The net proceeds were used to pay off and cancel the Company's

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credit facility with the bank. The Company is currently pursuing a new credit facility and anticipates that a new agreement will be in place during the second quarter of 2002.

For
the three months ended March 31, 2001, the Company used cash of $2.3 million from financing activities to pay down the bank line of $1.3 million and to make a
payment of $0.9 million on the note issued in connection with the settlement of the Dissenters' Lawsuit. The Company had borrowings of $10.1 million and repayments of
$11.4 million with the outstanding bank loan during the quarter.

The
Company believes that its available funds together with its anticipated credit facilities will be adequate to satisfy its current and planned operations, including restructuring
accruals, for at least the next 12 months.

On
July 20, 2001, the Financial Accounting Standard Board (FASB) issued SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Intangible Assets."
SFAS No. 141 is effective for all business combinations completed after June 30, 2001. SFAS No. 142 is effective for fiscal years beginning after December 15, 2001;
however, certain provisions of this Statement apply to goodwill and other intangible assets acquired between July 1, 2001, and the effective date of SFAS No. 142. Major provisions of the
Statements and their effective dates for the Company are as follows:

At
December 31, 2001, the Company had no goodwill recorded.

In
August 2001, the FASB issued SFAS No. 144, "Accounting for the impairment or Disposal of Long-Lived Assets." SFAS No. 144 is effective for fiscal
years beginning after December 15, 2001, and addresses financial accounting and reporting for the impairment or disposal of long-lived assets. This statement supersedes SFAS
No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and the accounting and reporting provisions of Accounting
Principles Board Opinion No. 30. "Reporting the Results of OperationsReporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions," for the disposal of a segment of a business. The Company has adopted SFAS No. 144 at January 1, 2002, and has determined that adoption does not have a
material effect on its results of operations or financial position.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This report contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as

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amended. These statements appear in a number of places in this report and include all statements that are not historical facts. Some of the forward-looking statements relate to the intent, belief or
expectations of the Company and its management regarding the Company's strategies and plans for operations and growth. Other forward-looking statements relate to trends affecting the Company's
financial condition and results of operations, and the Company's anticipated capital needs and expenditures.

Investors
are cautioned that such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially
from those that are anticipated in the forward-looking statements as a result of the impact of competition and competitive pricing, business conditions and growth in the industry, general and economic
conditions, and other risks. Investors should review the more detailed description of these and other possible risks contained in the Company's filings with the Securities and Exchange Commission,
including the Company's Form 10-K.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of trade accounts receivable. Credit
risks with respect to trade receivables are limited due to the diversity of customers comprising the Company's customer base. The Company performs ongoing credit evaluations and charges uncollectible
amounts to operations when they are determined to be uncollectible.

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PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Not applicable

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

On March 28, 2002, the Company sold, in a private placement to a group of individual and institutional accredited venture capital investors, 216,000 units,
each consisting of one share of convertible preferred stock and one warrant to purchase one additional share of convertible preferred stock. This offering was made pursuant to an exemption from
registration under Rule 506 of Regulation D under the Securities Act of 1933. The purchase price for each unit was $10.00 per unit. Because each share of convertible preferred stock is
convertible, initially, into ten shares of common stock, the effective purchase price was $1.00 for each share of common stock purchased. The warrant that is included in each unit gives the holder the
right, until five years after the issuance of the warrant, to purchase one share of convertible preferred stock at a purchase price of $15.00 per share (the equivalent of $1.50 per share of common
stock). Neither the convertible preferred stock nor the warrants have been registered under the Securities Act of 1933. Therefore, they may not be offered or sold in the United States absent
registration or an applicable exemption from registration requirements. In connection with this offering the Company, pursuant to its Articles of Incorporation filed a Certificate of Designations,
Rights and Preferences with the Secretary of State of the State of Georgia defining the rights of the preferred stock.

The
convertible preferred stock has a liquidation preference over common stock equal to the purchase price of the convertible preferred stock plus any accrued but unpaid dividends. If
not previously converted, the convertible preferred stock will begin to accrue dividends on March 31, 2003 at an annual rate equal to 8% of the purchase price of the convertible preferred
stock. In addition, if not previously converted into common stock, the convertible preferred stock is subject to redemption at the option of the Company on the fourth anniversary of the issuance of
the convertible preferred stock at a redemption price equal to the purchase price plus any accrued but unpaid dividends. If the Company
fails to redeem the convertible preferred stock on that date, the holders of the convertible preferred stock become entitled to elect a majority of the board of directors. Notwithstanding the
foregoing, directors elected by virtue of the voting rights of the convertible preferred stock would have to recuse themselves from any vote to redeem all or a portion of the convertible preferred
stock.

The
convertible preferred stock is initially convertible into ten shares of common stock for each share of the convertible preferred stock. This conversion ratio, however, is subject to
anti-dilution adjustment for stock splits, combinations and other similar changes and if the Company issues, except in limited circumstances, any capital stock for a per share price less
than the then current conversion price.

The
convertible preferred stock is automatically converted if (i) holders of 2/3 of the outstanding shares of such preferred stock agree to convert, (ii) the
Company's revenues for the Centiv Business exceed $5 million for any two consecutive quarters, or (iii) the Company recognizes $20 million in revenues for the Centiv Business for
the 12-month period ending March 31, 2003.

The
Company has agreed, by April 28, 2002, to file a registration statement to cover the resale of the shares of common stock issuable upon conversion of the convertible
preferred stock and the shares of common stock issuable upon exercise of the warrants or upon conversion of the convertible preferred stock issuable upon exercise of the warrants. The Company will use
its best efforts to have the registration statement declared effective and will maintain the effectiveness of the registration statement until the earlier of (a) the later of (i) two
years after all of the warrants have been redeemed or exercised, or (ii) two years after all of the preferred stock has been converted, or (b) six years from

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the closing date. The Company has also granted the purchasers of the convertible preferred stock piggy-back registration rights on any other Registration Statement filed by the Company
(other than on Forms S-8 or S-4). The Company will bear all expenses of each registration, including the costs of one special counsel to the holders of registrable securities.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable

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

Not applicable.

ITEM 5. OTHER INFORMATION

On April 8, 2002, the Company received a letter from The Nasdaq Stock Market, Inc. requesting that the Company provide Nasdaq with a detailed
description of how the Company intends to continue to comply with the listing requirements of the Nasdaq SmallCap Market. The Company has responded to that inquiry with a detailed plan of how the
Company plans to remain in compliance with all of the listing requirements of the Nasdaq SmallCap Market. There can be no assurance that, upon considering the Company's response, Nasdaq will not chose
to take further action. In the event that the Company is unable to continue to meet the listing requirements of the Nasdaq SmallCap Market, the Company may be delisted. In the event that the Company's
stock were delisted, it would then trade on Nasdaq's OTC Bulletin Board under the same symbol.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

Exhibits

2.1  Asset
Purchase Agreement dated October 29, 2001 by and between Tekgraf, Inc. and SCB Acquisitions, LLC (Filed as Appendix A to the Company's
Definitive Proxy Statement filed October 21, 2002 and incorporated herein by reference).

2.2  Asset
Purchase Agreement effective as of January 31, 2002 by and among CalGraph Technology Services, Inc., Centiv, Inc., the sole shareholder of
CalGraph and Graphic Enterprises of Ohio, Inc. (Filed as Exhibit 99.2 to the Company's Current Report on Form 8-K filed February 20, 2002 and incorporated
herein by reference).

3.1  Restated
Articles of Incorporation dated January 21, 2000 as amended December 31, 2001 and related Certificate of Designations filed March 28, 2002.
(Filed as Exhibit 3.1 to the Company's annual report on Form 10-K filed on April 1, 2002 and incorporated herein by reference).

3.2  Bylaws
(Filed as Exhibit 3.1 to the Company's quarterly report filed on May 12, 2000 and incorporated herein by reference).

4.1  Form
of Securities Purchase Agreement dated March 28, 2002 by and among Centiv, Inc. and the purchasers identified on Exhibit A thereto (Filed as
Exhibit 4.1 to the Company annual report on form 10-K filed on April 1, 2002 and incorporated herein by reference).

4.2  Form
of Investors Rights Agreement dated March 28, 2002 by and among Centiv, Inc. and the investors who are signatories thereto (Filed as
Exhibit 4.2 to the Company annual report on form 10-K filed on April 1, 2002 and incorporated herein by reference).

4.3  Form
of Warrant issued pursuant to Securities Purchase Agreement dated March 28, 2002 by and among Centiv, Inc. and the purchasers identified on
Exhibit A thereto (Filed as Exhibit 4.3 to the Company annual report on form 10-K filed on April 1, 2002 and incorporated herein by reference).

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11.1 Statements
of Computation of Earnings Per Share (Filed as Exhibit 11.1 to the Company annual report on form 10-K filed on April 1, 2002
and incorporated herein by reference)

21.1 Subsidiaries
(Filed as Exhibit 21.1 to the Company annual report on form 10-K filed on April 1, 2002 and incorporated herein by
reference)

Reports on Form 8-K

The following reports on Form 8-K have been filed during the three months ended March 31, 2002:

Current
Report on Form 8-K filed January 15, 2002, which included disclosure under Item 2 relating to the disposition by the Company of the assets of its
Channels Business effective as of December 31, 2001.

Current
Report on Form 8-K filed February 20, 2002, which included disclosure under Item 2 relating to the disposition by the Company of the assets of its
CalGraph Technology Services, Inc. on February 6, 2002, effective as of January 31, 2002.

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SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT ON FORM 10-Q TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED THIS 3rd DAY OF MAY, 2002.

CENTIV, INC.

|SIGNATURE |  | Title                                
|--------- |  | -------------------------------------
|          |  |                                      
|By:       |  | /s/WILLIAM M. RYCHELWilliam M. Rychel
|By:       |  | /s/THOMAS M. MASONThomas M. Mason    

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