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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

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

For the quarterly period ended
September 30, 2000

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ACTV, Inc.(Exact name of registrant as specified in its charter)

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| | Delaware
      (State or other jurisdiction of
      incorporation or organization) |  | 94-2907258
      (I.R.S. Employer
      Identification No.) | 
| | ----------------------------------------------------------------------------------- |  | ----------------------------------------------------------- | 

| | 1270 Avenue of
      the AmericasNew York, New York
      (Address of principal executive offices) |  | 10020
      (Zip Code) | 
| | -------------------------------------------------------------------------------------------------- |  | ---------------------- | 

(212) 217-1600
(Registrant's telephone number, including area code)

Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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 [x] No [  ]

As
of November 10, 2000, there were 50,933,118 shares of the registrant's
common stock outstanding.

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Item 1. Financial
  Statements

ACTV, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS

|                                                                                                                                                                                                            |  | September
        30,2000 |              | December
        31,1999 |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | ------------ | ------------------------ | -
|                                                                                                                                                                                                            |  |                           |              |                          |  
|                                                                                                                                                                                                            |  | (Unaudited)               |              |                          |  
|ASSETS                                                                                                                                                                                                      |  |                           |              |                          |  
|                                                                                                                                                                                                            |  |                           |              |                          |  
|Current assets:                                                                                                                                                                                             |  |                           |              |                          |  
|Cash
        and cash equivalents                                                                                                                                                                           |  | $                         | 134,676,552  |                          | $
|Accounts
        receivable-net                                                                                                                                                                             |  |                           | 1,892,971    |                          |  
|Other                                                                                                                                                                                                       |  |                           | 6,062,617    |                          |  
|                                                                                                                                                                                                            |  |                           |              |                          |  
|Total
        current assets                                                                                                                                                                                |  |                           | 142,632,140  |                          |  
|                                                                                                                                                                                                            |  |                           |              |                          |  
|                                                                                                                                                                                                            |  |                           |              |                          |  
|Property and
        equipment-net                                                                                                                                                                          |  |                           | 6,289,875    |                          |  
|                                                                                                                                                                                                            |  |                           |              |                          |  
|                                                                                                                                                                                                            |  |                           |              |                          |  
|Other assets:                                                                                                                                                                                               |  |                           |              |                          |  
|Investment
        in warrant                                                                                                                                                                               |  |                           | 76,016,175   |                          |  
|Investments-other                                                                                                                                                                                           |  |                           | 4,000,000    |                          |  
|Patents
        and patents pending                                                                                                                                                                         |  |                           | 8,114,836    |                          |  
|Software
        development costs                                                                                                                                                                          |  |                           | 2,354,503    |                          |  
|Goodwill                                                                                                                                                                                                    |  |                           | 1,468,665    |                          |  
|Other                                                                                                                                                                                                       |  |                           | 3,391,020    |                          |  
|                                                                                                                                                                                                            |  |                           |              |                          |  
|Total
        other assets                                                                                                                                                                                  |  |                           | 95,345,199   |                          |  
|                                                                                                                                                                                                            |  |                           |              |                          |  
|Total
        assets                                                                                                                                                                                        |  | $                         | 244,267,214  |                          | $
|                                                                                                                                                                                                            |  |                           |              |                          |  
|                                                                                                                                                                                                            |  |                           |              |                          |  
|LIABILITIES
        AND STOCKHOLDERS' EQUITY                                                                                                                                                                |  |                           |              |                          |  
|                                                                                                                                                                                                            |  |                           |              |                          |  
|Current
        liabilities:                                                                                                                                                                                |  |                           |              |                          |  
|Accounts
        payable and accrued expenses                                                                                                                                                               |  | $                         | 2,768,038    |                          | $
|Deferred
        revenue                                                                                                                                                                                    |  |                           | 4,002,577    |                          |  
|                                                                                                                                                                                                            |  |                           |              |                          |  
|Total
        current liabilities                                                                                                                                                                           |  |                           | 6,770,615    |                          |  
|                                                                                                                                                                                                            |  |                           |              |                          |  
|Long-term notes
        payable                                                                                                                                                                             |  |                           | -            |                          |  
|Deferred revenue                                                                                                                                                                                            |  |                           | 71,491,403   |                          |  
|Minority
        interest                                                                                                                                                                                   |  |                           | 12,465,774   |                          |  
|                                                                                                                                                                                                            |  |                           |              |                          |  
|Stockholders'
        equity:                                                                                                                                                                               |  |                           |              |                          |  
|Common
        stock, $0.10 par value, 200,000,000 shares authorized: issued
        and
              outstanding 50,933,118 at
        September 30, 2000, 42,440,032 at
               December 31, 1999 |  |                           | 5,093,312    |                          |  
|Additional
        paid-in capital                                                                                                                                                                          |  |                           | 273,512,879  |                          |  
|Accumulated
        deficit                                                                                                                                                                                 |  |                           | (125,066,769 | )                        |  
|                                                                                                                                                                                                            |  |                           |              |                          |  
|Total
        stockholders' equity                                                                                                                                                                          |  |                           | 153,539,422  |                          |  
|                                                                                                                                                                                                            |  |                           |              |                          |  
|Total
        liabilities and stockholders' equity                                                                                                                                                          |  | $                         | 244,267,214  |                          | $
|                                                                                                                                                                                                            |  |                           |              |                          |  

See notes to consolidated
  financial statements.

---

ACTV, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)

|                                                                                                                              |  | Three
        MonthsEnded September 30, |            | Nine
        MonthsEnded September 30, |  
|----------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------- | ---------- | -------------------------------------- | -
|                                                                                                                              |  |                                         |            |                                        |  
|                                                                                                                              |  | 2000                                    |            | 1999                                   |  
|                                                                                                                              |  |                                         |            |                                        |  
|Revenues                                                                                                                      |  | $                                       | 2,794,433  |                                        | $
|                                                                                                                              |  |                                         |            |                                        |  
|                                                                                                                              |  |                                         |            |                                        |  
|Costs and
        expenses:                                                                                                   |  |                                         |            |                                        |  
|Operating
        expenses                                                                                                    |  |                                         | 3,245,126  |                                        |  
|Selling
        and administrative                                                                                            |  |                                         | 9,015,025  |                                        |  
|Depreciation
        and amortization                                                                                         |  |                                         | 863,787    |                                        |  
|Amortization
        of goodwill                                                                                              |  |                                         | 106,593    |                                        |  
|Stock
        appreciation rights                                                                                             |  |                                         | -          |                                        |  
|                                                                                                                              |  |                                         |            |                                        |  
|Total
        expenses                                                                                                        |  |                                         | 13,230,531 |                                        |  
|                                                                                                                              |  |                                         |            |                                        |  
|                                                                                                                              |  |                                         |            |                                        |  
|Interest income                                                                                                               |  |                                         | 2,225,659  |                                        |  
|Interest
        (expense)                                                                                                    |  |                                         | (13,407    | )                                      |  
|                                                                                                                              |  |                                         |            |                                        |  
|Interest
        income/(expense)-net                                                                                         |  |                                         | 2,212,252  |                                        |  
|                                                                                                                              |  |                                         |            |                                        |  
|                                                                                                                              |  |                                         |            |                                        |  
|(Loss) before
        minority interest, preferred
           stock dividend and accretion and
           extraordinary items |  |                                         | (8,223,846 | )                                      |  
|                                                                                                                              |  |                                         |            |                                        |  
|Minority
        interest                                                                                                     |  |                                         | 606,822    |                                        |  
|Preferred stock
        dividend and accretion                                                                                |  |                                         | -          |                                        |  
|                                                                                                                              |  |                                         |            |                                        |  
|(Loss) before
        extraordinary item                                                                                      |  | $                                       | (7,617,024 | )                                      | $
|                                                                                                                              |  |                                         |            |                                        |  
|Extraordinary
        loss on early extinguishment
           of debt                                                         |  |                                         | -          |                                        |  
|                                                                                                                              |  |                                         |            |                                        |  
|Net (loss)                                                                                                                    |  | $                                       | (7,617,024 | )                                      | $
|                                                                                                                              |  |                                         |            |                                        |  
|                                                                                                                              |  |                                         |            |                                        |  
|Basic and
        diluted (loss) per common share
           before extraordinary item                                        |  | $                                       | (0.15      | )                                      | $
|Basic and
        diluted (loss) per common share
           after extraordinary item                                         |  | $                                       | (0.15      | )                                      | $
|                                                                                                                              |  |                                         |            |                                        |  
|Weighted average
        number of common
           shares outstanding                                                       |  |                                         | 50,743,722 |                                        |  

See notes to consolidated
  financial statements.

---

ACTV, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)

|                                                                                                |  | Three
        MonthsEnded September 30, |             | Nine
        MonthsEnded September 30, |  
|----------------------------------------------------------------------------------------------- |  | --------------------------------------- | ----------- | -------------------------------------- | -
|                                                                                                |  |                                         |             |                                        |  
|                                                                                                |  | 2000                                    |             | 1999                                   |  
|                                                                                                |  |                                         |             |                                        |  
|Cash flows from
        operating activities:                                                   |  |                                         |             |                                        |  
|Net loss                                                                                        |  | $                                       | (7,617,024  | )                                      | $
|Adjustments
        to reconcile net loss to net cash used in
              operations:         |  |                                         |             |                                        |  
|Depreciation
        and amortization                                                           |  |                                         | 970,380     |                                        |  
|Deferred
        compensation from stock appreciation
              rights                      |  |                                         | -           |                                        |  
|Stock
        appreciation rights                                                               |  |                                         | -           |                                        |  
|Amortization
        and accretion of deferred expenses
              related to debt financing |  |                                         | -           |                                        |  
|Amortization
        of deferred revenue                                                        |  |                                         | (904,954    | )                                      |  
|Common
        stock issued in lieu of cash payment                                             |  |                                         | 1,520,000   |                                        |  
|Common
        stock issued for preferred dividends and
              accretion                 |  |                                         | -           |                                        |  
|Minority
        interest                                                                       |  |                                         | (606,822    | )                                      |  
|                                                                                                |  |                                         |             |                                        |  
|Changes in
        assets and liabilities:                                                      |  |                                         |             |                                        |  
|Accounts
        receivable                                                                     |  |                                         | (317,404    | )                                      |  
|Other
        assets                                                                            |  |                                         | (3,380,790  | )                                      |  
|Accounts
        payable and accrued expenses                                                   |  |                                         | 517,678     |                                        |  
|Deferred
        revenue                                                                        |  |                                         | (374,488    | )                                      |  
|                                                                                                |  |                                         |             |                                        |  
|Net
        cash used in operating activities                                                   |  |                                         | (10,193,424 | )                                      |  
|Cash flows from
        investing activities:                                                   |  |                                         |             |                                        |  
|Investment
        in patents                                                                   |  |                                         | (183,421    | )                                      |  
|Investment
        in property and equipment                                                    |  |                                         | (1,952,930  | )                                      |  
|Investment
        in software development costs                                                |  |                                         | (247,703    | )                                      |  
|Strategic
        investments                                                                   |  |                                         | -           |                                        |  
|                                                                                                |  |                                         |             |                                        |  
|Net
        cash used in investing activities                                                   |  |                                         | (2,384,054  | )                                      |  
|Cash flows from
        financing activities:                                                   |  |                                         |             |                                        |  
|Retirement
        of debt                                                                      |  |                                         | (300,000    | )                                      |  
|Preferred
        stock dividends payable                                                       |  |                                         | -           |                                        |  
|Redemption
        of preferred stock                                                           |  |                                         | -           |                                        |  
|Net
        proceeds from subsidiary equity transactions                                        |  |                                         | 10,000,000  |                                        |  
|Net
        proceeds from equity financings                                                     |  |                                         | 1,666,703   |                                        |  
|                                                                                                |  |                                         |             |                                        |  
|Net
        cash provided by financing activities                                               |  |                                         | 11,366,703  |                                        |  
|                                                                                                |  |                                         |             |                                        |  
|Net (decrease)
        increase in cash and cash equivalents                                    |  |                                         | (1,210,775  | )                                      |  
|Cash
        and cash equivalents, beginning of period                                          |  |                                         | 135,887,327 |                                        |  
|                                                                                                |  |                                         |             |                                        |  
|Cash
        and cash equivalents, end of period                                                |  | $                                       | 134,676,552 |                                        | $
|                                                                                                |  |                                         |             |                                        |  

See notes to consolidated
  financial statements.

---

ACTV, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY(Unaudited)

|                                                                                                                    |  | Common
        Stock |            |        |   |                                   |   |         |            
|------------------------------------------------------------------------------------------------------------------- |  | -------------------- | ---------- | ------ | - | --------------------------------- | - | ------- | -----------
|                                                                                                                    |  |                      |            |        |   |                                   |   |         |            
|                                                                                                                    |  | Shares               |            | Amount |   | Additional
        Paidin Capital |   | Deficit |            
|                                                                                                                    |  |                      |            |        |   |                                   |   |         |            
|Balance at
        December 31, 1999
           as originally reported                                              |  |                      | 42,167,997 |        |   | 4,216,800                         |   |         | 110,692,842
|                                                                                                                    |  |                      |            |        |   |                                   |   |         |            
|Adjustment for
        pooling of
           interests                                                              |  |                      | 272,035    |        |   | 27,204                            |   |         | 5,755,490  
|                                                                                                                    |  |                      |            |        |   |                                   |   |         |            
|                                                                                                                    |  |                      |            |        |   |                                   |   |         |            
|Adjusted balance
        at
            December 31, 1999                                                           |  |                      | 42,440,032 |        | $ | 4,244,004                         |   | $       | 116,448,332
|                                                                                                                    |  |                      |            |        |   |                                   |   |         |            
|Issuance of
        shares in
           connection with public
           offering                                 |  |                      | 4,600,000  |        |   | 460,000                           |   |         | 128,917,268
|                                                                                                                    |  |                      |            |        |   |                                   |   |         |            
|Issuance of
        shares for services                                                                             |  |                      | 947,000    |        |   | 94,700                            |   |         | 7,617,788  
|                                                                                                                    |  |                      |            |        |   |                                   |   |         |            
|Issuance of
        shares in
           connection with exercise of
           stock options &
           warrants |  |                      | 3,004,562  |        |   | 300,456                           |   |         | 20,837,127 
|                                                                                                                    |  |                      |            |        |   |                                   |   |         |            
|Retirement of
        common stock                                                                                  |  |                      | (58,476    | )      |   | (5,848                            | ) |         | (307,636   
|                                                                                                                    |  |                      |            |        |   |                                   |   |         |            
|Net loss                                                                                                            |  |                      | -          |        |   | -                                 |   |         | -          
|                                                                                                                    |  |                      |            |        |   |                                   |   |         |            
|                                                                                                                    |  |                      |            |        |   |                                   |   |         |            
|Balance at
        September 30, 2000                                                                               |  |                      | 50,933,118 |        | $ | 5,093,312                         |   | $       | 273,512,879
|                                                                                                                    |  |                      |            |        |   |                                   |   |         |            

See notes to consolidated
  financial statements.

---

NOTES TO CONSOLIDATED FINANCIAL
  STATEMENTSTHREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 and 2000

1.   Basis
  of Presentation

The
  results of operations for the three and nine months ended September
  30, 2000 and 1999 are not necessarily indicative of a full year's
  operations. In the opinion of our management, the accompanying
  financial statements include all adjustments of a normal recurring
  nature, which are necessary to present fairly such financial
  statements.

All
  significant intercompany balances and transactions have been
  eliminated in consolidation. Certain information and footnote
  disclosures normally included in the financial statements prepared
  in accordance with generally accepted accounting principles have
  been condensed or omitted.

These
  consolidated financial statements should be read in conjunction with
  the audited financial statements and notes thereto included in our
  annual report on Form 10-K for the year ended December 31, 1999.

We
  consider all highly liquid debt instruments purchased with an
  original maturity of three months or less to be cash equivalents.

Certain
  reclassifications have been made to the prior years' financial
  statements to conform to the 2000 presentation.

2.   Financing
  Activities

On
  February 3, 2000, we completed a follow-on offering of 4.6 million
  common shares, including 0.6 million common shares to cover the
  over-allotments of our underwriters, Credit Suisse First Boston,
  Bear Stearns & Co. Inc., Lehman Brothers, and Salomon Smith
  Barney. The 4.6 million total common shares were priced to the
  public at $30 per share, for total gross proceeds of $138 million.
  We paid underwriting discounts and commissions of $1.80 per share or
  $8.28 million, resulting in net proceeds of $28.20 per share, or
  $129.7 million.

On
  March 27, 2000 Liberty Digital, Inc. invested an additional $20
  million in us, increasing its investment to 16% by exercising a
  warrant granted in March 1999.

On
  September 6, 2000, Digital ADCO, Inc., a subsidiary of ACTV, Inc.
  and General Instruments, a subsidiary of Motorola Broadband
  Communications, announced the completion of a direct minority
  investment by OpenTV Corp. Digital ADCO, Inc. with Motorola
  Broadband Communications and OpenTV have joined to create a new
  subsidiary named Digital ADCO International.

3.   Merger
  and Acquisition Activity



On
  August 17, 2000, the Company acquired all of the outstanding capital
  stock of Bottle Rocket, Inc. ("Bottle Rocket") in exchange for
  272,035 shares of the Company's common stock. Bottle Rocket
  creates online entertainment based on proprietary technology engines
  for trivia, prediction, simulation, arcade-style, and multi-player
  games. The acquisition of Bottle Rocket has been accounted for under
  the pooling of interests method of accounting and, accordingly, the
  Company's historical consolidated financial statements have been
  restated to include the accounts and results of operations of Bottle
  Rocket.

---

The
  results of operations previously reported by the Company, the
  results of operations of Bottle Rocket and the combined amounts
  presented in the accompanying consolidated financial statements are
  presented below:

|              |  |                                             |            | Years
        ended December 31 |  
|------------- |  | ------------------------------------------- | ---------- | ------------------------------- | -
|              |  |                                             |            |                                 |  
|              |  | Nine
        months endedSeptember 30, 1999 |            | 1999                            |  
|              |  |                                             |            |                                 |  
|              |  | (unaudited)                                 |            |                                 |  
|Revenues:     |  |                                             |            |                                 |  
|ACTV          |  | $                                           | 1,328,961  |                                 | $
|Bottle Rocket |  |                                             | 401,505    |                                 |  
|              |  |                                             |            |                                 |  
|Combined      |  | $                                           | 1,730,466  |                                 | $
|              |  |                                             |            |                                 |  
|              |  |                                             |            |                                 |  
|Net Loss:     |  |                                             |            |                                 |  
|ACTV          |  | $                                           | 16,407,091 |                                 | $
|Bottle Rocket |  |                                             | 2,886,756  |                                 |  
|              |  |                                             |            |                                 |  
|Combined      |  | $                                           | 19,293,847 |                                 | $
|              |  |                                             |            |                                 |  

There
  were no eliminations or other adjustments to historical financial
  statements or significant non-recurring charges as a result of this
  transaction. Bottle Rocket had no operations prior to1997.

4.   Extinguishment
  of Long Term Debt

On
  April 3, 2000, we repaid certain notes in full, thereby incurring a
  loss on extinguishment of debt that we recorded as an extraordinary
  item in the quarter ended June 30, 2000. The extraordinary loss
  includes a prepayment premium of $369,632, and the unamortized
  original issue discount and deferred issue costs of $819,294 and
  $222,213, respectively, for a total loss of $1,411,139, or $0.03 per
  share. We incurred the debt in January 1998, when subsidiaries of
  ours entered into a note purchase agreement with certain private
  investors. Pursuant to the agreement, the purchasers purchased $5.0
  million aggregate principal amount notes from our subsidiaries. The
  notes bore interest at a rate of 13.0% per annum, payable
  semi-annually. During the term of the note, the issuer had the
  option, pay any four semi-annual interest payments in kind rather
  than in cash, with an increase in the rate applicable to such
  payments in kind to 13.75% per annum.

5.   Investments

We
  entered into various strategic equity investments in privately held
  companies that operate in our industry. The investments are stated
  at cost, aggregating $4,000,000. We do not exercise effective
  control over operations for any of these strategic equity
  investments.

6.   Minority
  Interest

We
  record minority interest resulting from Digital ADCO. Digital ADCO
  was formed in November 1999 and co-founded by ACTV, Inc. and
  Motorola Broadband. Digital ADCO develops applications for the
  delivery of addressable advertising. Under the terms of our
  agreement with Motorola Broadband, we licensed five of our patents
  to Digital ADCO and Motorola Broadband licensed six of its patents
  and made a capital commitment to Digital ADCO. During August 2000,
  OpenTV made a capital contribution and contributed patents on a
  non-exclusive basis to Digital ADCO. Additionally, Digital ADCO
  International is being formed to license and distribute products and
  services outside of North America and other western hemisphere
  countries. Digital Adco, Inc.'s issued and outstanding shares of
  capital stock presently consist of Class A common stock, having one
  vote per share, and Class B common stock, having 25 votes per share.
  All of Digital Adco's issued and outstanding shares are presently
  held by three investors. Open TV currently owns the issued and
  outstanding Class A common shares. ACTV, Inc. and Motorola
  Broadband, the co-founders of Digital Adco, own the issued and
  outstanding Class B common shares. ACTV, Inc. currently owns 45.9%
  of Digital ADCO, and exercise voting control of the venture.

For
  the three and nine months ended September 30, 2000, we allocated
  losses in the amount of $568,985 and $1,001,377 from Digital ADCO to
  Motorola Broadband and OpenTV.

In
  May 2000, Thomas R. Wolzien exercised his option to acquire a 49.9%
  interest in Media Online Services. We record minority interest
  resulting from this exercise and allocated losses in the amount of
  $37,837 and $83,342 for the three and nine months ended September
  30, 2000.

---

7.Segment Information

We
  have two principal business segments. The Digital Television
  segment, which includes Digital ADCO, develops and markets
  technologies which enables interactive television and advertising.

The
  Enhanced Media segment, which includes HyperTV, Bottle Rocket, and
  Media Online Services, develops and markets technologies for the
  convergence of the Internet and television, for Internet gaming, for
  Internet radio and for streaming media applications.

Information
  concerning the our business segments for the three and nine-month
  periods ending September 30, 2000 and 1999 are as follows:

|                                    |  | For
        the Three months endedSeptember 30, |            | For
        the Nine months endedSeptember 30, |  
|----------------------------------- |  | ----------------------------------------------- | ---------- | ---------------------------------------------- | -
|                                    |  |                                                 |            |                                                |  
|                                    |  | 2000                                            |            | 1999                                           |  
|                                    |  |                                                 |            |                                                |  
|Revenues                            |  |                                                 |            |                                                |  
|Digital
        Television          |  | $                                               | -          |                                                | $
|Enhanced Media                      |  |                                                 | 2,794,433  |                                                |  
|Unallocated
        corporate       |  |                                                 | -          |                                                |  
|                                    |  |                                                 |            |                                                |  
|Total                               |  | $                                               | 2,794,433  |                                                | $
|                                    |  |                                                 |            |                                                |  
|                                    |  |                                                 |            |                                                |  
|Depreciation
        & Amortization |  |                                                 |            |                                                |  
|Digital
        Television          |  | $                                               | 419,675    |                                                | $
|Enhanced Media                      |  |                                                 | 271,401    |                                                |  
|Unallocated
        Corporate       |  |                                                 | 279,304    |                                                |  
|                                    |  |                                                 |            |                                                |  
|Total                               |  | $                                               | 970,380    |                                                | $
|                                    |  |                                                 |            |                                                |  
|                                    |  |                                                 |            |                                                |  
|Interest
        Income (Expense)   |  |                                                 |            |                                                |  
|Digital
        Television          |  | $                                               | 71,665     |                                                | $
|Enhanced Media                      |  |                                                 | (3,365     | )                                              |  
|Unallocated
        corporate       |  |                                                 | 2,143,952  |                                                |  
|                                    |  |                                                 |            |                                                |  
|Total                               |  | $                                               | 2,212,252  |                                                | $
|                                    |  |                                                 |            |                                                |  
|                                    |  |                                                 |            |                                                |  
|Net (Loss)                          |  |                                                 |            |                                                |  
|Digital
        Television          |  | $                                               | (1,908,412 | )                                              | $
|Enhanced Media                      |  |                                                 | (3,025,312 | )                                              |  
|Unallocated
        corporate       |  |                                                 | (2,683,300 | )                                              |  
|                                    |  |                                                 |            |                                                |  
|Total                               |  | $                                               | (7,617,024 | )                                              | $
|                                    |  |                                                 |            |                                                |  
|                                    |  |                                                 |            |                                                |  
|Capital
        Expenditures        |  |                                                 |            |                                                |  
|Digital
        Television          |  | $                                               | 1,380,096  |                                                | $
|Enhanced Media                      |  |                                                 | 380,115    |                                                |  
|Unallocated
        corporate       |  |                                                 | 623,843    |                                                |  
|                                    |  |                                                 |            |                                                |  
|Total                               |  | $                                               | 2,384,054  |                                                | $
|                                    |  |                                                 |            |                                                |  

Balance Sheet Accounts as of
  September 30,

|                              |  | 2000 |             | 1999 |  
|----------------------------- |  | ---- | ----------- | ---- | -
|                              |  |      |             |      |  
|Current
        Assets        |  |      |             |      |  
|Digital
        Television    |  | $    | 10,562,359  |      | $
|Enhanced Media                |  |      | 2,136,266   |      |  
|Unallocated
        corporate |  |      | 129,933,515 |      |  
|                              |  |      |             |      |  
|Total                         |  | $    | 142,632,140 |      | $
|                              |  |      |             |      |  
|                              |  |      |             |      |  
|Total Assets                  |  |      |             |      |  
|Digital
        Television    |  | $    | 16,115,454  |      | $
|Enhanced Media                |  |      | 82,330,052  |      |  
|Unallocated
        corporate |  |      | 145,821,708 |      |  
|                              |  |      |             |      |  
|Total                         |  | $    | 244,267,214 |      | $
|                              |  |      |             |      |  

---

8.   Stock
  Appreciation Rights Plan

The
  stock appreciation rights expense for the three and nine months
  ended September 30, 2000 was $0 and the three and nine months ended
  September 30, 1999 was $(2,605,319) and $1,950,330, respectively. In
  September 1999, all remaining SARs were converted into options under
  our 1999 option plan. Deferred expenses were recorded related to
  SARs that had not yet vested. In May 2000, we recognized $306,000 of
  those deferred expenses as period costs.

9.   Executive
  Compensation

For
  both the three and nine months ended September 30, 2000 we incurred
  executive incentive compensation expense of $2,300,000 and
  $4,600,000, respectively. For both the three and nine months ended
  September 30, 1999, we incurred executive incentive compensation
  expense of $780,844 and $1,561,688. This expense is related to an
  executive incentive compensation provision which is based on changes
  in the market value of our common stock and is paid in unregistered
  securities. The future compensation to be recognized is contingent
  on continued employment of the executive and subject to forfeiture.

10.   Investment
  in Warrant

The
  Company and Liberty Livewire LLC, a unit of Liberty Livewire
  Corporation ("Livewire") (formerly known as Todd AO
  Corporation), entered into a joint marketing venture "HyperTV®
  with Livewire" on April 13, 2000. HyperTV with Livewire will
  use ACTV's patented HyperTV convergence technology to combine the
  emotive power of television with the interactivity of the Internet,
  and will provide turnkey convergence services, including application
  hosting, web authoring services, data management, e-commerce and
  other value-added services for advertisers, television programmers,
  studios and networks.

The
  Company received a warrant to acquire 2,500,000 shares of Livewire
  at $30 per share in connection with entering into the joint
  marketing agreement. The warrant becomes exercisable at the rate of
  500,000 shares per year, commencing on April 13, 2001, includes
  certain registration rights, and may be exercised until March 31,
  2015. With certain exceptions, the warrant is not transferable. The
  Company has recorded an investment and deferred revenue in the
  amount of $ 76,016,175, the estimated value of the warrant. The
  Company estimated the value of the warrant using the Black Scholes
  pricing model with a risk free rate of 6.5%, a volatility of 80% and
  assuming no cash dividends. For accounting purposes, the Company
  will periodically estimate the value of the warrant. Any change in
  estimated value attributable to shares that are both exercisable and
  are expected to become registered within one year will be recorded
  through increases or decreases in Other Comprehensive Income. The
  deferred income recorded by the Company is being amortized into
  income over a period of 21 years, the contractual term of the joint
  marketing venture.

11.   Supplemental
  Disclosure of Cash and Non-cash Activities

For
  both the three and nine months ended September 30, 2000 we recorded
  a deferred expense of $1,520,000 and $3,040,000 for stock-based
  compensation.

We
  also recorded revenue of $904,954 during the quarter ended September
  30, 2000 relating to amortization of the deferred revenue recorded
  in connection with the Liberty Livewire warrant (See Note 10).

We
  also paid $284,619 in interest costs for the nine months ended
  September 30, 2000, and we made no cash payments of interest or
  income taxes during the nine months ended September 30, 1999.

12.   New
  Accounting Pronouncements Not Yet Effective

In
  June 1998, the Financial Accounting Standards Board ("FASB")
  issued Statement of Financial Accounting Standards ("SFAS") No.
  133, "Accounting for Derivative Instruments and Hedging
  Activities" ("SFAS 133"). This Statement requires that all
  derivative instruments be measured at fair value and recognized in
  the consolidated balance sheets as either assets or liabilities. In
  addition, the accounting for changes in the fair value of a
  derivative (gains and losses) depends on the intended use of the
  derivative and the resulting designation. For a derivative
  designated as a hedge, the change in fair value will be recognized
  as a component of other comprehensive income; for a derivative not
  designated as a hedge, the change in the fair value will be
  recognized in the consolidated statements of operations.

---

In
  June 1999, the FASB issued SFAS No. 137, "Accounting for
  Derivative Instruments and Hedging Activities - Deferral of the
  Effective Date of FASB Statement No 133" which delayed the
  adoption of SFAS 133 to fiscal years beginning after June 15, 2000.

In
  June 2000, the FASB issued SFAS No. 138, "Accounting for Certain
  Derivative Financial Instruments and Certain Hedging Activities -
  An Amendment of FASB Statement No. 133." This Statement amends the
  accounting and reporting standards of SFAS 133 for certain
  derivative instruments, for certain hedging activities and for
  decisions made by the FASB relating to the Derivatives
  Implementation Group ("DIG") process. Certain decisions arising
  from the DIG process that required specific amendments to SFAS 133
  were incorporated into this Statement. We plan to adopt SFAS 133 and
  SFAS 138 in the first quarter of 2001.

We
  do no expect the adoption of SFAS No. 133 to have an impact on our
  results of operations, financial position or cash flows.

13.   Preferred
  Stock Rights Agreement

Our
  policy is and has been to license our technology and arrange joint
  ventures for its use in a number of different industries. In August
  2000, our Board of Directors adopted a Preferred Stock Rights
  Agreement, which gives our Board of Directors certain alternative
  courses of action if a potential acquirer of 15% or more of our
  common stock is deemed unlikely to further such policy or if such
  potential acquirer acts inconsistently with the best interests of
  our stockholders. The Preferred Stock Rights Agreement does not
  apply to existing holders of 15% or more of our common stock.
  Pursuant to the Preferred Stock Rights Agreement, we could
  distribute certain preferred stock purchase rights to our current
  stockholders. These rights would become exercisable if an outside
  party became the beneficial owner of 15% or more of our issued and
  outstanding common stock, unless our Board of Directors determines
  to defer the exercise of, or redeem, such rights. The potential
  acquirer's rights under the Preferred Stock Rights Agreement will be
  null and void. Once exercisable, each preferred stock purchase right
  would entitle the holder thereof to purchase .001 of share of our
  Series C Preferred Stock at an exercise price of $0.00001 per share.
  Each share of our Series C Preferred Stock shall entitle the holder
  thereof to 1,000 votes on all matters submitted to a vote of our
  stockholders. Once issued our Board of Directors could vote to
  exchange the preferred stock purchase rights for shares of our
  common stock. A potential acquirer may be discouraged from
  completing an acquisition if it could not be assured of having
  control of us. Our Board of Directors has also approved an amendment
  to our Bylaws which provides that only a majority of the Board of
  Directors or the Chairman of the Board may call a special meeting of
  the stockholders. In addition, our certificate of incorporation
  permits our Board of Directors to have us designate and issue,
  without stockholder approval, preferred stock with voting,
  conversion and other rights and preferences that could
  differentially and adversely affect the voting power or other rights
  of the holders of our common stock. Our issuance of preferred stock
  or of rights to purchase preferred stock could also be used to
  discourage an unsolicited acquisition proposal.

ACTV
  Entertainment, Inc. ("Entertainment") and HyperTV Networks, Inc.
  are subsidiaries of ACTV, Inc. In part as an anti-takeover defense,
  in 1997 and 1998 Entertainment and HyperTV granted stock options for
  their respective Class B common shares to a limited number of their
  officers and employees, which Class B stock options - as amended
  in December, 1999 - were to become exercisable only upon a "change
  of control" of ACTV, Inc., as the term "change of control" was
  defined in those options. Effective October 2, 2000, all of those
  Class B stock options were terminated, with the result that there
  are no options outstanding at this date with respect to any of the
  Class B shares of either Entertainment or HyperTV.

---

Item 2. Management's
  Discussion and Analysis of Financial Condition and Results of
  Operations

Overview

ACTV

We
  are a digital media company that has developed proprietary and
  patented technologies which enable interactive television and
  Internet applications. We have two business segments, Digital
  Television and Enhanced Media. Digital Television, through our
  products One To One TV and SpotOn, enables television programmers
  and advertisers to create individualized programming for digital
  television. Enhanced Media, through our HyperTV, Bottle Rocket and
  Media Online Services businesses, primarily enhances standard video
  and radio content with information and interactivity.

We
  anticipate that the expansion of digital television transmission
  systems, together with the new applications they enable, will
  revolutionize television as we know it by turning passive viewing
  into an interactive experience. Digital technology will allow
  telecasters, advertisers and digital media companies to bring
  interactivity and Internet content to a mass audience. We believe
  that our proprietary technologies uniquely position us to capitalize
  on this anticipated digital television revolution.

To
  this end, we have built key strategic relationships with industry
  leaders, including:

- Liberty Media Corporation, Liberty Livewire Corporation and
      Liberty Digital Inc., collectively our largest shareholder and a
      co-venturer;

- Motorola Broadband Sector, a shareholder and a co-investor;
      and

- iN DEMAND LLC, the nation's leading pay-per-view network.

RESULTS OF OPERATIONS

Comparison of Three Month Periods
  Ended September 30, 2000 and September 30, 1999

Revenues.
  During the three month period ended September 30, 2000, our revenues
  increased 363%, to $2,794,433, from $603,712 for the three month
  period ended September 30, 1999. The increase is the result of
  increasing sales of the company's Enhanced Media products, along
  with $904,954 in revenue from the Livewire warrant.

Total
  Costs and Expenses. Operating costs for the three months ended
  September 30, 2000 were $3,245,126, compared to $1,414,572 for the
  three months ended September 30, 1999. Selling and administrative
  expenses for the three months ended September 30, 2000 were
  $9,015,025, compared to $5,817,579 for the three months ended
  September 30, 1999. The increases were principally the result of
  costs associated with the development and sales of our Enhanced
  Media products, increased product development costs and higher
  selling and administrative expenses associated with developing the
  sale force and infrastructure. Third quarter 2000 selling and
  administrative expenses also includes $2,300,000 of deferred
  compensation expense, of which $1,520,000 was non-cash.

Depreciation
  and Amortization. Depreciation and amortization expense
  increased $459,720 for the three month period ended September
  30, 2000, to $970,380, from $510,660 during the same period of 1999,
  due primarily to our increasing investment in patents, software
  development, and equipment.

Interest
  (Expense)/Income. Interest income-net in the three month period
  ended September 30, 2000 was $2,212,252, compared with ($73,674) for
  the three month period ended September 30, 1999. The increase was
  the result of significantly higher cash balances resulting from our
  February 2000 follow-on offering. We incurred interest expense for
  the quarter ending September 30, 2000 of $13,407, compared to
  $261,305 for the same period of 1999. The interest expense for 1999
  relates to the $5 million original face value notes issued by a
  subsidiary of ours in January 1998, and such notes were retired on
  April 3, 2000.

Net
  Loss. For the three months ended September 30, 2000 and 1999,
  our net loss applicable to common stockholders after extraordinary
  loss was $7,617,024 and $4,607,454, or $0.15 and $0.11, per basic
  and diluted share, respectively.

---

Comparison of Nine Month Periods
  Ended September 30, 2000 and September 30, 1999

Revenues.
  During the nine month period ended September 30, 2000, our revenues
  increased 238%, to $5,842,646, from $1,730,466 for the nine month
  period ended September 30, 1999. The increase is the result of
  increasing sales of the company's Enhanced Media products, along
  with $904,954 in revenue from the Livewire warrant.

Total
  Costs and Expenses. Operating costs for the nine months ended
  September 30, 2000 were $9,136,422, compared to $3,136,470 for the
  nine months ended September 30, 1999. Selling and administrative
  expenses for the nine months ended September 30, 2000 were
  $20,481,176, compared to $13,539,944 for the nine months ended
  September 30, 1999. The increases were principally the result of
  costs associated with the development and sales of Enhanced Media
  products, increased product development costs and higher selling and
  administrative expenses associated with developing the sale force
  and infrastructure. Year 2000 selling and administrative expenses
  also includes $4,600,000 of deferred compensation expense, of which
  $3,040,000 was non-cash.

Depreciation
  and Amortization. Depreciation and amortization expense
  increased $1,217,670 for the period ended September 30, 2000, to
  $2,648,157, from $1,430,487 during the same period of 1999, due
  primarily to our increasing investment in patents, software
  development, and equipment.

Interest
  Income (Expense).Interest income for the nine month period
  ended September 30, 2000 was $5,602,064, compared with $310,271 for
  the nine month period ended September 30, 1999. The increase was the
  result of significantly higher cash balances resulting from our
  February 2000 follow-on offering. We incurred interest expense for
  the period ending September 30, 2000 of $284,619, compared to
  $782,922 for the same period of 1999. The interest expense for both
  periods relates to the $5 million original face value notes issued
  by a subsidiary of ours in January 1998, and is lower during the
  period ending September 30, 2000 due to retirement of the notes on
  April 3, 2000.

Preferred
  Stock Dividends. For the nine month period ended September 30,
  1999, we paid $494,431 for preferred stock dividends, related to our
  Series B preferred stock. We redeemed all of our outstanding
  preferred stock in the second quarter of 1999.

Net
  Loss Before Extraordinary Item. For the nine months ended
  September 30, 2000, our net loss applicable to common stockholders
  before extraordinary item was $20,020,945 or $0.41 per basic and
  diluted share, an increase of 4% compared to the net loss of
  $19,293,847 or $0.54 per basic and diluted share for the nine months
  ended September 30, 1999.

Net
  Loss. For the nine months ended September 30, 2000 and 1999, our
  net loss applicable to common stockholders after extraordinary loss
  was $21,432,084 or $0.43 per basic and diluted share, and
  $19,293,847 or $0.54 per basic and diluted share. The extraordinary
  loss was the result of early retirement of long term debt on April
  3, 2000. The extraordinary loss includes a prepayment premium of
  $369,632, and the unamortized original issue discount and deferred
  issue costs of $819,294 and $222,213, respectively, for a total loss
  of $1,411,139 or $0.03 per share.

Liquidity and Capital Resources

Since
  our inception, we have not generated revenues sufficient to fund our
  operations, and have incurred operating losses. Through September
  30, 2000, we had an accumulated deficit of $125,066,769. Our cash
  position on September 30, 2000 was $134,676,552, compared to
  $9,413,170 on December 31, 1999.



During
  the nine months ended September 30, 2000, we used $23,104,875 for
  cash for operations, compared with $9,843,849 for the nine months
  ended September 30, 1999. The increase in net cash used by operating
  activities principally relates to increased operating losses
  incurred through the roll out and execution of our business plan.



For
  the nine months ended September 30, 2000, we used cash for investing
  activities of $8,740,521, compared with $3,718,044, for the nine
  months ended September 30, 1999. The increase in cash used in
  investing activities is

---

primarily due to $3,750,000 of
  strategic equity investments, along with increased capital
  expenditures for the roll out of the interactive TV products.



We
  have and continue to fund our cash requirements from the net
  proceeds of a public, follow-on offering completed on February 3,
  2000. Through a group of underwriters, we sold total of
  4.6 million common shares, resulting in net proceeds of $129.7
  million. In addition, on March 27, 2000, Liberty Digital, Inc.
  invested an additional $20 million in us by exercising a warrant
  granted in March 1999. With this warrant exercise, Liberty Digital
  increased its investment in us to 16%.

Impact of Inflation

Inflation
  has not had any significant effect on the Company's operating
  costs.

Item 3.   Quantitative
  and Qualitative Disclosures About Market Risk

Not
  applicable

PART II. OTHER INFORMATION

Item 1.   Legal
  Proceedings

There
  are no pending material legal proceedings to which the Company is a
  party.

Item 2.   Changes
  in Securities

Not
  applicable

Item 3.   Defaults
  Upon Senior Securities

Not
  applicable.

Item 4.   Submission
  of Matters to a Vote of Stockholders

None.

Item 5.   Other
  Information

On
  August 17, 2000, the Company completed the acquisition of all of the
  issued and outstanding capital stock, stock options and warrants of
  Bottle Rocket, Inc., a Delaware corporation, in consideration for: (i)
  254,936 shares of the Company's common stock; (ii) stock options to
  purchase up to 27,599 shares of the Company's common stock; and
  (iii) warrants to purchase up to 26,216 shares of the Company's
  common stock.

Item 6.   Exhibits
  and Reports on Form 8-K

(a)
  Exhibits





(b)
  Reports on Form 8-K: None.

---

SIGNATURES

Pursuant
  to the requirements of the Securities Exchange Act of 1934, the
  registrant has duly caused this report to be signed on its behalf by
  the undersigned thereunto duly authorized.

| |  |  | ACTV, Inc.
| |  |  | ----------
| |  |  | Registrant
| |  |  |           
| |  |  |           

|                                   |  |  |                                                                                  
|---------------------------------- |  |  | ---------------------------------------------------------------------------------
|Date:
           November 13, 2000 |  |  | /s/ William C.
        Samuels                                                   
|                                   |  |  |                                                                                  
|                                   |  |  | William C. Samuels
        Chairman, Chief Executive Officer
        and Director

|                                   |  |  |                                                                                                                               
|---------------------------------- |  |  | ------------------------------------------------------------------------------------------------------------------------------
|Date:
           November 13, 2000 |  |  | /s/ Joseph P. Dwyer                                                                                                           
|                                   |  |  |                                                                                                                               
|                                   |  |  | Joseph P. Dwyer
        Executive Vice President, Chief Financial Officer
        (principal financial and accounting officer)

---