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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-QSB



|x |  | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ---------------------------------------------------------------------------------



For the quarterly period ended June 30, 2003



OR



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



For the transition period from
 to



Commission file number: 0-20995



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AXTIVE CORPORATION

(Exact name of small business issuer as specified in its charter)



|Delaware                                                       |  | 13-3778895                       
|-------------------------------------------------------------- |  | ---------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)



1445 ROSS AVENUE,
SUITE 4500, DALLAS, TEXAS 75202

(Address of principal executive offices)



(214) 397-0200

(Issuers telephone number)



(Former name, former address and former fiscal year, if changed since last report)



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Check whether the issuer (1) filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes ̈No  x



State the number of shares outstanding of each of the issuers classes
of common equity, as of the latest practicable date.



As of
September 2, 2003, the issuer had 21,956,445 shares of Common Stock outstanding.



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AXTIVE CORPORATION



TABLE OF CONTENTS



|                                                                                                                 |  |                                                            |  | Page No.
|---------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------- |  | --------
|PART IFINANCIAL INFORMATION                                                                                     |  |                                                           
|                                                                                                                 |  |                                                           
|ITEM 1.                                                                                                          |  | Financial Statements:                                      |  |         
|                                                                                                                 | 
|Consolidated Balance Sheets as of December 31, 2002 and June 30, 2003 (unaudited)                                |  | 3                                                         
|Unaudited Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2002 and 2003        |  | 4                                                         
|Unaudited Consolidated Statements of Comprehensive Income (Loss) for the Six Months Ended June 30, 2002 and 2003 |  | 4                                                         
|Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2002 and 2003        |  | 5                                                         
|Notes to Unaudited Consolidated Financial Statements                                                             |  | 6                                                         
|                                                                                                                 |  |                                                           
|ITEM 2.                                                                                                          |  | Managements Discussion and Analysis or Plan of Operations |  | 16      
|                                                                                                                 |  |                                                           
|ITEM 3.                                                                                                          |  | Controls and Procedures                                    |  | 19      
|                                                                                                                 | 
|PART IIOTHER INFORMATION                                                                                        |  |                                                           
|                                                                                                                 |  |                                                           
|ITEM 1.                                                                                                          |  | Legal Proceedings                                          |  | 20      
|                                                                                                                 |  |                                                           
|ITEM 2.                                                                                                          |  | Changes in Securities and Use of Proceeds                  |  | 21      
|                                                                                                                 |  |                                                           
|ITEM 3.                                                                                                          |  | Defaults Upon Senior Securities                            |  | 22      
|                                                                                                                 |  |                                                           
|ITEM 4.                                                                                                          |  | Submission of Matters to a Vote of Security Holders        |  | 23      
|                                                                                                                 |  |                                                           
|ITEM 5.                                                                                                          |  | Other Information                                          |  | 23      
|                                                                                                                 |  |                                                           
|ITEM 6.                                                                                                          |  | Exhibits and Reports on Form 8-K                           |  | 23      
|                                                                                                                 | 
|SIGNATURES                                                                                                       |  | 24                                                        



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AXTIVE CORPORATION

CONSOLIDATED BALANCE SHEETS



|                                                                                                                                                                                                                                                      |  | December 31,2002 |             |   | June 30,2003 |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ----------- | - | ------------ | -
|                                                                                                                                                                                                                                                      |  |                  |             |   | (unaudited)  |  
|CURRENT ASSETS                                                                                                                                                                                                                                        |  |                  |             |   |              |  
|Cash and cash equivalents                                                                                                                                                                                                                             |  | $                | 444,275     |   |              | $
|Marketable securities                                                                                                                                                                                                                                 |  |                  | 26,873      |   |              |  
|Accounts receivable, net                                                                                                                                                                                                                              |  |                  | 392,043     |   |              |  
|Other current assets                                                                                                                                                                                                                                  |  |                  | 121,984     |   |              |  
|                                                                                                                                                                                                                                                      |  |                  |             |   |              |  
|Total current assets                                                                                                                                                                                                                                  |  |                  | 985,175     |   |              |  
|                                                                                                                                                                                                                                                      |  |                 
|NON-CURRENT ASSETS                                                                                                                                                                                                                                    |  |                  |             |   |              |  
|Property and equipment, net                                                                                                                                                                                                                           |  |                  | 301,388     |   |              |  
|Goodwill                                                                                                                                                                                                                                              |  |                  | 2,247,714   |   |              |  
|Intangible assets, net                                                                                                                                                                                                                                |  |                  | 361,476     |   |              |  
|Other assets                                                                                                                                                                                                                                          |  |                  | 8,853       |   |              |  
|                                                                                                                                                                                                                                                      |  |                  |             |   |              |  
|TOTAL ASSETS                                                                                                                                                                                                                                          |  | $                | 3,904,606   |   |              | $
|                                                                                                                                                                                                                                                      |  |                  |             |   |              |  
|CURRENT LIABILITIES                                                                                                                                                                                                                                   |  |                  |             |   |              |  
|Accounts payable                                                                                                                                                                                                                                      |  | $                | 408,187     |   |              | $
|Accrued expenses                                                                                                                                                                                                                                      |  |                  | 322,380     |   |              |  
|Short-term notes payable                                                                                                                                                                                                                              |  |                  | 995,619     |   |              |  
|Current portionlong-term debt                                                                                                                                                                                                                        |  |                  |            |   |              |  
|Settlement notes payable                                                                                                                                                                                                                              |  |                  |            |   |              |  
|Lease termination liability                                                                                                                                                                                                                           |  |                  |            |   |              |  
|Other current liabilities                                                                                                                                                                                                                             |  |                  | 666,333     |   |              |  
|                                                                                                                                                                                                                                                      |  |                  |             |   |              |  
|Total current liabilities                                                                                                                                                                                                                             |  |                  | 2,392,519   |   |              |  
|                                                                                                                                                                                                                                                      |  |                 
|Long-term debt, less current portion                                                                                                                                                                                                                  |  |                  |            |   |              |  
|Other liabilities                                                                                                                                                                                                                                     |  |                  | 69,195      |   |              |  
|                                                                                                                                                                                                                                                      |  |                  |             |   |              |  
|Total non-current liabilities                                                                                                                                                                                                                         |  |                  | 69,195      |   |              |  
|                                                                                                                                                                                                                                                      |  |                  |             |   |              |  
|TOTAL LIABILITIES                                                                                                                                                                                                                                     |  |                  | 2,461,714   |   |              |  
|                                                                                                                                                                                                                                                      |  |                 
|COMMITMENTS AND CONTINGENCIES                                                                                                                                                                                                                         |  |                  |            |   |              |  
|                                                                                                                                                                                                                                                      |  |                 
|STOCKHOLDERS EQUITY                                                                                                                                                                                                                                  |  |                  |             |   |              |  
|Series A convertible preferred stock, $.01 par value, 5,000,000 shares authorized, 4,440 and 6,775 issued and outstanding at
December 31, 2002 and June 30, 2003, net of discount; liquidation preference of $4,440,000 and $6,775,000, respectively. |  |                  | 3,925,572   |   |              |  
|Common stock, $.01 par value, 100,000,000 shares authorized, 19,039,622 and 20,258,771 issued and outstanding at December 31, 2002
and June 30, 2003, respectively.                                                                                   |  |                  | 190,396     |   |              |  
|Additional paid in capital                                                                                                                                                                                                                            |  |                  | 41,924,284  |   |              |  
|Accumulated deficit                                                                                                                                                                                                                                   |  |                  | (44,586,502 | ) |              |  
|Accumulated other comprehensive loss                                                                                                                                                                                                                  |  |                  | (10,858     | ) |              |  
|                                                                                                                                                                                                                                                      |  |                  |             |   |              |  
|TOTAL STOCKHOLDERS EQUITY                                                                                                                                                                                                                            |  |                  | 1,442,892   |   |              |  
|                                                                                                                                                                                                                                                      |  |                  |             |   |              |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                                            |  | $                | 3,904,606   |   |              | $
|                                                                                                                                                                                                                                                      |  |                  |             |   |              |  



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



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AXTIVE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)



|                                                              |  | For the three months ending June 30, |            |   | For the six months ending June 30, |  
|------------------------------------------------------------- |  | ------------------------------------ | ---------- | - | ---------------------------------- | -
|                                                              |  | 2002                                 |            |   | 2003                               |  
|Net revenue                                                   |  | $                                    | 511,101    |   |                                    | $
|Cost of revenue                                               |  |                                      | (340,040   | ) |                                    |  
|                                                              |  |                                      |            |   |                                    |  
|Gross profit                                                  |  |                                      | 171,061    |   |                                    |  
|                                                              |  |                                      |            |  
|Operating expenses                                            |  |                                      |            |   |                                    |  
|General and administrative                                    |  |                                      | 787,521    |   |                                    |  
|Marketing                                                     |  |                                      | 34,185     |   |                                    |  
|Bad debt                                                      |  |                                      |           |   |                                    |  
|Depreciation and amortization                                 |  |                                      | 12,167     |   |                                    |  
|                                                              |  |                                      |            |   |                                    |  
|Total operating expenses                                      |  |                                      | 833,873    |   |                                    |  
|                                                              |  |                                      |            |   |                                    |  
|Operating loss                                                |  |                                      | (662,812   | ) |                                    |  
|                                                              |  |                                      |            |  
|Other income (expense)                                        |  |                                      |            |   |                                    |  
|Interest income                                               |  |                                      | 4,381      |   |                                    |  
|Interest expense                                              |  |                                      | (2,920     | ) |                                    |  
|Incomeother                                                  |  |                                      |           |   |                                    |  
|Expensesother                                                |  |                                      | (8,828     | ) |                                    |  
|                                                              |  |                                      |            |   |                                    |  
|Total other income (expense)                                  |  |                                      | (7,367     | ) |                                    |  
|                                                              |  |                                      |            |   |                                    |  
|Net loss                                                      |  |                                      | (670,179   | ) |                                    |  
|                                                              |  |                                      |            |  
|Provision for preferred stock dividends                       |  |                                      | (82,849    | ) |                                    |  
|Amortization of discount on preferred stock                   |  |                                      | (92,500    | ) |                                    |  
|                                                              |  |                                      |            |   |                                    |  
|Net loss attributed to common stockholders                    |  | $                                    | (845,528   | ) |                                    | $
|                                                              |  |                                      |            |   |                                    |  
|Net loss per share, basic and diluted                         |  | $                                    | (0.05      | ) |                                    | $
|                                                              |  |                                      |            |   |                                    |  
|Weighted average common shares outstanding, basic and diluted |  |                                      | 17,767,656 |   |                                    |  
|                                                             
|COMPREHENSIVE INCOME (LOSS)                                  
|                                                              |  |                                      |            |  
|Net loss                                                      |  | $                                    | (670,179   | ) |                                    | $
|Unrealized loss on available for sale securities              |  |                                      |           |   |                                    |  
|                                                              |  |                                      |            |   |                                    |  
|Comprehensive loss                                            |  | $                                    | (670,179   | ) |                                    | $
|                                                              |  |                                      |            |   |                                    |  



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



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AXTIVE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



|                                                                         |  | For the Six Months Ended June 30, |           
|------------------------------------------------------------------------ |  | --------------------------------- | ----------
|                                                                         |  | 2002                              |           
|CASH FLOWS FROM OPERATING ACTIVITIES                                     |  |                                   |           
|Net cash used in operating activities                                    |  | $                                 | (890,229  
|                                                                         |  |                                  
|CASH FLOWS FROM INVESTING ACTIVITIES                                     |  |                                   |           
|Capital expenditures                                                     |  |                                   | (37,006   
|Cash received in the acquisition of ThinkSpark                           |  |                                   |          
|Cash paid in connection with the ThinkSpark acquisition                  |  |                                   |          
|Acquisition of subsidiaries, net of cash received                        |  |                                   | (1,640,168
|Settlements of prior acquisitions                                        |  |                                   |          
|                                                                         |  |                                   |           
|Net cash used in investing activities                                    |  |                                   | (1,677,174
|                                                                         |  |                                  
|CASH FLOWS FROM FINANCING ACTIVITIES                                     |  |                                   |           
|Proceeds from the issuance of preferred stock and warrants               |  |                                   | 2,561,000 
|Deferred financing fees                                                  |  |                                   | (35,007   
|Repayment of settlement costs                                            |  |                                   |          
|Principal payments on capital leases                                     |  |                                   |          
|                                                                         |  |                                   |           
|Net cash provided by financing activities                                |  |                                   | 2,725,993 
|                                                                         |  |                                   |           
|NET CHANGE IN CASH AND CASH EQUIVALENTS                                  |  |                                   | 158,590   
|                                                                         |  |                                  
|Cash and cash equivalents, beginning of period                           |  |                                   | 340,683   
|                                                                         |  |                                   |           
|Cash and cash equivalents, end of period                                 |  | $                                 | 499,273   
|                                                                         |  |                                   |           
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                         |  |                                   |           
|Cash paid for interest                                                   |  | $                                 | 1,841     
|Cash paid for taxes                                                      |  | $                                 | 8,386     
|                                                                         |  |                                  
|SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION                          |  |                                   |           
|Fair value of warrants issued in connection with sale of preferred stock |  | $                                 |          
|Fair value of warrants issued to settle a note payable                   |  | $                                 |          
|Amortization of preferred stock beneficial conversion feature            |  | $                                 |          
|Issuance of common stock as collateral                                   |  | $                                 |          
|Issuance of note payable in connection with acquisition of ThinkSpark    |  | $                                 |          
|Preferred stock issues in satisfaction of note payable                   |  | $                                 |          
|Preferred stock issuescash not yet received                             |  | $                                 |          



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



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AXTIVE CORPORATION



NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



In this
Quarterly Report on Form 10-QSB, we will refer to Axtive Corporation, a Delaware corporation, as Axtive, Company, we, us and our. Prior to October 28, 2002, the Company was known as Edge
Technology Group, Inc. Throughout this Quarterly Report where prior reports included a reference to Edge in a historical context, the reference to Edge has been changed to Axtive. Axtive is a publicly traded company
(OTC:AXTV.PK).



1. BASIS OF PRESENTATION



The consolidated financial statements included herein have been prepared by
us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. Additionally, certain amounts reported in prior periods have been reclassified to conform to the current periods presentation.



In the opinion of management, the accompanying unaudited
consolidated financial statements include all necessary adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position, results of operations, comprehensive loss, and cash flows of the Company. The
results of operations and cash flows for the interim dates are not necessarily indicative of the results of operations or cash flows that may be reported for the year ended December 31, 2003. The unaudited consolidated financial statements included
herein should be read in conjunction with the audited financial statements and the notes thereto included in the Companys Annual Report on Form 10-KSB for the year ended December 31, 2002 (Annual Report).



As disclosed in the Annual Report, we apply Accounting Principles Board
Opinion No. 25 (APB No. 25), Accounting for Stock Issued to Employees, in accounting for our stock plans. Under APB No. 25, no compensation cost is generally recognized for fixed stock options in which the exercise price is equal to or
greater than the market price on the grant date. Compensation cost related to stock options recognized by us in accordance with APB No. 25 was not significant during the three and six months ended June 30, 2002 or 2003.



The following table illustrates the effect had we determined compensation
cost based on fair value at the grant date for our stock options under SFAS No. 123, Accounting for Stock-Based Compensation and SFAS No. 148, Accounting for Stock-Based CompensationDisclosure and Transition:



|                                           |  | For the Three Months EndedJune 30, |            |   | For the Six Months EndedJune 30, |  
|------------------------------------------ |  | ---------------------------------- | ---------- | - | -------------------------------- | -
|                                           |  | 2002                               |            |   | 2003                             |  
|Net loss attributed to common stockholders |  |                                    |            |   |                                  |  
|As reported                                |  | $                                  | (845,528   | ) |                                  | $
|Pro forma compensation expense             |  | $                                  | (440,338   | ) |                                  | $
|                                           |  |                                    |            |   |                                  |  
|Pro forma                                  |  | $                                  | (1,285,866 | ) |                                  | $
|                                           |  |                                    |            |   |                                  |  
|Basic and diluted loss per share           |  |                                    |            |   |                                  |  
|As reported                                |  | $                                  | (0.05      | ) |                                  | $
|Pro forma                                  |  | $                                  | (0.08      | ) |                                  | $



2. UNCERTAINTY OF PROPOSED PLAN OF
OPERATION



The Company has suffered recurring losses from
operations and has an accumulated deficit of approximately $46.0 million at June 30, 2003. Of this amount, approximately $33.5 million had accumulated through March 31, 2001, and is attributable to the Companys former One-on-One golf video
business. An additional amount totaling approximately $6.2 million reflects impairment charges and bad debts stemming from investments and loans made prior to the Companys creation of its current business plan.



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We believe we will continue to incur losses until we are able to generate sufficient revenues to offset
the operating costs associated with executing our new business plan. These losses could limit our ability to raise new funds and could ultimately jeopardize our ability to remain in business.



Our business strategy is dependent upon making additional acquisitions of
software-related technology companies. To be suitable for acquisition by us, these companies must be small enough to be affordable yet profitable. Acquisition candidates may be few in number and may attract offers from companies with greater
financial resources than us. Acquisitions involve numerous risks, including, among others, loss of key personnel of the acquired company, difficulties associated with assimilating the personnel and operations of the acquired company, potential
disruption of our ongoing business and the maintenance of uniform standards, controls, procedures and policies. While we believe our past acquisitions are compatible with our business plan, we can provide no assurance that we will be able to locate
other suitable acquisition targets or that we will be able to complete additional acquisitions. Our business plan will succeed only if we are able to identify, acquire and manage additional acquisitions. There can be no assurance that we will be
able to implement our business plan, and failure to effectively implement our business plan will have a material adverse effect on us.



Our current financial condition will not allow us to finance additional acquisitions independently. We have no assurance that Axtive will be able to
obtain additional financing on acceptable terms or at all. If we cannot obtain additional financing, we will not be able to complete any future acquisitions and will consequently not be able to successfully implement our business plan.



3. BUSINESS COMBINATIONS



The acquisitions described below were made pursuant to our business model as
discussed in the Annual Report. The purchase price for each acquisition was generally based upon a multiple of earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for certain non-recurring costs deemed to be
unique to the particular company or situation. Since the acquired companies are technology service companies with minimal tangible or intangible assets, the purchases resulted in payments characterized as goodwill.



Acquisition of Media Resolutions, Inc.



On April 11, 2002, we completed the acquisition of Media Resolutions, Inc.,
an Application Service Provider (ASP) and website hosting company located in Dallas, Texas.



Acquisition of The Visionary Group, Inc.



On April 8, 2002, we acquired the Visionary Group, Inc., a professional services firm providing IT Professional Services related to Oracle applications
software. Headquarted in Dallas, Texas, The Visionary Group has operations in Dallas and Austin, Texas.



Acquisition of Universal Data Technology, Inc.



On May 31, 2002, our newly created and wholly owned subsidiary, UDT Consulting, Inc., acquired the assets of Universal Data Technology, Inc., an IT
Professional Services practice headquartered in Dallas, Texas with additional operations in Arkansas and Florida. In July 2003, Axtive, UDT Consulting, Inc., and Universal Data Technology, Inc. entered into a settlement agreement to resolve all
outstanding obligations of the parties arising from the acquisition of Universal Data Technology, Inc.s assets. We paid Universal Data Technology, Inc. $310,000 in full and final payment of the purchase price for the acquisition.



Acquisition of Virtually There, Inc.



In May 2002, we acquired Virtually There, Inc., an ASP and website hosting
company located in Fort Worth, Texas.



Acquisition of
ThinkSpark Corporation



In May 2003, we acquired
ThinkSpark Corporation and its subsidiaries (ThinkSpark), a professional services firm providing IT Professional Services related to Oracle database software. ThinkSpark is headquartered in Dallas, Texas with additional offices in
Austin, San Antonio, Oklahoma City, and Las Vegas, Nevada. The Company believes that ThinkSpark is a significant building block for growing Axtives IT professional services



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business in conjunction with executing the Companys current business plan. As a result of the acquisition, the Company gained an industry savvy
management team with decades of professional service experience, an established and profitable partnership with Oracle Education, and numerous long-term government contracts. We assigned a value of $662,000 to non-compete agreements entered into by
ThinkSpark management, amortizable over 2 years; $662,000 to the Oracle Education partnership, amortizable over 2 years; and approximately $2.3 million to the government contracts acquired, amortizable over 5 years.



In exchange for all of the outstanding shares of ThinkSpark, we paid
approximately $242,000 in cash and notes and $198,000 in acquisition-related costs. As part of the acquisition, Axtive assumed $5.0 million of long-term debt from ThinkSparks secured creditor, Merrill Lynch Business Financial Services, Inc.
The debt assumed is secured by $1.0 million of accounts receivable of ThinkSpark and is guaranteed by the remaining subsidiaries of Axtive. We also issued Merrill Lynch warrants to acquire 5,000,000 shares of Axtives common stock in exchange
for of the retirement of an additional $1.9 million of debt due from ThinkSpark To Merrill Lynch. The warrants have an exercise price of $0.01 per share and can be exercised anytime prior to the 10th anniversary of their issuance (May 2013). As a
result of the warrants, Merrill Lynch could acquire a significant equity interest in Axtive. The issuance of these warrants, valued at $414,000 had no effect in the statement of operations as the debt was recorded as part of the ThinkSpark
acquisition.



The acquisition was accounted for using the
purchase method of accounting. As such, the assets and liabilities of ThinkSpark have been recorded at their estimated fair value and the results of operations have been included in our consolidated results of operations from the date of
acquisition. The excess purchase price over the fair value of the tangible and intangible assets acquired in the acquisition totaled $3.6 million and was allocated to goodwill.



Allocation of Purchase Price



Following is a summary of the amounts assigned to the assets and liabilities of ThinkSpark:



|Net Assets Acquired                  
|-------------------------------------
|Cash                                 
|Accounts receivable                  
|Property and equipment               
|Goodwill                             
|Intangibles                          
|Other assets                         
|                                     
|Total assets acquired                
|                                     
|Accounts payable and accrued expenses
|Other liabilities                    
|                                     
|Total liabilities assumed            
|                                     
|Total purchase price                 
|                                     



None of the goodwill
recorded as a result of the acquisition is expected to be deductible for tax purposes.



Pro Forma Results



The
following unaudited pro forma consolidated results of operations have been prepared as if the acquisitions discussed above had occurred at January 1, 2002:



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|                                                                                 |  | For the Three Months Ended June 30, |            |   | For the Six Months Ended June 30, |  
|-------------------------------------------------------------------------------- |  | ----------------------------------- | ---------- | - | --------------------------------- | -
|                                                                                 |  | 2002                                |            |   | 2003                              |  
|Revenues                                                                         |  | $                                   | 6,960,280  |   |                                   | $
|Net income (loss) attributed to common stockholders                              |  | $                                   | (2,268,010 | ) |                                   | $
|Net income (loss) per share attributed to common stockholders, basic and diluted |  | $                                   | (0.13      | ) |                                   | $
|Weighted average shares outstanding, basic and diluted                           |  |                                     | 17,767,656 |   |                                   |  



4. RELATED PARTY TRANSACTIONS



Investment in PurchasePooling Solutions, Inc.



In October 2001, we participated in the amount of
$400,000 in a syndicated loan to PurchasePooling Solutions, Inc. (PurchasePooling) in the total amount of $1,600,000. The loan was considered impaired and written off by the Company during 2001. In February 2003, the lenders to
PurchasePooling (including Axtive) declared the loan to PurchasePooling in default and foreclosed upon the assets of the company. The previous lenders formed a new entity, Demand Aggregation Solutions, LLC (DAS), to hold the assets, and
Axtive, under a management agreement, has agreed to manage the affairs of DAS in exchange for a management fee of $25,000 per month beginning in May 2003. Stemming from Axtives participation in the loan, the Company has a 25% membership
interest in DAS that is subject to forfeiture if Axtive breaches its obligations under the management agreement. Additionally, the management agreement with DAS obligates Axtive to advance DAS for working capital needs at a rate not exceeding, on
average, $50,000 per month up to a maximum of $1.2 million over the three year life of the agreement. At such time when DASs cash flow permits, DAS will reimburse the Company for all outstanding advances. As of June 30, 2003, Axtive has funded
DAS approximately $100,000 which is included in Other current assets on the consolidated balance sheet.



In connection with the formation of DAS and Axtives agreement to manage its affairs, DAS participated in the Axtive 2003 Series A Preferred
Financing (see Note 10 Financing Transactions ) investing $1.2 million of the $2.3 million raised.



Acquisition of Axtive Name



In June 2002, the Company acquired the name Axtive and its related logo and trademark and certain tangible assets including furniture and
fixtures, signage and office supplies from Axtive Software Corporation, as represented by it sole shareholder, G.C. Scooter Beachum III, our Executive Vice President and General Manager. The assets were acquired in exchange for an
initial grant of 400,000 restricted shares of Axtives common stock, which was valued at approximately $168,000 at the time of acquisition. This amount was allocated between relative fair values of the intangible ($153,000) and tangible assets
($15,000) purchased by us.



Additionally, on July 1, 2003, we
issued 297,674 restricted shares of our common stock valued at approximately $15,000 to TSTC International Holding Company, formerly known as Axtive Software Corporation. These shares constituted an additional payment due to TSTC in connection with
our June 2002 purchase of certain assets. We were obligated to issue the additional restricted shares, not in excess of 297,674 shares, if the market price of our common stock had not been at or above $0.75 within the one-year period after our
purchase.



5. PRINCIPLES OF CONSOLIDATION



The accompanying consolidated financial statements include the Company and
its wholly owned subsidiaries. All significant intercompany balances and intercompany transactions have been eliminated in consolidation.



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6. REVENUE RECOGNITION



The Company earns revenues from providing consulting services, providing education, and selling products.



In Emerging Issues Task Force Issue No. 99-19, Reporting Revenue Gross as
a Principal versus Net as an Agent(EITF 99-19), the Task Force established certain criteria for net versus gross recording of sales transactions. EITF 99-19 requires, among other things, that revenues derived from products or services in which
companies typically act as an intermediary be reported on a net basis. The Company has reported applicable revenues in accordance with EITF 99-19 in the accompanying financial statements.



Although the Company provides consulting services under both time-and-material and fixed-price contracts, the majority of
our service revenues are recognized under time-and-material contracts as hours and costs are incurred. Revenues include reimbursable expenses billed to customers. Revenues from consulting services and database monitoring services are recognized when
the Company has received a signed agreement, the Company has delivered the services, and collection is considered probable by management. Cost of revenues for consulting services and database management includes salaries, benefits, and other direct
expenses related to providing consulting services. Deposits received from customers in advance of the delivery of product or provision of service are included in other current liabilities in the accompanying balance sheets.



Education revenues include amounts billed for providing training seminars at
Company-owned and third-party facilities. Revenues from Company-organized courses are reported on a gross basis. Revenues from training courses conducted for Oracle Corporation are recorded on a net basis, as the Company receives a percentage of the
amounts billed to participants. Cost of revenues for education revenues includes salaries, benefits, and other direct expenses related to providing education services.



Revenues for products primarily include sales of Oracle software, Oracle Education Credits, and hardware. These revenues are
predominantly recorded at the net amount received by the Company, primarily because the Company typically acts only as an intermediary. Cost of revenues for products includes direct costs of providing products.



7. FOREIGN SUBSIDIARY



The Companys wholly owned foreign subsidiary, Thinkspark Limited is currently in liquidation. No adjustments have been
made to these consolidated financial statements to reflect the possible effects of this liquidation, which could include the reduction or settlement of certain liabilities.



8. GOODWILL AND OTHER INTANGIBLE ASSETS



Effective January 1, 2002, we adopted Statement of Financial Accounting Standards (SFAS) No, 141, Business Combinations and SFAS
No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001, and also specifies the criteria for the recognition of
intangible assets separately from goodwill. Under the new rules, goodwill is no longer amortized but is subject to an impairment test at least annually or more frequently if impairment indicators arise. In accordance with SFAS No. 142, we performed
an annual impairment test of goodwill in the third quarter of 2002. Of the approximate $906,000 of goodwill recorded in the acquisition of The Visionary Group, $600,000 was written off in September 2002, and the balance was written off in December
2002.



Intangible assets consist of the following as of June
30, 2003:



|                               |  | Gross CarryingValue |           | AccumulatedAmortization
|------------------------------ |  | ------------------- | --------- | -----------------------
|Amortizable intangible assets: |  |                     |           |                        
|Non-compete agreements         |  | $                   | 911,040   |                        
|Oracle partnership             |  |                     | 661,792   |                        
|Government contracts acquired  |  |                     | 2,316,270 |                        
|                               |  |                     |           |                        
|Total                          |  | $                   | 3,889,102 |                        
|                               |  |                     |           |                        



Intangible assets not
subject to amortization:



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|Tradename |  | $ | 162,638   |  | $ | 0
|--------- |  | - | --------- |  | - | -
|Goodwill  |  |   | 5,200,587 |  |   | 0
|          |  |   |           |  |   |  
|Total     |  | $ | 5,363,225 |  | $ | 0
|          |  |   |           |  |   |  



Amortization expense
related to the intangible assets totaled $122,317 and $143,541 for the three and six months ended June 30, 2003. The aggregate estimated amortization expense for intangible assets remaining as of June 30, 2003 is as follows:



|2003  |  | $ | 597,638  
|----- |  | - | ---------
|2004  |  |   | 1,175,872
|2005  |  |   | 765,472  
|2006  |  |   | 489,738  
|2007  |  |   | 473,408  
|2008  |  |   | 193,023  
|      |  |   |          
|Total |  | $ | 3,695,151
|      |  |   |          



9. LOSS PER SHARE



Basic loss per share is calculated by dividing loss attributable to
common stockholders by the weighted average number of shares of common stock outstanding during each period.



For the six months ended June 30, 2002 and 2003, due to our net losses, all shares of our Common Stock issuable upon conversion of convertible preferred
stock, convertible debt and the exercise of outstanding options and warrants have been excluded from the computation of diluted loss per share in the accompanying statements of operations as their impact would be antidilutive. The aggregate number
of warrants and options excluded from the loss per share calculation for the six months ended June 30, 2002 and 2003 are 9,011,401, and 39,022,834, respectively.



10. FINANCING TRANSACTIONS



2003 Series A Preferred Financing



On May 23, 2003, the Company issued 2,335 shares of Series A Preferred shares in a private offering to new and existing private, accredited investors at
$1,000 per share. The Company received gross proceeds of $2.3 million, consisting of $2.25 million in cash, less $122,024 of issuance costs and $84,000 in satisfaction of debt owed by the Company to a stockholder and an executive officer. The Series
A Preferred shares carry an 8% cumulative dividend and are immediately convertible, at the option of the holder, into shares of common stock at $0.10 per share. The purchasers also received warrants to acquire 4,670,000 shares of Common Stock at
$0.20 per share in connection with the transaction. These warrants were valued at $386,000 using the Black-Scholes model and have been treated as a discount to the Series A Preferred and have been recorded as an increase in additional paid in
capital. Demand Aggregation Solutions, LLC (DAS) purchased $1.2 million of the Series A Preferred Stock. See Note 4 Related Party Transactions regarding our obligation to provide up to $1.2 million in funding to DAS.



The 2002 issuances of Series A Preferred, as discussed in our
2002 Annual Report, provided that subsequent issuances of such securities on terms more favorable than those provided to the original investors in the Series A Preferred would automatically adjust the terms and conditions on the outstanding Series A
Preferred to the more favorable terms and conditions (Superior Rights). As a result, the initial conversion price on all Series A Preferred outstanding prior to the 2003 issuance was reduced from $0.75 to $0.10 per share and the exercise
price of the warrants was reduced from $1.15 per share to $0.20 per share. Each purchaser of Series A Preferred Stock in 2002 was issued a restated warrant exercisable for additional shares as a result of the decrease in the initial conversion
price. The additional value of the modified warrants was determined to be $77,000 using the Black-Scholes model and has been treated as a discount to the Series A Preferred and have been recorded as an increase in additional paid in capital. The
restated warrants are exercisable for a total of 4,440,000 additional shares of common stock.



In July 2003, we issued an additional 50 shares of Series A Preferred Stock in a private offering to a purchaser in the May 2003 offering, G.C. Scooter Beachum, who is also one of our executive officers.
This issuance was pursuant to an irrevocable subscription agreement executed by the purchaser at the time of the issuance



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of Series A Preferred Stock in May 2003. The terms were identical to the May 2003 sale of Series A Preferred Stock. The Company received gross proceeds of
$50,000 in cash in July 2003. Based upon an irrevocable commitment to purchase, the $50,000 is included with Other assets as of June 30, 2003. As part of this subsequent issuance, we issued additional warrants exercisable for 100,000
shares of our common stock.



Receivables Factoring



One of the Companys subsidiaries, UDT Consulting,
Inc., has engaged with a third-party to factor certain of its receivables. The receivables are purchased by the factor with recourse to UDT Consulting, and amounts due under the Factoring and Security Agreement are secured by a pledge of receivables
and other assets of UDT Consulting, and are guaranteed by Axtive. Under the agreement, UDT Consulting receives approximately 80% of the face amount of the receivable, pays interest at a rate of prime plus 2% and is subject to additional fees in
certain circumstances. At June 30, 2003, UDT Consulting had approximately $194,000 of receivables sold under the agreement. These receivables remain on the Companys financial statements until collected and the related liability to the factor
is included in Other Current Liabilities in the Consolidated Balance Sheet.



Dividends in Arrears



As of June 30, 2003, there had been no dividends declared on the Series A Preferred stock and total dividends in arrears at June 30, 2003 totals $457,449. Undeclared dividends for the three and six months ended June 30, 2003 on the
preferred shares as of that date totaled $107,501 and $196,005 and are reflected in the computation of net loss attributable to common stockholders in the Consolidated Statements of Operations.



11. ACCRUED EXPENSES



Accrued expenses are summarized as follows:



|                               |  | December 31, 2002 |         | June 30, 2003
|------------------------------ |  | ----------------- | ------- | -------------
|Professional fees              |  | $                 | 59,632  |              
|Interest                       |  |                   |        |              
|Salaries, bonuses and benefits |  |                   | 223,806 |              
|Other                          |  |                   | 38,942  |              
|                               |  |                   |         |              
|                               |  | $                 | 322,380 |              
|                               |  |                   |         |              



12. OTHER CURRENT LIABILITIES



Other current liabilities are summarized as follows:



|                                             |  | December 31, 2002 |         | June 30, 2003
|-------------------------------------------- |  | ----------------- | ------- | -------------
|Current portion of capital lease obligations |  | $                 | 41,522  |              
|Deferred vendor liabilities                  |  |                   | 377,969 |              
|Amounts due on receivables factored          |  |                   | 151,089 |              
|Customer deposits                            |  |                   | 39,941  |              
|Deferred revenue                             |  |                   | 37,707  |              
|Other                                        |  |                   | 18,105  |              
|                                             |  |                   |         |              
|                                             |  | $                 | 666,333 |              
|                                             |  |                   |         |              



13. SHORT-TERM NOTES PAYABLE,
LONG-TERM DEBT, AND SETTLEMENT NOTES PAYABLE



Concurrent
with the ThinkSpark acquisition, the Company entered into an Assignment and Assumption Agreement to assume $5.0 million of debt of ThinkSpark outstanding with Merrill Lynch Business Financial Services, Inc. (Merrill Lynch). The debt
assumed is secured by $1.0 million of accounts receivable of ThinkSpark and is guaranteed by the remaining subsidiaries of Axtive. The debt is payable in monthly installments of $55,000



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including 6.0% percent interest in year one, and monthly installments of $60,000 including 8.0% interest in year two, with the remaining balance due on June
1, 2005. The Company also issued Merrill Lynch warrants to acquire 5,000,000 shares of Axtives common stock at $0.01 per share for a term of 10 years in exchange for Merrill Lynchs assignment to Axtive and settlement of an additional
$1.9 million of debt due from ThinkSpark. These warrants were valued at $414,000 using the Black-Scholes model on the date of grant.



Also concurrent with the ThinkSpark acquisition, the Company entered into various other settlement agreements with former landlords, customers, and
employees of ThinkSpark. Of these settlements, $1.17 million bear interest rates of 6.0%, and are all due and payable within six months to twenty four months of execution; and $160,000 bear no interest rate and are due and payable within twelve
months of execution. As of June 30, 2003, the balance remaining due is $1.03 million and is included in Short-term notes payable on the consolidated balance sheet.



14. LEASE TERMINATION LIABILITY



During 2002, ThinkSpark closed certain offices that had existing lease obligations. The Company has estimated the liability associated with terminating
these leases prior to their respective maturity dates. At June 30, 2003, the estimated liability related to these obligations that has been recorded by the Company totaled approximately $706,000. This estimate is based on signed releases, if
applicable, or managements expected liability based on ongoing negotiations. The Company is involved in litigation related to unpaid rent on several of these facilities, however management believes that the Company will be able to settle these
claims and that the ultimate remaining liability will approximate $706,000.



15. LEGAL PROCEEDINGS



PROCEEDINGS AGAINST THE VISIONARY
GROUP



In June 2002, we were notified that The Visionary
Group and Axtive had been sued in the District Court of Dallas County, Texas for non-payment of approximately $110,000 due to former sub-contractors of The Visionary Group. In order to limit our costs to defend the matter, Axtive agreed to a partial
summary judgment pursuant to which Axtive admitted the liability of The Visionary Group, but retained our defenses on the third-party beneficiary claim against Axtive. Trial has been set for October 2003.



The Visionary Group ceased operations in December 2002 and currently has no
employees and no assets and identified liabilities totaling, including the $110,000 non-payment discussed above, of approximately $190,000, which have been recorded in the accompanying consolidated balance sheets. We do not expect that an adverse
judgment against The Visionary Group in this lawsuit would have a material impact on Axtive.



With respect to any exposure directly against Axtive Corporation, we believe we have meritorious defenses, but an adverse judgment against Axtive could have a material negative impact on our business.



In April 2003, a judgment was entered against The Visionary Group in the
amount of approximately $3,000 for failure to pay the business related expenses of a former employee. The judgment remains outstanding.



PROCEEDINGS AGAINST THINKSPARK



In 2002, a former customer obtained a final judgment against ThinkSpark. The former customer filed a collection suit against ThinkSpark with respect to
the judgment in the amount of $940,000, including attorneys fees. The former customer also filed a lawsuit against certain of ThinkSparks then directors and stockholders with respect to alleged improper repurchases of stock from certain
stockholders. Effective with Axtives acquisition of ThinkSpark, ThinkSpark entered into a settlement agreement with the former customer. ThinkSpark agreed to make a cash payment of $18,000 to the former customer and issue a promissory note for
$150,000. The promissory note bears interest at 6% per year and is payable on a monthly basis amortized over 12 months. In exchange, the former customer agreed not to seek to enforce the judgment, to dismiss with prejudice the separate lawsuit, and
upon payment in full of the promissory note, to fully release ThinkSpark and the individual defendants from all claims.



In October 2002, a former employee and shareholder filed a suit against ThinkSpark, certain of its subsidiaries, and certain of its directors and
shareholders seeking damages in the amount of $612,000 for breach of a severance agreement. Effective with Axtives acquisition of ThinkSpark, ThinkSpark entered into a mutual release agreement with the former employee. In exchange for mutual
releases of all claims, ThinkSpark agreed to issue to



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the former employee a promissory note in the amount of $169,000, a portion of which represented the merger consideration payable to the former employee and
shareholder. The promissory note bears interest at 6% per year and is payable on a monthly basis amortized over 18 months. The former employee agreed to then abate his lawsuit and, upon payment in full of the promissory note, to dismiss all claims
against ThinkSpark and the other defendants.



In January 2001,
a United Kingdom subsidiary of ThinkSpark entered into a lease for office space in London for a 15-year term. ThinkSpark was required to be a surety on this lease agreement. In October 2002, the ThinkSpark subsidiary ceased operations in the United
Kingdom and consequently breached the lease agreement. The United Kingdom subsidiary is now in liquidation. The landlord filed suit against ThinkSpark in the United Kingdom. In May 2003, ThinkSpark and the landlord entered into a settlement
agreement. Pursuant to the terms of the settlement agreement, and in consideration of the terms of the settlement, Axtive executed a promissory note in favor of the landlord for $200,000. The promissory note bears interest at 6% per year and is
payable over 12 months. Axtive issued 1,219,149 restricted shares of our common stock to the landlord as security for the promissory note. Pursuant to the settlement agreement and the promissory note, the shares will be returned to us at various
stages based upon payments made on the promissory note. Assuming the promissory note is paid in full pursuant to its terms, all of the shares will be returned. All returned shares will be held by us as treasury shares. If there is a default on the
promissory note, the landlord has the right to keep all or part of the shares to satisfy any remaining obligation. These shares have been treated as outstanding in the accompanying financial statements. These shares were recorded at par value with
an offset to additional paid in capital.



ThinkSpark was sued
in state court in Cuyahoga County, Ohio, for breach of a November 1998 lease agreement for office space in Cleveland, Ohio, which has been vacated by ThinkSpark. The landlord obtained a judgment in March 2003 for approximately $203,000 plus 10% per
year until paid and all costs, including collection costs. The landlord has filed in state court in Texas an authenticated copy of a judgment for domestication under the Uniform Enforcement of Foreign Judgments Act, and ThinkSpark has been served
with post-judgment discovery. The ThinkSpark subsidiary is in discussions with the landlord to settle the judgment; however, we can give you no assurance that ThinkSpark will be able to enter into a settlement. Managements estimated of the
potential liability has been recorded in the accompanying consolidated balance sheets as Lease termination liability.



A subsidiary of ThinkSpark was sued in state court in Tarrant County, Texas for breach of an October 1998 lease agreement for office space in Fort Worth,
Texas, which has been vacated by the ThinkSpark subsidiary. The landlord seeks damages for past due rent, utilities and other sums due under the lease, future rents, brokerage commissions paid by the landlord at the commencement of the lease, and
unreimbursed tenant improvement expenses in the total amount of approximately $212,000, plus attorneys fees. The ThinkSpark subsidiary is in discussions with the landlord to settle the claims; however, we can give you no assurance that the
ThinkSpark subsidiary will be able to enter into a settlement or otherwise successfully defend against the landlords claims. Managements estimate of the potential liability has been recorded in the accompanying consolidated balance
sheets as Lease termination liability.



A
subsidiary of ThinkSpark was sued in state court in Fulton County, Georgia for breach of a June 2000 lease agreement for office space in Atlanta, Georgia, which has been vacated by the ThinkSpark subsidiary. The landlord seeks damages for past due
rent of approximately $12,000 per month since August 2002. The action as originally filed claimed past due rent from August-November 2002; however, the landlord has indicated its intent to seek the full remaining obligation under the lease from
November 2002 of approximately $420,000. The ThinkSpark subsidiary is in discussions with the landlord to settle the claims; however, we can give you no assurance that the ThinkSpark subsidiary will be able to enter into a settlement or otherwise
successfully defend against the landlords claims. Managements estimate of the potential liability has been recorded in the accompanying consolidated balance sheets as Lease termination liability.



In August 2003, ThinkSpark was sued in Greene County, Ohio for breach of a
November 1998 lease agreement extension for office space in Dayton, Ohio, which has been vacated by ThinkSpark. The landlord seeks damages for $55,556. ThinkSpark is in discussions with the landlord to settle the judgment; however, we can give you
no assurance that ThinkSpark will be able to enter into a settlement. Managements estimate of the potential liability has been recorded in the accompanying consolidated balance sheets as Lease termination liability.



In July 2003, an individual filed suit against ThinkSpark alleging breach of
contract and seeking damages of $14,040 plus interest, attorneys fees and costs of court. The suit was based on a contract between ThinkSpark and the former employee whereby the individual served as an independent contractor as a consultant
and expert witness in a collection against a former customer. The individual rendered these services in 2001. ThinkSpark agreed to pay the individual $1,500 per month for a term of eleven months, commencing in August 2003. The



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parties also executed an Agreed Judgment in the amount of $21,500. In the event ThinkSpark defaults on its payments to this individual, the Agreed Judgment
will be enforced with an offset equal to the amounts ThinkSpark had paid prior to the default. In exchange, the individual agreed to abate the proceedings against ThinkSpark and will file a motion for nonsuit with prejudice upon full satisfaction of
the payments due.



16. INVESTMENT BANKING AGREEMENT



On June 26, 2003, the Company entered into an amended Investment Banking
Agreement with Atlas Capital Services, LLC (Atlas), that was effective May 1, 2003, to act as an agent on a per transaction fee basis on our behalf in connection with certain advisory and investment banking services. At execution, the
Company issued to Atlas 1,115,000 shares of its common stock and warrants to purchase 1,250,000 shares of common stock at $0.20 per share. Additionally, Atlas is entitled to a $10,000 per month advisory fee. As of June 30, 2003, we have paid Atlas
$10,000 under the terms of this amended agreement and have recorded a liability for the fees accrued but not yet paid.



17. SUBSEQUENT EVENT



On August 18, 2003, ThinkSpark engaged with a third-party to factor certain of its receivables. The receivables are purchased by the factor with recourse
to ThinkSpark, and amounts due under the Factoring and Security Agreement are secured by a pledge of receivables and other assets of ThinkSpark, and are guaranteed by Axtive. Under the agreement, ThinkSpark receives approximately 80% of the face
amount of the receivable, pays interest at a rate of prime plus 2% and is subject to additional fees in certain circumstances.



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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS



The following discussion and analysis should be read in conjunction with the consolidated financial statements and notes thereto included as Item 1 of
this report. This document contains forward-looking statements relating to future events or our future financial performance within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934 and which are intended to be covered by the safe harbors created thereby. These forward-looking statements are based on the beliefs of our management as well as assumptions made by and information currently available to our management. These
statements include without limitation, statements regarding our future capital requirements and our ability to satisfy our capital needs, statements regarding our recent acquisitions, statements regarding our ability to implement our plans to
acquire additional companies, and other statements which speak to projections of future conditions or our anticipated performance which contain the words anticipate, believe, expect and words or phrases of similar
import, as they relate to us or our management. You should be aware that these forward-looking statements are subject to certain risks, uncertainties and assumptions related to certain factors including, without limitation, the ability
to adopt and successfully execute a revised business plan, respond to future business opportunities, and overcome numerous other risks and difficulties generally experienced by early stage business models, including, but not limited to, those
factors set forth under the heading RISK FACTORS in Annual Report on Form 10-KSB for our fiscal year ended December 31, 2002. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can
give no assurance that such expectations will prove to have been correct. Based upon changing conditions, should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may
vary materially from those described herein. We expressly undertake no obligation to update these forward-looking statements. Except as required by federal securities laws, we undertake no obligation to publicly update or revise any written or oral
forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason after the date of this report.



GENERAL



Axtives business model is to acquire software related technology companies that deliver software products and related information technology services to middle-market companies. We offer products and services
that improve the utilization of business information for middle-market companies, initially within the United States. We expect that customer organizations will benefit from integrated business process applications that are delivered on a fully
outsourced basis through portal technology or, if needed, as traditional licensed products. Our acquisition targets are companies with existing strategic relationships with Oracle, IBM or Microsoft that will allow us to take advantage of partnership
opportunities available only to select parties. The technology companies targeted for acquisition are those that operate within the following business sectors and operating business units: (1) IT Professional Services; (2) Business Application
Software, comprised of six product groups; and (3) Application Services and Management.



Initial development of our business model has involved the acquisition of IT Professional Services and Application Services and Management firms that have existing relationships with numerous middle-market customers.
Subsequent acquisitions are expected to target software products with common data structures (such as Oracle, IBM and Microsoft) designed for the application service delivery channel. We expect that synergistic relationships will develop between the
acquired companies and that funding for operating business unit -specific projects will be provided through public and private offerings of Axtive securities. Nearly all operations are expected to continue within each operating business unit while a
small corporate staff will interface with the capital markets, formulate and manage our overall strategic objectives and oversee all mergers and acquisitions.



Prior to our emphasis on IT Professional Services, Business Application Software and Application Services and Management, the business consisted
primarily of developing, marketing and selling personalized videotape golf lessons featuring One-on-One golf video instruction by leading professional golfer Greg Norman, sold under the name One-on-One with Greg Norman. In September
2001, we sold all the assets related to our One-on-One business to Visual Edge, Inc., a newly created company formed by certain members of our previous management. Visual Edge, Inc. is not related to us.



OUR ONGOING PLAN



Our plan of operation for the upcoming months calls for the following:



| |  |  | Operation of the businesses Axtive has acquired to date;
| | - |  | --------------------------------------------------------



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| |  |  | Additional fundraising activities to continue our acquisition strategy and funding operational requirements; and
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | Additional acquisitions to fill in Axtives end-to-end (E2E) offering of business application software products and professional services to meet the needs of
middle market companies.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



RESULTS OF OPERATIONS



Three months ended June 30, 2003 compared to three
months ended June 30, 2002



Net Sales.As a result
of our acquisitions in 2002 and the acquisition in May 2003, revenues from continuing operations for the three months ended June 30, 2003 were $1.7 million. Gross margins across all businesses averaged 35.0%, which is a decline from previous
reporting periods. This decline is primarily due to the inclusion of cost of sales associated with over-runs on government contracts not yet authorized to be billed as of June 30, 2003 and not reflected in sales for the three months ended June 30,
2003.



General and Administrative Expenses.General and
administrative expenses increased $360,000 to $1.15 million for the three months ended June 30, 2003 from $790,000 for the three months ended June 30, 2002. This increase is substantially a result of the acquisitions.



Marketing Expenses.Marketing expenses increased $77,300 to $111,500
for the three months ended June 30, 2003 from $34,200 for the three months ended June 30, 2002. This increase in expenses was primarily related to salaries and bonuses of internal sales and marketing personnel stemming from the acquisitions in 2002.



Depreciation and Amortization Expenses.The
depreciation expense of $74,800 for the three months ended June 30, 2003 was related primarily to the property and equipment acquired through the acquisitions. The amortization expense of $122,300 related to non-competition agreements entered into
with former employees of the acquired companies; and our Oracle partnership and government contracts assumed in the ThinkSpark acquisition.



Interest Expense.Interest expense increased $60,600 to $63,500 for the three months ended June 30, 2003 from $2,900 for the three months ended
June 30, 2002. Interest expense in the three months ended June 30, 2003, reflects primarily the cost of factoring receivables by our subsidiary, UDT Consulting, and one months interest expense on the installment note and settlement agreements
entered into as a result of the ThinkSpark acquisition.



Other Income.Other income for the three months ended June 30, 2003 consists primarily of the management fees we received from PurchasePooling and DAS (see note 4 Related Party Transactions).



Six months ended June 30, 2003 compared to six months ended June 30, 2002



Net Sales.As a result of our acquisitions in 2002
and the acquisition in May 2003, revenues from continuing operations for the six months ended June 30, 2003 were $2.7 million. Gross margins across all businesses averaged 42.4%, which is a slight decline from previous reporting periods. This
decline is primarily due to the inclusion of cost of sales associated with over-runs on government contracts not yet billed as of June 30, 2003 and not reflected in sales for the six months ended June 30, 2003.



General and Administrative Expenses.General and administrative
expenses increased $979,000 to $1.96 million for the six months ended June 30, 2003 from $979,000 for the six months ended June 30, 2002. This increase is substantially a result of the acquisitions.



Marketing Expenses.Marketing expenses increased $193,700 to $227,900
for the six months ended June 30, 2003 from $34,200 for the six months ended June 30, 2002. This increase in expenses was primarily related to salaries and bonuses of internal sales and marketing personnel stemming from the acquisitions in 2002.



Depreciation and Amortization Expenses.The
depreciation expense of $114,700 for the six months ended June 30, 2003 was related primarily to the property and equipment acquired through the acquisitions. The amortization expense of $143,500 related to non-competition agreements entered into
with former employees of the acquired companies; and our Oracle partnership and government contracts assumed in the ThinkSpark acquisition.



Interest Expense.Interest expense increased $46,800 to $84,000 for the six months ended June 30, 2003 from $37,200 for the six months ended June
30, 2002. Interest expense in the first six months of 2002 was



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attributable to certain loans that were converted into equity in April 2002 with the issuance of Series A Preferred Stock. Interest expense in the six months
ended June 30, 2003, reflects primarily the cost of factoring receivables by our subsidiary, UDT Consulting, and one months interest expense on the installment note and settlement agreements entered into as a result of the ThinkSpark
acquisition.



Other Income.Other income for the six
months ended June 30, 2003 consists primarily of the management fees we received from PurchasePooling and DAS (see note 4 Related Party Transactions).



LIQUIDITY AND CAPITAL RESOURCES



At June 30, 2003, we had cash and cash equivalents of $1.1 million and a working capital deficit of $2.0 million compared to cash and cash equivalents of
$444,300 and a working capital deficit of $1.4 million on December 31, 2002. During the six months ended June 30, 2003, net cash used in operating activities was $1.3 million, net cash used in investing activities was $1,000, and net cash provided
by financing activities was $2.1 million, for a total increase in cash and cash equivalents for the period of $0.7 million. We do not maintain a bank credit facility.



During the first six months of 2003, the Company entered into an Assignment and Assumption Agreement to assume $5.0 million
of debt of ThinkSpark outstanding with Merrill Lynch Business Financial Services, Inc. (Merrill Lynch). As of June 30, 2003, the current portion outstanding is $367,000. The debt assumed is secured by $1.0 million of accounts receivable
of ThinkSpark and is guaranteed by the remaining subsidiaries of Axtive. The debt is payable in monthly installments of $55,000 including 6.0% percent interest in year one, and monthly installments of $60,000 including 8.0% interest in year two,
with the remaining balance due on June 1, 2004.



Also during
the first six months of 2003, the Company entered into various other settlement agreements with former landlords, customers, and employees of ThinkSpark. Of these settlements, $1.17 million bear interest rates of 6.0%, and are all due and payable
within six months to twenty four months of execution; and $160,000 bear no interest rate and are due and payable within twelve months of execution. As of June 30, 2003, the balance remaining due is $1.03 million, including $678,000 classified as
current on the accompanying consolidated balance sheet.



We
expect our liquidity to remain tight throughout the remainder of 2003. We will look to our current cash reserves, cash reserves created by our additional issuance of shares of Series A Preferred Stock in May 2003, cash flows generated by our
factoring agreements, and cash flows generated by our acquired companies to meet current liquidity requirements. While we have a level of comfort as to the projected cash flows generated by our acquired companies, we are relying on projections based
upon assumptions and forecasts, including factors beyond our control. Actual results could vary from our projections and such variance could have a significant adverse effect on our liquidity.



We have historically financed our operations primarily through the sale of
equity securities or instruments convertible into equity securities. There can be no assurance that future financings can be completed.



Ability to Continue as a Going Concern



Our independent accountants included an explanatory paragraph in their report on our financial statements for the year ended December 31, 2002, contained
in our most recent Annual Report on Form 10-KSB, that states that our consolidated financial statements have been prepared assuming that we will continue as a going concern, but that substantial doubt exists as to our ability to do so.



SEASONALITY



Based upon our review of current companies and acquisition candidates, the IT Professional Service businesses experience a
moderate level of seasonality. The first quarter revenue tends to be the lowest, higher revenues are generally reflected in the second and third quarters and revenues in the fourth quarter decline from the mid-year levels. Revenues for Business
Application Software and Application Services and Management do not reflect a discernable pattern of seasonality.



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RISK FACTORS



In addition to the information contained herein, readers of this report or any of our press releases should carefully consider the risk factors contained
in previous filings, in particular our most recent Annual Report on Form 10-KSB.



THIRD PARTY REPORTS AND PRESS RELEASES



We do
not make financial forecasts or projections nor do we endorse the financial forecasts or projections of third parties or comment on the accuracy of third-party reports. We do not participate in the preparation of the reports or the estimates given
by analysts. Analysts who issue financial reports are not privy to non-public financial information. Any purchase of our securities based on financial estimates provided by analysts or third parties is done entirely at the risk of the purchaser. We
periodically issue press releases to update stockholders on new developments at Axtive and our business. These releases may contain certain forward-looking statements relating to future events or our future financial performance within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and which are intended to be covered by the safe harbors created thereby. Readers are cautioned that such statements are only predictions
and that actual events or results may materially differ with those statements. In evaluating such statements, readers should specifically consider the various risk factors and other information identified that could cause actual results to differ
materially from those indicated by the forward-looking statements.



ITEM 3. CONTROLS AND PROCEDURES



As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Companys management, including the Companys Chief Executive Officer and current
Chief Financial Officer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. Based upon their evaluation, the Chief
Executive Officer and the current Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports filed or submitted by it under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by
Axtive in such reports is accumulated and communicated to the Companys management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.



There have been no significant changes in the Companys internal controls or in other factors that could significantly
affect internal controls subsequent to the date the Company carried out its evaluation.



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PART IIOTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS



PROCEEDINGS AGAINST
THE VISIONARY GROUP



In June 2002, we were notified that
The Visionary Group and Axtive had been sued in the District Court of Dallas County, Texas for non-payment of approximately $110,000 due to former sub-contractors of The Visionary Group. In order to limit our costs to defend the matter, Axtive
agreed to a partial summary judgment pursuant to which Axtive admitted the liability of The Visionary Group, but retained our defenses on the third-party beneficiary claim against Axtive. Trial has been set for October 2003.



The Visionary Group ceased operations in December 2002. The company has no
employees and no assets and identified liabilities totaling, including the $110,000 non-payment discussed above, of approximately $190,000. Accordingly, we do not expect that an adverse judgment against The Visionary Group in this lawsuit would have
a material impact on Axtive.



With respect to any exposure
directly against Axtive Corporation, we believe we have meritorious defenses, but an adverse judgment against Axtive could have a material negative impact on our business.



In April 2003, a judgment was entered against The Visionary Group in the amount of approximately $3,000 for failure to pay
the business related expenses of a former employee. The judgment remains outstanding.



PROCEEDINGS AGAINST THINKSPARK



In 2002, a former customer obtained a final judgment against ThinkSpark. The former customer filed a collection suit against ThinkSpark with respect to the judgment in the amount of $940,000, including attorneys fees. The former
customer also filed a lawsuit against certain of ThinkSparks then directors and stockholders with respect to alleged improper repurchases of stock from certain stockholders. Effective with Axtives acquisition of ThinkSpark, ThinkSpark
entered into a settlement agreement and a tolling agreement with the former customer. ThinkSpark agreed to make a cash payment of $18,000 to the former customer and issue a promissory note for $150,000. The promissory note bears interest at 6% per
year and is payable on a monthly basis amortized over 12 months. In exchange, the former customer agreed not to seek to enforce the judgment, to dismiss with prejudice the separate lawsuit, and upon payment in full of the promissory note, to fully
release ThinkSpark and the individual defendants from all claims.



In October 2002, a former employee filed a suit against ThinkSpark, certain of its subsidiaries, and certain of its directors and shareholders seeking damages in the amount of $612,000 for breach of a severance agreement. Effective with
Axtives acquisition of ThinkSpark, ThinkSpark entered into a mutual release agreement with the former employee. In exchange for mutual releases of all claims, ThinkSpark agreed to issue to the former employee a promissory note in the amount of
$169,000, a portion of which represented the merger consideration payable to the former employee. The promissory note bears interest at 6% per year and is payable on a monthly basis amortized over 18 months. The former employee agreed to then abate
his lawsuit and, upon payment in full of the promissory note, to dismiss all claims against ThinkSpark and the other defendants.



In January 2001, a United Kingdom subsidiary of ThinkSpark entered into a lease for office space in London for a 15-year term. ThinkSpark was required to
be a surety on this lease agreement. In October 2002, the ThinkSpark subsidiary ceased operations in the United Kingdom and consequently breached the lease agreement. The United Kingdom subsidiary is now in liquidation. The landlord filed suit
against ThinkSpark in the United Kingdom. In May 2003, ThinkSpark and the landlord entered into a settlement agreement. Pursuant to the terms of the settlement agreement, and in consideration of the terms of the settlement, Axtive executed a
promissory note in favor of the landlord for $200,000. The promissory note bears interest at 6% per year and is payable over 12 months. Axtive issued 1,219,149 restricted shares of our common stock to the landlord as security for the promissory
note. Pursuant to the settlement agreement and the promissory note, the shares will be returned to us at various stages based upon payments made on the promissory note. Assuming the promissory note is paid in full pursuant to its terms, all of the
shares will be returned. All returned shares will be held by us as treasury shares. If there is a default on the promissory note, the landlord has the right to keep all or part of the shares to satisfy any remaining obligation.



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ThinkSpark was sued in state court in Cuyahoga County, Ohio, for breach of a November 1998 lease
agreement for office space in Cleveland, Ohio, which has been vacated by ThinkSpark. The landlord obtained a judgment in March 2003 for approximately $203,000 plus 10% per year until paid and all costs, including collection costs. The landlord has
filed in state court in Texas an authenticated copy of a judgment for domestication under the Uniform Enforcement of Foreign Judgments Act, and ThinkSpark has been served with post-judgment discovery. The ThinkSpark subsidiary is in discussions with
the landlord to settle the judgment; however, we can give you no assurance that ThinkSpark will be able to enter into a settlement.



A subsidiary of ThinkSpark was sued in state court in Tarrant County, Texas for breach of an October 1998 lease agreement for office space in Fort Worth,
Texas, which has been vacated by the ThinkSpark subsidiary. The landlord seeks damages for past due rent, utilities and other sums due under the lease, future rents, brokerage commissions paid by the landlord at the commencement of the lease, and
unreimbursed tenant improvement expenses in the total amount of approximately $212,000, plus attorneys fees. The ThinkSpark subsidiary is in discussions with the landlord to settle the claims; however, we can give you no assurance that the
ThinkSpark subsidiary will be able to enter into a settlement or otherwise successfully defend against the landlords claims.



A subsidiary of ThinkSpark was sued in state court in Fulton County, Georgia for breach of a June 2000 lease agreement for office space in Atlanta,
Georgia, which has been vacated by the ThinkSpark subsidiary. The landlord seeks damages for past due rent of approximately $12,000 per month since August 2002. The action as originally filed claimed past due rent from August-November 2002; however,
the landlord has indicated its intent to seek the full remaining obligation under the lease from November 2002 of approximately $420,000. The ThinkSpark subsidiary is in discussions with the landlord to settle the claims; however, we can give you no
assurance that the ThinkSpark subsidiary will be able to enter into a settlement or otherwise successfully defend against the landlords claims.



In August 2003, ThinkSpark was sued in Greene County, Ohio for breach of a November 1998 lease agreement extension for office space in Dayton, Ohio, which
has been vacated by ThinkSpark. The landlord seeks damages for $55,555.95. ThinkSpark is in discussions with the landlord to settle the judgment; however, we can give you no assurance that ThinkSpark will be able to enter into a settlement.



In July 2003, an individual filed suit against ThinkSpark
alleging breach of contract and seeking damages of $14,040.00 plus interest, attorneys fees and costs of court. The suit was based on a contract between ThinkSpark and the former employee whereby the individual served as an independent
contractor as a consultant and expert witness in a collection against a former customer. The individual rendered these services in 2001. ThinkSpark agreed to pay the indivual $1,500 per month for a term of eleven months, commencing in August 2003.
The parties also executed an Agreed Judgment in the amount of $21,500. In the event ThinkSpark defaults on its payments to this individual, the Agreed Judgment will be enforced with an offset equal to the amounts ThinkSpark had paid prior to the
default. In exchange, the individual agreed to abate the proceedings against ThinkSpark and will file a motion for nonsuit with prejudice upon full satisfaction of the payments due.



ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS



ISSUANCE OF SERIES A PREFERRED STOCK



On May
23, 2003, we issued 2,335 shares of our Series A Preferred Stock in a private offering to new and existing private, accredited investors at $1,000 per share. We received gross proceeds of $2.3 million, consisting of $2.25 million in cash and $84,000
in satisfaction of debt owed by Axtive to a stockholder and to an executive officer. Of the net cash proceeds, after $124,000 in legal expenses related to the issuance of Series A Preferred Stock, the acquisition of ThinkSpark and the preparation of
the management agreement regarding Demand Aggregation Solutions, LLC, we have used or expect to use $500,000 to satisfy current liabilities arising from prior acquisitions and $61,000 in cash merger consideration for the ThinkSpark acquisition. The
balance is available for working capital and general corporate purposes.



Each new share of our Series A Preferred Stock carries an 8% cumulative dividend and is convertible into shares of our common stock at an initial conversion price of $0.10 per share. The new shares of Series A
Preferred Stock were immediately convertible upon issuance. Each new purchaser was also granted warrants to purchase 20 shares of our common stock for each 100 shares of common stock the investor was initially entitled to receive upon conversion of
the Series A Preferred Stock. The warrants are exercisable at a price of $0.20 per share. We issued warrants to acquire 4,670,000 shares of common stock in connection with the new financing.



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The initial issuance of Series A Preferred Stock in 2002 provided that subsequent issuances of the shares
on terms more favorable than those provided to the original investors in the Series A Preferred would automatically adjust the terms and conditions on the outstanding Series A Preferred Stock to the more favorable terms and conditions. As a result,
the initial conversion price on all shares of Series A Preferred Stock issued in 2002 was reduced from $0.75 to $0.10 per share, and the exercise price of the warrants issued in 2002 was reduced from $1.15 per share to $0.20 per share. Each
purchaser of Series A Preferred Stock in 2002 was issued a restated warrant exercisable for additional shares as a result of the decrease in the initial conversion price. The restated warrants are exercisable for a total of 7,696,002 additional
shares of common stock. In addition, the holders of the Series A Preferred Stock were given the right to elect one member of our board of directors.



In July 2003, we issued an additional 50 shares of Series A Preferred Stock in a private offering to a purchaser in the May 2003 offering, G.C.
Scooter Beachum, who is also one of our executive officers. This issuance was pursuant to an irrevocable subscription agreement executed by the purchaser at the time of the issuance of Series A Preferred Stock in May 2003. The terms were
identical to the May 2003 sale of Series A Preferred Stock. The Company received gross proceeds of $50,000 in cash. Net proceeds of the sale will be used for general corporate purposes. As part of this subsequent issuance, we issued additional
warrants exercisable for 100,000 shares of our common stock.



We paid no commissions in connection with issuance of the new shares of Series A Preferred Stock in 2003. The new shares of Series A Preferred Stock and warrants to purchase common stock were issued by the Company in reliance upon an
exemption from registration pursuant to Rule 506 of Regulation D under Section 4(2) of the Securities Act of 1933. A Form D was filed with the SEC.



OTHER ISSUANCES



In connection with the settlement of a lease dispute involving a United Kingdom subsidiary of ThinkSpark Corporation, ThinkSpark entered into a settlement
agreement with the landlord. See Item 3, Legal ProceedingsProceedings Against ThinkSpark. Pursuant to the terms of the settlement agreement, we issued 1,219,149 restricted shares of our common stock to the landlord as security for
a promissory note from Axtive for $200,000. Pursuant to the settlement agreement and the promissory note, the shares will be returned to us at various stages based upon payments made on the promissory note. Assuming the promissory note is paid in
full pursuant to its terms, all of the shares will be returned. All returned shares will be held by us as treasury shares. If there is a default on the promissory note, the landlord has the right to keep all or part of the shares to satisfy any
remaining obligation. The issuance of the restricted shares of common stock did not involve a public offering. The restricted shares were issued by the Company in reliance upon an exemption from registration pursuant to Section 4(2) of the
Securities Act.



Effective May 1, 2003, we entered into a new
services agreement with Atlas Capital Services, LLC. Pursuant to the agreement, in exchange for financial advisory services as described in the agreement Atlas was entitled to an advisory fee consisting of (1) 1,115,000 restricted shares of our
common stock, (2) 250,000 restricted shares of our common stock to be issued directly to Leeb Brokerage Services for Leebs introduction of Atlas to us, (3) warrants to purchase 1,250,000 restricted shares of our common stock, and (4) a monthly
cash fee. The warrants were issued effective June 26, 2003, upon the same terms as the warrants issued to the purchasers of Series A Preferred Stock in May 2003. The restricted shares of common stock were issued in July 2003. The issuance of the
restricted shares of common stock and warrants did not involve a public offering. The restricted shares and warrants were issued by the Company in reliance upon an exemption from registration pursuant to Section 4(2) of the Securities Act.



On July 1, 2003, we issued 297,674 restricted shares of our
common stock to TSTC International Holding Company, formerly known as Axtive Software Corporation. These shares constituted an additional payment due to TSTC in connection with our June 2002 purchase of certain intangible assets, including the name
Axtive, and certain tangible assets. We were obligated to issue the additional restricted shares if the market price of our common stock had not been at or above $0.75 within the one-year period after our purchase. G.C.
Scooter Beachum, our Executive Vice President and General Manager, is the sole shareholder and director of TSTC. The issuance of the restricted shares of common stock did not involve a public offering. The restricted shares were issued
to TSTC by the Company in reliance upon an exemption from registration pursuant to Section 4(2) of the Securities Act.



ITEM 3. DEFAULTS UPON SENIOR SECURITIES



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None.



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



No matters were submitted to a vote of our stockholders during the second quarter of 2003.



ITEM 5. OTHER INFORMATION



None.



ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



|(a) |  | Exhibits
|--- |  | --------



|ExhibitNumber |  | Description                                                                                                                                                        
|------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|              | 
|31.1          |  | Chief Executive Officers Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                 
|              | 
|31.2          |  | Chief Financial Officers Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                 
|              | 
|32.1          |  | Chief Executive and Chief Financial Officers Certification Pursuant to 18 U.S.C Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.



|(b) |  | Reports on Form 8-K
|--- |  | -------------------



On August 11, 2003, Axtive filed a Form 8-K/A reporting the unaudited combined pro forma condensed balance sheets of Axtive Corporation and ThinkSpark Corporation as of March 31, 2003, and the related unaudited
combined pro forma condensed statements of operations for the year ended December 31, 2002, and the three months ended March 31, 2003, for the previously announced acquisition of ThinkSpark Corporation and its subsidiaries on May 23, 2003.



On August 14, 2003, Axtive filed a Form 8-K announcing the change in their
certifying accountant and the change in their Chief Financial Officer.



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SIGNATURES



In accordance with the requirements of
the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|AXTIVE CORPORATION
|------------------
|                  
|By:               
|                  
|                  
|                  



September
, 2003



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INDEX TO EXHIBITS



|ExhibitNumber |  | Description                                                                                                                                                        
|------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|              | 
|31.1          |  | Chief Executive Officers Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                 
|              | 
|31.2          |  | Chief Financial Officers Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                 
|              | 
|32.1          |  | Chief Executive and Chief Financial Officers Certification Pursuant to 18 U.S.C Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.



25