U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   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, 2004

                          Commission File No. 001-15819


                               ACTIVEWORLDS CORP.
                               ------------------
        (Exact name of small business issuer as specified in its charter)


               DELAWARE                                     513-3883101
               --------                                     -----------
   (State or other jurisdiction of                         (I.R.S. Employer
   incorporation or organization)                         Identification Number)

                 40 Wall Street, 58th Floor, New York, NY 10005
                 ----------------------------------------------
                                 (212) 509-1700
                           ---------------------------
                          (Address and telephone number
                         of principal executive offices)

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 registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.  [ ] Yes      [X] No

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

We had 5,317,116 shares of our common stock outstanding as of August 11, 2004.

Transitional Small Business Disclosure Format (check one):  [ ] Yes     [X] No




<PAGE>
<TABLE>
<CAPTION>


                                                        INDEX

                                                                                                Page
<S>                                                                                             <C>
                                            PART I - FINANCIAL INFORMATION

ITEM 1.    Financial Statements

           Condensed Consolidated Balance Sheets
                as of June 30, 2004 (unaudited) and December 31, 2003                             1

           Condensed Consolidated Statements of Income
                for the three and six months ended June 30, 2004 and 2003 (unaudited)             2

           Condensed Consolidated Statements of Cash Flows
                for the six months ended June 30, 2004 and 2003 (unaudited)                       3

           Notes to unaudited condensed consolidated interim financial statements               4 - 5

ITEM 2.    Management's Discussion and Analysis of Interim Financial
                Condition and Results of Operations                                             5 - 6

ITEM 3.    Controls and Procedures                                                               6-7


                                             PART II - OTHER INFORMATION


ITEM 1.    Legal Proceedings                                                                      7

ITEM 2.    Change in Securities                                                                   7

ITEM 3.    Defaults upon Senior Securities                                                        8

ITEM 4.    Submission of Matters to a Vote of Security Holders                                    8

ITEM 5.    Other Information                                                                      8

ITEM 6.    Exhibits and Reports on Form 8-K                                                       8
</TABLE>


                                       ii
<PAGE>

ITEM 1.  FINANCIAL STATEMENTS

                                  Balance Sheet
<TABLE>
<CAPTION>


                                                                        June 30,        December 31,
                                                                          2004             2003 *
                                                                       -----------      -----------
                                                                       (Unaudited)
<S>                                                                    <C>              <C>
                                     Assets

Current assets
    Cash                                                               $   378,341      $   407,318
    Investments                                                             87,111           87,111
                                                                       -----------      -----------
              Total current assets                                         465,452          494,429
                                                                       -----------      -----------

              Total assets                                             $   465,452      $   494,429
                                                                       -----------      -----------


                      Liabilities and Stockholders' Equity
Current liabilities
    Accounts payable                                                   $        --      $       403
    Accrued liabilities                                                      3,000            8,500
                                                                       -----------      -----------
              Total current liabilities                                      3,000            8,903
                                                                       -----------      -----------

Commitments and contingencies

Stockholders' equity
    Preferred stock, $.001 par value,  500,000 shares  authorized,
      no shares issued or outstanding                                           --               --
    Common stock, $.001 par value,  50,000,000 shares  authorized,
      5,317,116 shares issued                                                5,317            5,317
    Additional paid-in capital                                           5,652,510        5,725,913
    Treasury stock                                                              --         (118,403)
    Accumulated deficit                                                 (5,151,709)      (5,083,635)
    Accumulated other comprehensive income (loss)                          (43,666)         (43,666)
                                                                       -----------      -----------
              Total stockholders' equity                                   462,452          485,526
                                                                       -----------      -----------

              Total liabilities and stockholders' equity               $   465,452      $   494,429
                                                                       -----------      -----------
</TABLE>


*Derived from audited financial statements

                                       1
<PAGE>

                             Statement of Operations
<TABLE>
<CAPTION>
                                                       Three Months Ended         Six Months Ended
                                                            June 30                     June 30
                                                     ----------------------      ----------------------

                                                      2004           2003          2004         2003
                                                     --------      --------      --------      --------
                                                          (Unaudited)                 (Unaudited)

<S>                                                    <C>           <C>           <C>           <C>
Revenues                                             $     --      $     --             $      $     --
                                                     --------      --------      --------      --------
Operating expenses
    Selling, general and administrative expenses       50,734        12,983        68,074        31,358
    Research and development expenses                      --            --            --            --
                                                     --------      --------      --------      --------
              Total operating expenses                 50,734        12,983        68,074        31,358
                                                     --------      --------      --------      --------

    Loss from operations                              (50,734)      (12,983)      (68,074)      (31,358)

Interest income                                            --            --            --            --
                                                     --------      --------      --------      --------
    Loss before  (provision  for)  benefit  from
     income taxes                                     (50,734)      (12,983)      (68,074)      (31,358)
(Provision for) benefit from income taxes                  --            --            --            --
                                                     --------      --------      --------      --------

    Net loss                                         $(50,734)     $(12,983)     $(68,074)     $(31,358)
                                                     --------      --------      --------      --------

Net loss per share of common stock
    Basic                                            $  (.010)     $  (.002)     $  (.013)     $  (.004)
                                                     --------      --------      --------      --------
</TABLE>

                                       2
<PAGE>

                      Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
                                                                                       Six Months Ended
                                                                                            June 30
                                                                                    ------------------------
                                                                                      2004           2003
                                                                                    ---------      ---------
                                                                                          (Unaudited)
<S>                                                                                 <C>            <C>
Operating activities
    Net (loss)                                                                      $ (68,074)     $ (31,358)
    Adjustment to reconcile net (loss) to net cash used in operating activities
       Stock options issued for services                                               45,000             --
       Changes in operating assets and liabilities which provided (used) cash
          Accounts payable                                                               (403)       (14,323)
          Accrued liabilities                                                          (5,500)        (2,000)
                                                                                    ---------      ---------
              Net cash used in operating activities                                   (28,977)       (47,681)
                                                                                    ---------      ---------

Net decrease in cash                                                                  (28,977)       (47,681)
Cash at beginning of period                                                           407,318        346,213
                                                                                    ---------      ---------

              Cash at end of period                                                 $ 378,341      $ 298,532
                                                                                    ---------      ---------

Supplemental disclosure information
    Cash paid for interest during the period                                        $      --      $      --
                                                                                    ---------      ---------
    Non-cash transaction - cancellation of Treasury stock                           $ 118,403      $      --
                                                                                    ---------      ---------
</TABLE>

                                       3
<PAGE>

Note 1 -      Basis of presentation

              The accompanying 2004 and 2003 unaudited interim financial
              statements included herein have been prepared by the Company,
              without audit, pursuant to the rules and regulations of the
              Securities and Exchange Commission (the "SEC"). 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.
              However, the Company believes that the disclosures are adequate to
              prevent the information presented from being misleading. These
              financial statements should be read in conjunction with the
              financial statements and the notes thereto included in the
              Company's Form 10-KSB, which contains financial information for
              the years ended December 31, 2003 and 2002.

              The information provided in these financial statements reflects
              all adjustments (consisting solely of normal recurring accruals)
              that are, in the opinion of management, necessary to present
              fairly the results of operations for this period. The results for
              this period are not necessarily indicative of the results to be
              expected for the full year.

              On July 10, 2002 the Company sold all of the issued and
              outstanding stock of its subsidiary, Activeworlds Inc. to the
              Company's management in exchange for management selling 2,595,445
              shares or approximately 30% of the Company's stock to the Company.
              At the time of the sale Activeworlds, Inc. generated substantially
              all of the operating revenues of the Company.

              The Company is actively seeking to merge, invest in or acquire
              other companies to generate revenues and profits.

Note 2 -      Investments

              In 2001 the Company agreed to accept 9,800,000 shares of common
              stock of its largest contract customer in full and final payment
              on the work completed to date on the contract. The fair market
              value at the date the common stock was transferred was $130,777.
              The fair market value of the investment had decreased by $43,666
              at June 30, 2004 and December 31, 2003. Accordingly, the value of
              the investment has been adjusted to $87,111 at June 30, 2004 and
              December 31, 2003.

Note 3 -      Income taxes

              At June 30, 2004, the Company has a net operating loss
              carryforward of approximately $1,545,000 that may be used to
              offset future taxable income.

              An allowance has been established for the full amount of gross
              deferred tax asset of approximately $618,000 due to the
              uncertainty of utilizing the deferred taxes in the future.

                                       4
<PAGE>

Note 4 -      Net (loss) per share of common stock

              The number of shares on which the basic net (loss) per share of
              common stock has been calculated is as follows:

                                                             Weighted Average
                          Six Months Ended June 30,          Number of Shares
                          -------------------------          ----------------
                                (Unaudited)

                                    2004                         5,317,116

                                    2003                         5,319,790

              Diluted net (loss) per share of common stock has not been
              presented for the six months ended June 30, 2004 and 2003 since
              the effect of including the stock options and warrants outstanding
              would be antidilutive.

Note 5 -      Issuance of stock options

              On May 6, 2004, the Company issued 500,000 options under the
              Company's stock option plan exercisable at $.25 per share to a
              member of the Board of Directors for services rendered. The
              options are vested as follows: 250,000 options vest immediately;
              250,000 options vest upon closing of an acquisition in which
              control of the Company changes. The estimated value of the
              services recognized in exchange for the stock options was $25,000.

              The Company also issued 200,000 options exercisable at $.25 per
              share to individuals for services rendered. The estimated value of
              the services recognized in exchange for the stock options was
              $20,000.

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

         The following discussion of our financial condition and results of
operations should be read together with the financial statements and related
notes included in this Report. This discussion contains forward-looking
statements that involve risks and uncertainties. Our actual results may differ
materially from those anticipated in those forward-looking statements as a
result of certain factors, including, but not limited to, those contained in the
discussion on forward-looking statements that follows this section.

OVERVIEW

         We are a Delaware corporation organized on September 5, 1995. Beginning
in 1999, through our wholly-owned subsidiary Activeworlds, Inc., we operated the
business of providing Internet software products and services that enabled the
delivery of three dimensional content over the Internet. We operated this
business until July 10, 2002 when we entered into an agreement to sell the
subsidiary to our former management. The sale closed on September 11, 2002, at
which time we became inactive. We are now seeking business opportunities. We
have not had revenues from operations since entering into the agreement to sell
our subsidiary on July 10, 2002.

                                       5
<PAGE>

         Our primary expenses will relate to our reporting obligations under the
Securities Exchange Act of 1934. We will incur expenses due to the legal and
accounting services required to prepare periodic reports and the costs of filing
these reports with the SEC. In the event we acquire a business opportunity, we
may incur additional expenses related to proxy or information statements we must
provide to our stockholders which disclose that company's business operations,
management and financial condition.

         Our plan of operations does not call for any product research or
development, nor do we plan to purchase any equipment.

         We currently have no employees. Our management expects to confer with
consultants, attorneys and accountants as necessary. We do not anticipate a need
to engage any employees so long as we are seeking and evaluating business
opportunities. We will determine the need for employees based upon the specific
business opportunity once we consummate an acquisition transaction.

RESULTS OF OPERATIONS, LIQUIDITY AND CAPITAL RESOURCES

         There have been no material changes to our Results of Operations,
Liquidity or Capital Resources during the quarter ended June 30, 2004. For
further information, see our report on Form 10-KSB filed on March 30, 2004.

FORWARD-LOOKING STATEMENTS
--------------------------

         The statement made above relating to the adequacy of our working
capital is a forward-looking statement within the meaning of the Private
Securities Litigation Reform Act of 1995. The statements that express the
"belief", "anticipation", "plans", "expectations", "will" and similar
expressions are intended to identify forward-looking statements.

         The results anticipated by any or all of these forward-looking
statements might not occur. Important factors, uncertainties and risks that may
cause actual results to differ materially from these forward-looking statements
include matters relating to the business and financial condition of any company
we acquire. We undertake no obligation to publicly update or revise any
forward-looking statements, whether as the result of new information, future
events or otherwise.

ITEM 3.  CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

         As of June 30, 2004, we performed an evaluation, under the supervision
and with the participation of our management, including our chief executive
officer and chief financial officer, of the effectiveness of the design and
operation of our disclosure controls and procedures (as defined in SEC Rule
13a-15(e) or 15d-15(e)). Based upon that evaluation, our chief executive officer
and chief financial officer concluded that our disclosure controls and
procedures are effective in timely alerting them to material information
relating to Activeworlds required to be included in our reports filed or
submitted under the Securities Exchange Act of 1934, as amended. Due to the
inherent limitations of the effectiveness of any established disclosure controls
and procedures, our management cannot provide absolute assurance that the
objectives of our disclosure controls and procedures will be met.

                                       6
<PAGE>

(b)  Changes in Internal Controls

         There has been no change in our internal control over financial
reporting that occurred during our most recent fiscal quarter that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         Not applicable.

ITEM 2.  CHANGES IN SECURITIES

         (a)      Not applicable.

         (b)      Not applicable.

         (c)      On May 6, 2004, in consideration of services rendered to the
                  Company, we granted options to purchase 500,000 shares of our
                  common stock to Sean Deson, our sole officer and director, and
                  options to purchase an aggregate of 200,000 shares of our
                  common stock to three consultants. All of the options are
                  exercisable at $.25 per share and expire on May 5, 2009. These
                  transactions were exempt from registration under the
                  Securities Act of 1933 as transactions not involving a public
                  offering.

         (d)      Not applicable.

         (e)      The following table provides information about purchases by
                  Activeworlds Corp. and its affiliated purchasers during the
                  quarter ended June 30, 2004 of equity securities that are
                  registered by Activeworlds Corp. pursuant to Section 12 of the
                  Exchange Act:
<TABLE>
<CAPTION>

                                        ISSUER PURCHASES OF EQUITY SECURITIES
----------------- --------------------- ----------------- ------------------------------ --------------------------------------
PERIOD                    (A)                 (B)                      (C)                                (D)
                    TOTAL NUMBER OF      AVERAGE PRICE     TOTAL NUMBER OF SHARES (OR       MAXIMUM NUMBER (OR APPROXIMATE
                   SHARES (OR UNITS)     PAID PER SHARE    UNITS) PURCHASED AS PART OF    DOLLAR VALUE) OF SHARES (OR UNITS)
                       PURCHASED)          (OR UNIT)       PUBLICLY ANNOUNCED PLANS OR    THAT MAY YET BE PURCHASED UNDER THE
                                                                  PROGRAMS (1)                   PLANS OR PROGRAMS (1)
----------------- --------------------- ----------------- ------------------------------ --------------------------------------
<S>                        <C>                 <C>                      <C>                                <C>
04/01/04-04/30/04          0                   $0                       0                                  0
----------------- --------------------- ----------------- ------------------------------ --------------------------------------
05/01/04-05/31/04          0                   0                        0                                  0
----------------- --------------------- ----------------- ------------------------------ --------------------------------------
06/01/04-06/30/04          0                   0                        0                                  0
----------------- --------------------- ----------------- ------------------------------ --------------------------------------
</TABLE>

(1) Activeworlds has not entered into any plans or programs under which it may
repurchase its common stock.

                                       7
<PAGE>


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         Not applicable.

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

         Not applicable.

ITEM 5.  OTHER INFORMATION

         Not applicable.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      EXHIBIT INDEX

                  Exhibit
                  Number     Description
                  ------   --------------------------------

                  10.1     2004 Stock Option Plan
                  31.1     Certification of CEO/CFO
                  32.1     Section 1350 certification of CEO/CFO


         (b)      REPORTS ON FORM 8-K.
                  None

                                       8
<PAGE>

                                   SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf on August 13, 2004 by
the undersigned, thereunto duly authorized.


                                   ACTIVEWORLDS CORP.


                                   /s/ Sean Deson
                                   --------------
                                   Sean Deson, Chief Executive Officer


                                       9