SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

MARK ONE

          [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Quarterly Period ended September 30,2006

          [_] Transition  Report  Pursuant to Section 13 or 15 (d) of the
Securities  Exchange Act of 1934 for the transition period from _____ to ______

COMMISSION FILE NUMBER 001-15819
                       ---------

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

            Delaware                                   13-3883101
  (State or other jurisdiction of                    (I.R.S. Employer
  incorporation or organization)                     Identification No.)

                           40 Wall Street, 58th Floor
                               New York, NY 10005
          (Address of principal executive offices, including zip code)

                                 (212) 509-1700
                (Issuer's telephone number, including area code)

         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[]

         Indicate by a check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). 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: 5,317,116 shares of common
stock were outstanding as of November 14, 2006.

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

<PAGE>

                                      INDEX
                                                                            Page
                         PART I - FINANCIAL INFORMATION

ITEM 1.    Financial Statements

           Condensed Consolidated Balance Sheets
              as of September 30, 2006(unaudited)and December 31, 2005         2

           Condensed Consolidated Statements of Operations
              for the three months and nine months ended September 30,
              2006 (unaudited)and 2005(unaudited)                              3

           Condensed Consolidated Statements of Cash Flows
              for the nine months ended September 30, 2006 (unaudited)
              and 2005 (unaudited)                                             4

           Notes to unaudited condensed consolidated interim financial         5
              statements

ITEM 2.    Management's Discussion and Analysis of Interim Financial
              Condition and Results of Operations                              8

ITEM 3.    Controls and Procedures                                             9

                           PART II - OTHER INFORMATION

ITEM 1.    Legal Proceedings                                                  10

ITEM 2.    Unregistered Sales of Equity Securities and Use of Proceeds        10

ITEM 3.    Defaults upon Senior Securities                                    10

ITEM 4.    Submission of Matters to a Vote of Security Holders                10

ITEM 5.    Other Information                                                  10

ITEM 6.    Exhibits                                                           10

                                       1
<PAGE>

ITEM 1.  FINANCIAL STATEMENTS

                              ACTIVEWORLDS CORP.

                           Consolidated Balance Sheet

<TABLE>
<CAPTION>
                                                                                      September 30,     December 31,
                                                                                          2006              2005*
                                                                                      -------------     ------------
                                                                                       (Unaudited)

                                     Assets
<S>                                                                                    <C>              <C>
Current assets
    Cash                                                                               $   279,320      $   307,073
    Investments (note 2)                                                                    87,801           85,839
                                                                                       -----------      -----------
              Total current assets                                                         367,121          392,912
                                                                                       -----------      -----------
              Total assets                                                             $   367,121      $   392,912
                                                                                       ===========      ===========

                      Liabilities and Stockholders' Equity

Current liabilities
    Accrued liabilities                                                                $     3,000      $     8,500
                                                                                       -----------      -----------
              Total current liabilities                                                      3,000            8,500
                                                                                       -----------      -----------
Commitments and contingencies

Stockholders' equity
    Preferred stock, $.001 par value, 500,000 shares authorized, no shares issued
      or outstanding                                                                          --               --
    Common stock, $.001 par value, 100,000,000 shares authorized, 5,317,116 shares
      issued and outstanding                                                                 5,317            5,317
    Additional paid-in capital                                                           6,754,385        6,293,135
    Accumulated deficit                                                                 (6,352,605)      (5,869,102)
    Accumulated other comprehensive (loss)                                                 (42,976)         (44,938)
                                                                                       -----------      -----------
              Total stockholders' equity                                                   364,121          384,412
                                                                                       -----------      -----------
              Total liabilities and stockholders' equity                               $   367,121      $   392,912
                                                                                       ===========      ===========
</TABLE>

*Derived from audited financial statements

See notes to consolidiated financial statements


                                       2
<PAGE>

                               ACTIVEWORLDS CORP.

                      Consolidated Statement of Operations
<TABLE>
<CAPTION>
                                               Three Months Ended             Nine Months Ended
                                                  September 30                  September 30
                                            -------------------------     -------------------------
                                               2006           2005           2006            2005
                                            ----------     ----------     ----------     ----------
                                                   (Unaudited)                   (Unaudited)

<S>                                         <C>            <C>            <C>            <C>
Revenues                                    $    --        $    --        $    --        $    --
                                            ---------      ---------      ---------      ---------

Operating expenses

    Selling, general and administrative
      expenses (note 5)                       157,363        158,746        483,503        485,625
    Research and development expenses            --             --             --             --
                                            ---------      ---------      ---------      ---------
              Total operating expenses        157,363        158,746        483,503        485,625
                                            ---------      ---------      ---------      ---------

    Loss from operations                     (157,363)      (158,746)      (483,503)      (485,625)
                                            ---------      ---------      ---------      ---------

    Loss before income taxes                 (157,363)      (158,746)      (483,503)      (485,625)
Income taxes                                     --             --             --             --
                                            ---------      ---------      ---------      ---------

    Net loss                                $(157,363)     $(158,746)     $(483,503)     $(485,625)
                                            ---------      ---------      ---------      ---------

Net loss per share of common stock
    Basic                                   $   (.030)     $   (.030)     $   (.091)     $   (.091)
                                            ---------      ---------      ---------      ---------
</TABLE>

See notes to consolidiated financial statements


                                       3
<PAGE>

                               ACTIVEWORLDS CORP.

                      Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>

                                                                                       Nine Months Ended
                                                                                          September 30
                                                                                   ------------------------
                                                                                      2006           2005
                                                                                   ---------      ---------
                                                                                          (Unaudited)
<S>                                                                                 <C>            <C>
Operating activities
    Net loss                                                                      $(483,503)     $(485,625)
    Adjustment to reconcile net loss to net cash used in operating activities
      Stock warrants issued for services                                            461,250        461,250
    Changes in operating assets and liabilities which provided (used) cash
      Accounts payable                                                                 --           (2,602)
      Accrued liabilities                                                            (5,500)        (5,500)
                                                                                  ---------      ---------
              Net cash used in operating activities                                 (27,753)       (32,477)
                                                                                  ---------      ---------

Net decrease in cash                                                                (27,753)       (32,477)
Cash at beginning of period                                                         307,073        346,823
                                                                                  ---------      ---------

              Cash at end of period                                               $ 279,320      $ 314,346
                                                                                  ---------      ---------
</TABLE>

See notes to consolidiated financial statements

                                       4
<PAGE>

                               ACTIVEWORLDS CORP.

                   Notes to Consolidated Financial Statements
                               September 30, 2006

Note 1 - Basis of presentation

         The accompanying 2006 and 2005 unaudited interim consolidated 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, 2006 and 2005.

         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.

         Activeworlds Corp. (the "Company") became inactive in July 2002 when
         the Company entered into an agreement to sell all of the issued and
         outstanding stock of its operating subsidiary, Activeworlds, Inc. The
         agreement closed in September 2002 and the Company's former management
         purchased Activeworlds, Inc. in exchange for their selling 2,595,445
         shares or approximately 30% of the Company's common stock to the
         Company. The Company has been actively seeking to merge, invest in or
         acquire other companies.

         On September 9, 2004, the Company entered into a letter of intent to
         acquire Hi-G-Tek, Ltd., an Israeli company, ("Hi-G") in a transaction
         expected to be treated as a reverse acquisition (the "Reverse
         Acquisition"). In connection with the Reverse Acquisition, the Company
         formed a wholly-owned subsidiary, AWLD, Inc., a Delaware corporation.
         AWLD, Inc. then formed a wholly-owned subsidiary AWLD, Ltd., an Israeli
         company.

         On December 13, 2004 the Company signed an Agreement and Plan of Merger
         (the "Plan") by and among the Company, AWLD, Inc., AWLD Ltd., Baytree
         LLC (a related company, substantially owned by a significant
         stockholder of the Company) and Hi-G. The Plan called for the merger of
         Hi-G and the Company's wholly-owned subsidiary AWLD, Ltd. in exchange
         for 24,683,303 shares of the Company's outstanding common stock. The
         terms of the Plan expired on February 28, 2005, although the parties
         continued discussions through March 31, 2005, at which time the parties
         ended discussions.

         All intercompany accounts and transactions have been eliminated in
         consolidation. The consolidated financial statements are presented as
         those of Activeworlds Corp.

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

                                       5
<PAGE>

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 $130,770 based on trading on the
         Australian Stock Exchange ("ASE"). Trading of the common stock of Green
         X Global Limited (Green X), formerly known as 3D Global Limited, was
         suspended pending the acquisition of Red X Property Pty. Ltd. ("Red
         X"). In anticipation of the acquisition Green X consolidated its share
         capital through a reverse stock split wherein the Company received one
         share for every 20 shares held. After the reverse split the Company
         holds 490,000 shares of Green X. The acquisition of Red X was completed
         during 2005, however trading remains suspended. Green X has announced
         plans to raise funds through a private placement and a public offering
         in order to raise additional funds. This funding would allow Green X to
         proceed to both raise the required capital if the expected placement
         does meet expectations and also raise additional capital to ensure a
         sufficient spread of investors to satisfy ASE listing requirements.
         Management cannot predict the outcome of the announced plans to raise
         funds at this time or the effect that it may have on the value of Green
         X's stock value. In light of this uncertainty the Company will continue
         to carry the value of the investment at $87,111, the value at
         suspension of trading.

         The carrying value of the investment was adjusted at the balance sheet
         date for changes in exchange rates, resulting in an increase of $1,967
         at September 30, 2006 and a decrease of $6,036 at December 31, 2005,
         respectively. Accordingly, the value of the investment has been
         adjusted to $87,801 and $85,839 at September 30, 2006 and December 31,
         2005, respectively.

Note 3 - Income taxes

         At September 30, 2006, the Company has a net operating loss
         carryforward of approximately $3,461,000 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 $1,384,000 due to the uncertainty of
         utilizing the deferred taxes in the future.

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
           Nine Months Ended September 30,                 Number of Shares
           -------------------------------                 ----------------
                   (Unaudited)

                       2006                                  5,317,116

                       2005                                  5,317,116

         Diluted net loss per share of common stock has not been presented for
         the nine months ended September 30, 2006 and 2005 since the effect of
         including the stock options and warrants outstanding would be
         antidilutive.

                                       6
<PAGE>

Note 5 - Related party transactions - warrants

         In December 2004 the Company issued 750,000 common stock warrants to a
         company controlled by its principal stockholder. The consulting
         contract is for two years from the date of the contract (measurement
         date). The warrants are fully-vested, can be exercised at $2.00 per
         share and expire three years from the date of the contract. The fair
         value of the warrants of $1,230,000 issued for the consulting services
         will be expensed over the life of the consulting contract and is not
         affected by changes in the fair value of the Company's stock subsequent
         to the measurement date. Expenses for consulting services under the
         contract were recognized in the amount of $461,250 for the nine months
         ended September 30, 2006 and 2005. The fair value has been determined
         using the Black Scholes Model with the following assumptions:

              Risk-free interest rate                         3.09%
              Volatility                                      100.0%
              Expected life                                   3 years
              Expected dividend yield                          0.00%

                                       7
<PAGE>

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.

         On December 13, 2004, we signed an Agreement and Plan of Merger with
Hi-G-Tek, Ltd., an Israeli corporation ("Hi-G") under which our newly-formed
wholly-owned subsidiary would have merged with and into a subsidiary of Hi-G, in
exchange for 24,683,303 shares of our restricted Common Stock. The Agreement
expired by its terms on February 28, 2005, although the parties continued
discussions through March 31, 2005 at which time all discussions ceased and the
parties determined that the merger would not close.

         Our primary expenses relate to our reporting obligations under the
Securities Exchange Act of 1934 and expenses related to the acquisition of
another business opportunity. 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 Securities and Exchange Commission.

         Our plan of operations does not call for any product research or
development, nor do we plan to purchase any equipment. We believe we have enough
working capital to meet our operational needs for the next 12 months.

         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.

                                       8
<PAGE>

RESULTS OF OPERATIONS

         We had no revenue for the quarters ended September 30, 2006 and 2005.
The loss from operations during the first nine months of 2006 was $483,503 was
similar to the loss from operations during the first nine months of 2005 of
$485,625. In each nine-month period, the primary cost was $461,250 of non-cash
expense related to the amortization of warrants and the remainder consisted
primarily of public company expenses.

LIQUIDITY AND CAPITAL RESOURCES

         At September 30, 2006 we had total assets of $367,121, which includes
$279,320 of cash, and total liabilities of $3,000. At December 31, 2005, we had
total assets of $392,912, which included $307,073 of cash, and total liabilities
of $8,500.

         For further information, see our report on Form 10-KSB filed on April
6, 2006.

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 September 30, 2006, 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. 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.

                                       9
<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. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

        (a)      Not applicable.
        (b)      Not applicable.
        (c)      Not applicable.

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
-------    -----------
31         Certification of CEO and CFO
32         Section 1350 certification of CEO and CFO

                                       10
<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 November 14, 2006 by
the undersigned, thereunto duly authorized.

                                        ACTIVEWORLDS CORP.

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

                                       11