<PAGE>

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

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

                 For the Quarterly Period Ended: March 31, 2001

                                       or

              [ ] 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.COM, INC.
             (Exact name of registrant as specified in its charter)

            DELAWARE                                      13-3883101
   (State or other jurisdiction               (IRS Employer Identification No.)
  of incorporation or organization)

               95 PARKER STREET, NEWBURYPORT, MASSACHUSETTS 01950
              (Address of principal executive offices and zip code)

       Registrant's telephone number, including area code: (978) 499-0222.

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


      As of March 31, 2001, there were outstanding 8,600,088 shares of Common
Stock, par value $.001, of the registrant.

<PAGE>


                             ACTIVEWORLDS.COM, INC.
                 MARCH 31, 2001 QUARTERLY REPORT ON FORM 10-QSB

                                TABLE OF CONTENTS


                         PART I - FINANCIAL INFORMATION

<TABLE>
<CAPTION>

                                                                          Page Number
<S>                                                                       <C>
Item 1. Financial Statements
        Consolidated Balance Sheets as of March 31, 2001 and
        December 31, 2000......................................................3
        Consolidated Statements of Operations
             for the three months ended March 31, 2001 and 2000................4
        Consolidated Statements of Cash Flows
             for the three months ended March 31, 2001 and 2000................5
        Notes to Consolidated Financial Statements.............................6
Item 2. Management's Discussion and Analysis of Financial Condition and
             Results of Operations.............................................8

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings......................................................9

</TABLE>

                                       2
<PAGE>


PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS


                             ACTIVEWORLDS.COM, INC.

                           Consolidated Balance Sheet

<TABLE>
<CAPTION>

                                                                           March 31,  December 31,
                                                                             2001          2000
                                                                          -----------  -----------
                                                                          (Unaudited)
                                     Assets
<S>                                                                        <C>          <C>
Current assets
    Cash                                                                   $3,177,781   $3,491,818
    Accounts receivable, trade - net of allowance for doubtful accounts
     Of $5,000 and $5,000                                                       4,098      139,500
    Contracts in progress in excess of billings                               339,585      308,737
    Prepaid expenses                                                           66,417       80,667
    Advances to officer/stockholder/employees                                  11,551       11,551
    Prepaid marketing                                                         265,915      223,450
                                                                          -----------   ----------
              Total current assets                                          3,865,347    4,255,723
                                                                          -----------   ----------

Property and equipment
    Leasehold improvements                                                     27,334       27,334
    Equipment and fixtures                                                    324,140      297,187
                                                                          -----------   ----------
                                                                              351,474      324,521
    Less: accumulated depreciation and amortization                            85,547       72,558
                                                                          -----------   ----------
              Property and equipment, net                                     265,927      251,963
                                                                          -----------   ----------
              Total assets                                                 $4,131,274   $4,507,686
                                                                          -----------   ----------


                      Liabilities and Stockholders' Equity
Current liabilities
    Current portion - capital lease                                       $     9,362   $    9,900
    Accounts payable                                                          187,334       52,382
    Accrued liabilities                                                        53,377       66,705
    Deferred revenue                                                          160,591      135,726
                                                                          -----------   ----------
              Total current liabilities                                       410,664      264,713

Capital lease, net of current portion                                              --        1,951

Commitments and contingencies
                                                                          -----------
              Total liabilities                                               410,664      266,664
                                                                          -----------   ----------

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,
      8,515,235 shares
      issued and outstanding                                                    8,515        8,515
    Additional paid-in capital                                              6,306,494    6,292,994
    Note receivable for shares issued                                          (6,500)      (6,500)
    Treasury stock                                                           (118,403)    (118,403)
    Accumulated deficit                                                    (2,469,496)  (1,935,584)
                                                                          -----------  -----------
              Total stockholders' equity                                    3,720,610    4,241,022
                                                                          -----------  -----------
              Total liabilities and stockholders' equity                  $ 4,131,274  $ 4,507,686
                                                                          -----------  -----------
</TABLE>

                                       3
<PAGE>


                             ACTIVEWORLDS.COM, INC.

                      Consolidated Statement of Operations


<TABLE>
<CAPTION>

                                                                              Three Months Ended
                                                                                   March 31
                                                                            ----------------------
                                                                                            2000
                                                                                2001     (Restated)
                                                                                  (Unaudited)
<S>                                                                         <C>           <C>
Revenues                                                                    $ 128,798     $461,552
                                                                            ---------     --------

Operating expenses
    Selling, general and administrative expenses                              666,497      271,514
    Research and development expenses                                          40,038       38,077
                                                                            ---------     --------
              Total operating expenses                                        706,535      309,591
                                                                            ---------     --------
    Income (loss) from operations                                            (577,737)     151,961

Interest income                                                                43,580        2,226
                                                                            ---------     --------
    Income (loss) before (provision for) benefit from income taxes           (534,157)     154,187
(Provision for) benefit from income taxes                                          --           --
                                                                            ---------     --------
    Net income (loss)                                                       $(534,157)    $154,187
                                                                            ---------     --------
Earnings (loss) per share of common stock
    Basic                                                                   $   (.063)    $   .022
                                                                            ---------     --------
    Diluted                                                                               $   .021
                                                                                          --------
</TABLE>

                                       4
<PAGE>


                             ACTIVEWORLDS.COM, INC.

                      Consolidated Statement of Cash Flows

<TABLE>
<CAPTION>

                                                                               Three Months Ended
                                                                                    March 31
                                                                            -----------------------
                                                                                            2000
                                                                               2001      (Restated)
                                                                            ----------   ----------
                                                                            (Unaudited)
<S>                                                                         <C>         <C>
Operating activities
    Net income (loss)                                                       $(534,157)  $  154,187
    Adjustment to reconcile net income (loss) to net cash (used)
      by operating activities
       Depreciation and amortization                                           12,989        8,598
       Change in estimate of allowance for doubtful accounts                       --      (15,000)
       Options issued for compensation and services                            13,500           --
       Contracts in progress in excess of billings                            (30,848)    (134,494)
       Changes in operating assets and liabilities which provided
          (used) cash
          Accounts receivable                                                 135,402       35,000
          Prepaid expenses                                                    (27,970)     (22,752)
          Accounts payable                                                    134,952       79,406
          Accrued liabilities                                                 (13,328)     (20,000)
          Deferred revenue                                                     24,865       44,846
                                                                            ---------   ----------
              Net cash provided by (used in) operating activities            (284,595)     129,791
                                                                            ---------   ----------

Investing activities
    Purchases of equipment and leasehold improvements                         (26,953)      (6,207)
                                                                            ---------   ----------
              Net cash (used in) investing activities                         (26,953)      (6,207)
                                                                            ---------   ----------

Financing activities
    Payments on capital lease obligation                                       (2,489)      (2,331)
    Deferred offering costs                                                        --      (60,603)
                                                                            ---------    ---------
              Net cash (used in) financing activities                          (2,489)     (62,934)
                                                                            ----------   ---------

Net increase (decrease) in cash                                              (314,037)      60,650
Cash at beginning of period                                                 3,491,818      481,408
                                                                           ----------    ---------

              Cash at end of period                                        $3,177,781    $ 542,058
                                                                           ----------    ---------

Supplemental disclosure information
    Cash paid for interest during the period                               $      157    $     318
                                                                           ----------    ---------
    Cash paid for income taxes during the period                           $       --    $      --
                                                                           ----------    ---------

</TABLE>


                                       5
<PAGE>


Note  1 -   Basis of presentation

            The accompanying 2001 and 2000 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 generally accepted accounting principles
            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 SB-2 (including amendments 1 through 4), which contains
            financial information for the years ended December 31, 2000 and
            1999.

            The information provided in this report 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.

            The consolidated financial statements include the accounts of the
            Company and its wholly-owned subsidiary.

            All share and per share information in the consolidated financial
            statements reflect the two-for-three reverse stock split which
            became effective on April 10, 2000.

Note  2 -   Change in estimate

            During the three months ended March 31, 2000, the Company reduced
            its estimate of the allowance for doubtful accounts by $15,000 due
            to improved collections. The effect of this change was to increase
            income for the three months ended March 31, 2000 by $15,000 ($.002
            per share).

Note 3 -    Deferred revenue

            Deferred revenue consists of the following:

                                                    March 31,      December 31,
                                                      2001             2000
                                                  ------------    -------------
                                                   (Unaudited)

                      Deferred memberships          $  87,222       $ 74,757
                      Advances on royalties            25,227         25,227
                      Deferred licenses                48,142         35,742
                                                    ---------       --------

                                                    $ 160,591       $135,726
                                                    ---------       --------
Note 4 -    Issuance of common stock

            In May 2000, the Company issued 1,260,000 shares of its common stock
            in a public offering and received $4,819,500 of proceeds after
            deducting underwriter's discount but before deducting offering
            related expenses.

                                       6
<PAGE>


Note  5 -  Earnings (loss) per share of common stock

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

                                                            Weighted Average
             Three Months Ended March 31,                   Number of Shares
             -----------------------------               ----------------------
                     (Unaudited)
                        2001                                   8,515,235
                        2000                                   7,342,762

      The diluted earnings (loss) per share of common stock for the three months
ended March 31, 2000 has been calculated using 7,421,138 weighted average number
of shares. Diluted earnings (loss) per share of common stock has not been
presented for the three months ended March 31, 2001 since the effect of
including the stock options and warrants outstanding would be antidilutive.

Note 6 -  Long-term contracts

      In 1999, the Company entered into a significant long-term contract.
Revenue from the contract was recognized as the phases were accepted by the
customer. At December 31, 1999, the Company had not completed a phase under the
contract and contract payments received were recognized as deferred revenue. At
December 31, 2000, as the contract developed and more reliable estimates were
available, the percentage-of-completion method of accounting was determined to
be the preferable method of accounting for long-term contracts. Under the
percentage-of-completion method of accounting, costs and estimated gross margins
are recorded as revenue as work is performed based on the percentage that
incurred costs bear to estimated total costs utilizing the most recent estimates
of costs. Billings on the contracts are recorded as advance billings on the
contract until the contract is substantially completed. As of March 31, 2001 and
December 31, 2000, costs and estimated gross margin on the contract in excess of
advanced billings was $339,585 and $308,737, respectively.

      The consolidated statement of operations and cash flows for the quarter
ended March 31, 2000 have been restated to reflect the adoption of the
percentage-of-completion method of accounting.

                                       7
<PAGE>


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

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

      The following discussion and analysis should be read in conjunction with
our Financial Statements and Notes thereto and other financial information
included elsewhere in this Form 10-QSB. This discussion contains forward-looking
statements that involve risks and uncertainties. Our actual results may differ
materially from those anticipated in these forward-looking statements as a
result of a number of factors, including those discussed elsewhere in this
report.

OVERVIEW

      Activeworlds.com, Inc. is a provider of Internet software products and
services that enable the efficient delivery of three-dimensional content over
the Internet and intranets. Our comprehensive software platform is comprised of
proprietary three-dimensional server software, browser, and authoring tools.
Using our Active Worlds technology users are able to create objects and
structures in virtual worlds which other users can see and explore in real time.
We believe that the emergence of the Internet as a global communications medium
has increased the demand for efficient delivery of rich multimedia and
three-dimensional content.

      Our goals are to be the leader in three-dimensional Internet environments
and interactive communication and to position our software platform as a
standard for the delivery of three-dimensional content over the Internet. In
furtherance of these goals, we have chosen to offer our three-dimensional
browser to users free of charge to promote the use our software platform. There
have been over 1.5 million downloads of the Active Worlds browser.

         We believe that by continually enhancing our technology, developing new
applications for the three-dimensional Internet market, implementing an
extensive marketing effort and entering into strategic partnerships, we will be
able to achieve our goals. We believe that three-dimensional Internet
applications provide enhanced richness that will be of interest to users
developing Internet-based advertising, distance learning, training,
entertainment, e-commerce, leisure time and chat applications and other on-line
activities. As three-dimensional Internet technology becomes more accepted, we
believe that a market will develop for our technology in these areas.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2001 AS COMPARED WITH THREE MONTHS ENDED MARCH 31,
2000

      Our principal source of revenue to date has been from the license of our
uniservers and galaxervers and from development projects for our customers. We
also generate revenue from the annual $19.95 registration fee, which is paid by
our users who become citizens, and from technical support services which we
offer to our licensees. Revenue from advertising has been nominal. We recognize
revenue from membership fees and licenses ratably over the periods the
memberships and licenses are in effect.

      Revenue for the three months ended March 31, 2001 declined approximately
72% to $128,798 from $461,552 for the three months ended March 31, 2000. Of this
amount, approximately $31,300 was related to revenue recognized for development
work pursuant to our contracts with 3D Global & Siemens. The decrease over the
same period last year was primarily the result of less recognition of revenue in
our development contracts and a decrease in licensing of our uniservers and
Galaxervers.

                                       8
<PAGE>


      Our selling, general and administrative expenses in the three months ended
March 31, 2001 increased approximately 245% to $666,497 from $271,514 for the
same period in 2000. The increase was the result of an increase in promotion and
advertising, adding additional staff, and an increase in professional fees.

      Research and development expenses in the three months ended March 31, 2001
increased 9.5% to $40,038 from $38,077 for the same period in 2000. This
increase reflects a general increase in our research and development efforts.

      As a result of the foregoing, we sustained a net loss of $534,157, or
$(.063) per share (basic), for the three months ended March 31, 2001, as
compared with net income of $154,187, or a basic earnings per share of $.022 and
a diluted earnings per share of $.021 for the same period in 2000. Diluted
earnings (loss) per share of common stock has not been presented for the three
months ended March 31, 2001 since the effect of including the stock options and
warrants outstanding would be antidilutive.

LIQUIDITY AND CAPITAL RESOURCES

      At March 31, 2001, we had working capital of $3,454,683, of which
$3,177,781 was cash. The working capital reflected the remaining cash from our
May public offering, from which we received aggregate net proceeds of
approximately $4.8 million. We have no credit facility. Our cash balances
represent substantially our only current asset. At March 31, 2001, our accounts
receivable net of allowance for doubtful accounts was $4,098. At March 31, 2001,
our working capital was sufficient to meet our near cash requirements for the
next twelve months.

      We have a net operating loss carry forward in the amount of $2,320,365 as
of March 31, 2001, which may be used to reduce our income taxes in the future if
we recognize a profit. We cannot assure you we will make a profit.

      The Company is in the third phase of its contract with 3D Global. During
the current period a required payment for the third phase of the contract was
not made by 3D Global as required under the contract. The Company and 3D Global
are in the process of renegotiating the contract to allow 3D Global to pay a
required installment under phase III of the contract with 3D Global stock in
lieu of cash. The value of the stock to be received is based on the minimum
value under the original contract terms. However, the total value of the
original contract remains intact. Progress on the contract was decreased during
the current period due to the negotiation process.

      To the extent that our marketing effort or strategic partnership program
is not successful and these expenses exceed our expectations and we are unable
to generate cash flow from our operations, we may require additional funding
during the next twelve months. We may not be able to obtain financing when we
require it, and any financing may be offered on terms which are unacceptable to
us and may result in substantial dilution to our stockholders. If we are unable
to raise needed funds, we may have to reduce the scope or our marketing and
development activities, which would have a material adverse effect upon our
business and financial condition.

         We may also acquire other businesses or software, including other
companies that would help us expand our business in the area of the
three-dimensional Internet environments. However, we may acquire companies or
businesses in other industries if we are unable to develop our present business.
To the extent that we make any acquisition, we may require additional funds to
be used for the purchase price in the acquisitions, to integrate the acquired
business with our existing business and to fund the operations of the combined
businesses. In addition, we may incur expenses negotiating acquisitions which
are not consummated.

                                       9
<PAGE>


      Recent Accounting Pronouncements

      In December 1999, the Securities and Exchange Commission staff released
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition," to provide
guidance on the recognition, presentation, and disclosure of revenue in
financial statements. Changes in accounting to apply the guidance in SAB No. 101
may be accounted for as a change in accounting principle effective January 1,
2000. The adoption of SAB No. 101 did not have a material effect on the
Company's revenue recognition and results of operations.

         In March 2000, the Financial Accounting Standards Board ("FASB") issued
FASB Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation," (an Interpretation of Accounting Principles Bulletin Opinion No.
25 ("APB 25")) ("FIN 44"). FIN 44 provides guidance on the application of APB
25, particularly as it relates to options. The effective date of FIN 44 is July
1, 2000. The adoption of FIN 44 did not have a material effect on the Company's
financial position or results from operations.

                                       10
<PAGE>


PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS

         The Company is not involved in any material legal proceedings.

                                       11
<PAGE>


SIGNATURES

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

                             ACTIVEWORLDS.COM, INC.


Date: May 15, 2001              By: /S/ J.P. McCormick
                                ----------------------------
                                J. P. McCormick,
                                Chief Financial Officer