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 June 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 August 14, 2006.

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




<PAGE>


                                      INDEX
<TABLE>
<CAPTION>

                                                                                                              Page
<S>                                                                                                          <C>

                         PART I - FINANCIAL INFORMATION

ITEM 1.    Financial Statements                                                                                 1

           Condensed Consolidated Balance Sheets
                as of June 30, 2006 (unaudited) and December 31, 2005                                           1

           Condensed Consolidated Statements of Operations
                for the three months and six months ended June 30, 2006
                (unaudited) and 2005 (unaudited)                                                                2

           Condensed Consolidated Statements of Cash Flows for the six months
                ended June 30, 2006 (unaudited) and 2005 (unaudited)                                            3

           Notes to unaudited condensed consolidated interim financial statements                               4

ITEM 2.    Management's Discussion and Analysis of Interim Financial
                Condition and Results of Operations                                                             7

ITEM 3.    Controls and Procedures                                                                              8

                           PART II - OTHER INFORMATION

ITEM 1.    Legal Proceedings                                                                                    9

ITEM 2.    Unregistered Sales of Equity Securities and Use of Proceeds                                          9

ITEM 3.    Defaults upon Senior Securities                                                                      9

ITEM 4.    Submission of Matters to a Vote of Security Holders                                                  9

ITEM 5.    Other Information                                                                                    9

ITEM 6.    Exhibits                                                                                             9
</TABLE>

                                       ii
<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS



                               ACTIVEWORLDS CORP.

                           Consolidated Balance Sheet
<TABLE>
<CAPTION>

                                                                                       June 30,     December 31,
                                                                                         2006          2005 *
                                                                                     -----------    -----------
                                                                                     (Unaudited)
<S>                                                                                  <C>            <C>
                                     Assets

Current assets
    Cash                                                                             $   282,933    $   307,073
    Investments                                                                           85,839         85,839
                                                                                     -----------    -----------
              Total current assets                                                       368,772        392,912
                                                                                     -----------    -----------

              Total assets                                                           $   368,772    $   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                                                         6,600,635      6,293,135
    Accumulated deficit                                                               (6,195,242)    (5,869,102)
    Accumulated other comprehensive (loss)                                               (44,938)       (44,938)
                                                                                     -----------    -----------
              Total stockholders' equity                                                 365,772        384,412
                                                                                     -----------    -----------

              Total liabilities and stockholders' equity                             $   368,772    $   392,912
                                                                                     ===========    ===========
</TABLE>

*Derived from audited financial statements

                 See notes to consolidated financial statements

                                       1
<PAGE>



                               ACTIVEWORLDS CORP.

                      Consolidated Statement of Operations
<TABLE>
<CAPTION>

                                                      Three Months Ended         Six Months Ended
                                                           June 30                   June 30
                                                   ----------------------    ----------------------
                                                      2006         2005         2006         2005
                                                   ---------    ---------    ---------    ---------
                                                        (Unaudited)               (Unaudited)

<S>                                                <C>          <C>          <C>          <C>
Revenues                                           $    --      $    --      $    --      $    --
                                                   ---------    ---------    ---------    ---------
Operating expenses
    Selling, general and administrative expenses     163,715      164,744      326,140      326,878
    Research and development expenses                   --           --           --           --
                                                   ---------    ---------    ---------    ---------
              Total operating expenses               163,175      164,744      326,140      326,878
                                                   ---------    ---------    ---------    ---------
    Loss from operations                            (163,175)    (164,744)    (326,140)    (326,878)
                                                   ---------    ---------    ---------    ---------
    Loss before income taxes                        (163,175)    (164,744)    (326,140)    (326,878)
Income taxes                                            --           --           --           --
                                                   ---------    ---------    ---------    ---------
    Net loss                                       $(163,175)   $(164,744)   $(326,140)   $(326,878)
                                                   ---------    ---------    ---------    ---------
Net loss per share of common stock
    Basic                                          $   (.031)   $   (.031)   $   (.061)   $   (.061)
                                                   ---------    ---------    ---------    ---------
</TABLE>

                 See notes to consolidated financial statements

                                       2
<PAGE>


                               ACTIVEWORLDS CORP.

                      Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>

                                                                                    Six Months Ended
                                                                                        June 30
                                                                                ----------------------
                                                                                  2006         2005
                                                                                ---------    ---------
                                                                                     (Unaudited)
<S>                                                                             <C>          <C>
Operating activities
    Net loss                                                                    $(326,140)   $(326,878)
    Adjustment to reconcile net loss to net cash used in operating activities
       Stock warrants issued for services                                         307,500      307,500
    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                               (24,140)     (27,480)
                                                                                ---------    ---------

Net decrease in cash                                                              (24,140)     (27,480)
Cash at beginning of period                                                       307,073      346,823
                                                                                ---------    ---------

              Cash at end of period                                             $ 282,933    $ 319,343
                                                                                =========    =========
</TABLE>

                 See notes to consolidated financial statements


                                       3
<PAGE>


                               ACTIVEWORLDS CORP.

                   Notes to Consolidated Financial Statements
                                  June 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.

                                       4
<PAGE>
                               ACTIVEWORLDS CORP.

                   Notes to Consolidated Financial Statements
                                  June 30, 2006

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 at December 31, 2005
              resulting in a decrease of $6,036; no adjustment was necessary at
              June 30, 2006. Accordingly, the value of the investment at June
              30, 2006 and December 31, 2005 is $85,839.

Note 3 -      Income taxes

              At June 30, 2006, the Company has a net operating loss
              carryforward of approximately $3,304,000 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 $1,322,000 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
              Six Months Ended June 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 six months ended June 30, 2006 and 2005 since the effect
              of including the stock options and warrants outstanding would be
              antidilutive.

                                       5
<PAGE>
                               ACTIVEWORLDS CORP.

                   Notes to Consolidated Financial Statements
                                  June 30, 2006

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 $307,500 for the six months ended June
              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%

                                       6
<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.

                                       7
<PAGE>

RESULTS OF OPERATIONS

         We had no revenue for the quarters ended June 30, 2006 and 2005. The
loss from operations in the first half of 2006 was $326,140 was similar to the
loss from operations in the first half of 2005 of $326,878. In each half, the
primary cost was approximately $307,000 of non-cash expense related to the
amortization of warrants and the remainder consisted primarily of public company
expenses.

LIQUIDITY AND CAPITAL RESOURCES

         At June 30, 2006 we had total assets of $368,772, which includes
$282,933 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-QSB filed on May 15,
2006 and 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 June 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.

(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.

                                       8
<PAGE>

                           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


                                       9
<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 14, 2006 by
the undersigned, thereunto duly authorized.

                               ACTIVEWORLDS CORP.

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


                                       10