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, 2003

                          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)


                112 Baypoint Drive, San Rafael, California 94901
                ------------------------------------------------
                                 (415) 453-4868
                                 --------------
                          (Address and telephone number
                         of principal executive offices)


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

We had 5,319,790 shares of our common stock outstanding as of August 13, 2003.

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

<PAGE>

                                      INDEX
<TABLE>
<CAPTION>

                                                                                          Page
                         PART I - FINANCIAL INFORMATION
<S>        <C>                                                                              <C>
ITEM 1.    Financial Statements

           Condensed Consolidated Balance Sheets
                as of June 30, 2002 (unaudited) and December 31, 2001                       1

           Condensed Consolidated Statements of Income
                for the three and six months ended June 30, 2002 and 2001 (unaudited)       2

           Condensed Consolidated Statements of Cash Flows
                for the six months ended June 30, 2002 and 2001 (unaudited)                 3

           Notes to unaudited condensed consolidated interim financial statements         4 - 6

ITEM 2.    Management's Discussion and Analysis of Interim Financial
                Condition and Results of Operations                                       6 - 8

ITEM 3.    Controls and Procedures                                                          8


                           PART II - OTHER INFORMATION


ITEM 1.    Legal Proceedings                                                                8

ITEM 2.    Change in Securities                                                             8

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                                                 9
</TABLE>


                                      ii
<PAGE>


ITEM 1.  FINANCIAL STATEMENTS


                           Consolidated Balance Sheet
<TABLE>
<CAPTION>
                                                                       June 30,         December 31,
                                                                         2003              2002 *
                                                                      -----------       ------------
                                                                      (Unaudited)

<S>                                                                   <C>               <C>
                                     Assets

Current assets
    Cash                                                              $   298,532       $   346,213
    Due from Activeworlds, Inc.                                             6,916             6,916
    Prepaid expenses                                                       10,519            10,519
    Investments                                                            50,256            50,256
                                                                      -----------       -----------
              Total current assets                                        366,223           413,904
                                                                      -----------       -----------
              Total assets                                            $   366,223       $   413,904
                                                                      -----------       -----------

                      Liabilities and Stockholders' Equity
Current liabilities
    Accounts payable                                                  $     5,000       $    19,323
    Accrued liabilities                                                     8,000            10,000
                                                                      -----------       -----------
              Total current liabilities                                    13,000            29,323
                                                                      -----------       -----------
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,
      5,319,790 shares issued and outstanding                               5,320             5,320
    Additional paid-in capital                                          5,725,910         5,725,910
    Treasury stock                                                       (118,403)         (118,403)
    Accumulated deficit                                                (5,179,083)       (5,147,725)
    Accumulated other comprehensive income (loss)                         (80,521)          (80,521)
                                                                      -----------       -----------
              Total stockholders' equity                                  353,223           384,581
                                                                      -----------       -----------
              Total liabilities and stockholders' equity              $   366,223       $   413,904
                                                                      -----------       -----------
</TABLE>

See notes to consolidated financial statements

*Derived from audited financial statements

                                       1

<PAGE>


                      Consolidated Statement of Operations


<TABLE>
<CAPTION>

                                                      Three Months Ended            Six Months Ended
                                                             June 30                     June 30
                                                    -----------------------     -----------------------
                                                       2003          2002          2003          2002
                                                    ---------     ---------     ---------     ---------
                                                          (Unaudited)                 (Unaudited)

<S>                                                 <C>           <C>           <C>           <C>
Revenues                                            $      --     $ 119,659     $      --     $ 257,504
                                                    ---------     ---------     ---------     ---------

Operating expenses
    Selling, general and administrative expenses
                                                       12,983       415,585        31,358       741,095
   Research and development expenses                      --         97,422            --       202,947
                                                    ---------     ---------     ---------     ---------
              Total operating expenses                 12,983       513,007        31,358       944,042
                                                    ---------     ---------     ---------     ---------

    Loss from operations                              (12,983)     (393,348)      (31,358)     (686,538)

Interest income                                            --         5,156            --        12,650
                                                    ---------     ---------     ---------     ---------
    Loss before  (provision  for)  benefit  from
     income taxes                                     (12,983)     (388,192)      (31,358)     (673,888)
(Provision for) benefit from income taxes                  --            --            --            --
                                                    ---------     ---------     ---------     ---------

    Net loss                                        $ (12,983)    $(388,192)    $ (31,358)    $(673,888)
                                                    ---------     ---------     ---------     ---------

Net loss per share of common stock
    Basic                                           $   (.002)    $   (.046)    $   (.004)    $   (.079)
                                                    ---------     ---------     ---------     ---------
</TABLE>
See notes to consolidated financial statements

                                       2

<PAGE>

                      Consolidated Statement of Cash Flows


<TABLE>
<CAPTION>

                                                                                         Six Months Ended
                                                                                              June 30
                                                                                      --------------------
                                                                                      2003            2002
                                                                                   -----------     -----------
                                                                                           (Unaudited)

<S>                                                                                <C>             <C>
Operating activities
    Net (loss)                                                                     $   (31,358)    $  (673,888)
    Adjustment to reconcile net (loss) to net cash used in operating activities
       Depreciation and amortization                                                        --          18,405
       Changes in operating assets and liabilities which provided (used) cash
          Accounts receivable                                                               --          (2,716)
          Employee advances                                                                 --          (3,421)
          Prepaid expenses and other                                                        --          (9,975)
          Accounts payable                                                             (14,323)        (14,503)
          Accrued liabilities                                                           (2,000)        (39,565)
          Deferred revenue                                                                  --         (31,225)
                                                                                   -----------     -----------
              Net cash used in operating activities                                    (47,681)       (756,888)
                                                                                   -----------     -----------

Investing activities
    Purchases of property and equipment                                                     --          (1,434)
                                                                                   -----------     -----------
              Net cash used in investing activities                                         --          (1,434)
                                                                                   -----------     -----------

Financing activities
    Payments on capital lease obligation                                                    --            (878)
                                                                                   -----------     -----------
              Net cash used in financing activities                                         --            (878)
                                                                                   -----------     -----------

Net decrease in cash                                                                   (47,681)       (759,200)
Cash at beginning of period                                                            346,213       1,840,430
                                                                                   -----------     -----------

              Cash at end of period                                                $   298,532     $ 1,081,230
                                                                                   -----------     -----------

Supplemental disclosure information
    Cash paid for interest during the period                                       $        --     $         4
                                                                                   -----------     -----------
    Cash paid for income taxes during the period                                   $        --     $        --
                                                                                   -----------     -----------
</TABLE>

See notes to consolidated financial statements

3

<PAGE>

Note 1 -      Basis of presentation

              The accompanying 2003 and 2002 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, 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.

              During January 2002, the Company was notified by NASDAQ that the
              Company had not met the minimum requirements of the NASDAQ and
              would be delisted from the NASDAQ in 2002 unless the minimum
              requirements were satisfied. The Company was subsequently delisted
              from the NASDAQ.

              From January 1, 2002 through July 9, 2002, the Company suffered a
              substantial consolidated net loss and has net capital in an amount
              less than its net loss for 2002. The board of directors began
              negotiations with management of the subsidiary, Activeworlds,
              Inc., to sell the subsidiary to the management of Activeworlds,
              Inc. On July 10, 2002 Activeworlds Corp. entered into an Agreement
              and Plan of Exchange (the "Agreement"). Under the Agreement, the
              Company agreed to sell all of the issued and outstanding shares of
              common stock of its subsidiary, Activeworlds, Inc. to the
              Company's management as of the date of the Agreement (the "Former
              Management"). The Former Management agreed to sell the Company
              2,595,445 shares of the Company's common stock representing
              approximately 30% of the outstanding shares. Under the Agreement,
              the Former Management resigned, terminated their employment
              agreements and assumed all expenses associated with the business
              of Activeworlds, Inc., and the Company agreed to pay Former
              Management $425,000 and up to $15,000 of their legal fees. At the
              same time, in a separate transaction, Former Management agreed to
              sell 1,000,000 shares of common stock to a 10% stockholder (the
              "Stockholder"), contingent upon closing the transactions under the
              Agreement. The Agreement was subject to the approval of a majority
              of the outstanding shares of common stock of the Company. The
              Former Management issued irrevocable proxies to the Stockholder
              who had the power to vote a majority of outstanding shares and
              voted in favor of sale of Activeworlds, Inc. to the Former
              Management. On September 9, 2002 the sale of Activeworlds, Inc.
              was approved by the consent of the majority of outstanding shares
              of common stock and the transactions under the Agreement closed.
              In accordance with the terms of the agreement, the subsidiary was
              sold to the former management effective as of the date of
              agreement (July 10, 2002).

                                       4
<PAGE>

              Non-cash items in connection with the sale of the subsidiary are
              as follows:

                   Property and equipment (net of accumulated
                    depreciation and amortization of $199,746)       $ (224,163)
                   Deferred revenue                                     185,602
                   Note receivable for shares issued                     (6,500)
                                                                     ----------
                                                                     $  (45,061)
                                                                     ----------

              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 $130,770.
              The fair market value of the investment had decreased by $80,521
              at June 30, 2003 and December 31, 2002. Accordingly, the value of
              the investment has been adjusted to $50,256 at June 30, 2003 and
              December 31, 2002.

Note 3 -      Income taxes

              At June 30, 2003, the Company has a net operating loss
              carryforward of approximately $4,770,000 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 $1,911,000 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)

                              2003                         5,319,790

                              2002                         8,515,235

              Diluted net (loss) per share of common stock has not been
              presented for the six months ended June 30, 2003 and 2002
              since the effect of including the stock options and warrants
              outstanding would be antidilutive.

                                       5
<PAGE>

Note 5 -      Revenue Sharing Agreement - litigation

              During 2000 the Company entered into an agreement with Internet
              on-line service provider to promote and market the Activeworlds
              Corp. services to the service provider's members. The term of the
              agreement was one year. Revenue from new members generated under
              the agreement was shared equally. The agreement required
              Activeworlds Corp. to make four quarterly installments in the
              amount of $112,500 each as a guarantee against further revenues
              earned from memberships derived from the on-line provider.
              Previously, the Company made three installments in the total
              amount of $337,500. Approximately $18,000 was received from
              memberships under the contract which expired in 2001. The Company
              entered into litigation regarding adjustments to the contract due
              to the lack of registrations received under the agreement. On July
              9, 2003 a settlement was reached between the parties. Under the
              settlement agreement, the on-line provider paid the Company
              $105,000 to settle all claims associated with the litigation.


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.

         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.

         Ourplan 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.

                                       6
<PAGE>

RESULTS OF OPERATIONS

         Three Months Ended June 30, 2003 Compared to Three Months ended June
30, 2002.

         Net Revenues. During the quarter ended June 30, 2003, net revenues
declined to $0 from $119,659 from the same period last year.

         Expenses. Selling, general and administrative expenses declined
substantially to $12,983 from $415,585 during the same period last year.
Research and development expenses decreased during the quarter ended June 30,
2003 to $0 from $97,422 during the Second quarter in 2002.

         Net Loss. The net loss for the second quarter of 2003 declined
substantially to $12,983 from $388,192 for the quarter ended June 30, 2002.


         Six Months Ended June 30, 2003 Compared to Six Months ended June 30,
2002.

         Net Revenues. During the six months ended June 30, 2003, net revenues
declined to $0 from $257,504 from the same period last year.

         Expenses. Selling, general and administrative expenses declined
substantially to $31,358 from $741,095 during the same period last year.
Research and development expenses decreased during the six months ended June 30,
2003 to $0 from $202,947 during the same period in 2002.

         Net Loss. The net loss for the six months ended June 30, 2003 declined
substantially to $31,358 from $673,888 for the same period in 2002.


LIQUIDITY AND CAPITAL RESOURCES

         For the six months ended June 30, 2003, net cash used by operating
activities was $47,681 in contrast to $756,888 for the corresponding period in
2002.

         In the six months ended June 30, 2003, net cash used by financing
activities was $0, while in the six months ended June 30, 2002, net cash of $878
was used.

         During the six months ended June 30, 2003, net cash used in investing
activities was $0 in contrast to $1,434 for the corresponding period in 2002.

         Working capital decreased to $298,532 at June 30, 2003 from 346,213 at
December 31, 2002.We believe our cash will be sufficient for more than the next
12 months because we will have no business operations and only minimal costs.
However, we are actively looking to acquire an existing business in order to
provide an opportunity to create stockholder value. Depending upon the business
and financial condition of any company we acquire, we may need future financing.

                                       7
<PAGE>

FORWARD-LOOKING STATEMENTS

         The statement made above relating to the adequacy of our working
capital are forward-looking statements 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

         Our chief executive officer and chief financial officer evaluated the
effectiveness of our disclosure controls and procedures (as defined in Rule
13a-14(c) under the Securities Exchange Act of 1934, as amended) within 90 days
of the filing date of this report (the "Evaluation Date") and, based on that
evaluation, concluded that, as of the Evaluation Date, the our disclosure
controls and procedures were effective in timely alerting them to the material
information relating to us that is required to be disclosed in our reports under
the Securities Exchange Act of 1934, as amended, within the time periods
specified in the Securities and Exchange Commission's rules and forms.

         Since the Evaluation Date, there have not been any significant changes
to our internal controls, including any corrective actions with regard to
significant deficiencies and material weaknesses.



                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         Not applicable.

ITEM 2. CHANGES IN SECURITIES

         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.

                                       8
<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
         (a)      EXHIBIT INDEX



Exhibit
Number     Description
------   ---------------------------------------------------------------------
31.1     certification of CEO
31.2     certification of CFO
32.1     Section 1350 certification of CEO
32.2     Section 1350 certification of CFO


         (b)      REPORTS ON FORM 8-K.

                  None


                                       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, 2003 by
the undersigned, thereunto duly authorized.


                                       ACTIVEWORLDS CORP.


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





                                       10