<SUBMISSION>
<ACCESSION-NUMBER>0001125282-02-003527
<TYPE>10-Q/A
<PUBLIC-DOCUMENT-COUNT>5
<PERIOD>20020630
<FILING-DATE>20021115
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>ACTV INC /DE/
<CIK>0000854152
<ASSIGNED-SIC>3663
<IRS-NUMBER>942907258
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q/A
<ACT>34
<FILE-NUMBER>001-10377
<FILM-NUMBER>02830562
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>1270 AVE OF THE AMERICAS
<CITY>NEW YORK
<STATE>NY
<ZIP>10020
<PHONE>2122622571
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>12270 AVE OF THE AMERICAS #2401
<STREET2>12270 AVE OF THE AMERICAS #2401
<CITY>NEW YORK
<STATE>NY
<ZIP>10020
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-Q/A
<SEQUENCE>1
<FILENAME>b321447_10qa.htm
<DESCRIPTION>QUARTERLY REPORT
<TEXT>
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   <title>ACTV, Inc. &#151; 10-Q/A &#151; EDGAR Services Provided by St Ives Burrups</title>
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<p align="center"> <b><font size=4 face="serif">UNITED
  STATES</font></b><br>
  <b><font size=4 face="serif">SECURITIES AND
  EXCHANGE COMMISSION</font></b><br>
  <b><font face="serif">Washington, D.C. 20549</font></b></p>
<hr align="center" width="25%" noshade>
<p align="center"> <b><font size=4>FORM 10-Q/A</font></b></p>
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<br>
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  <tr valign="top">
    <td width="6%"><img src="tickedbox.gif" title="checked box"></td>
    <td align="left"><b><font size=2>AMENDMENT NO. 1 TO QUARTERLY REPORT PURSUANT
      TO SECTION </font><font size=2 face="serif">13
      OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934</font></b></td>
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</table>
<p align="center"><b><font size=2 face="serif">For
  the quarterly period ended June 30, 2002</font></b></p>
<hr align="center" width="25%" noshade>
<p align="center"> <b><u><font size=3>ACTV, Inc.</font></u></b><br>
  <font size=2>(Exact name of registrant as specified in its charter)</font></p>
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<br>
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  <tr>
    <td align="center"><b><font size=2 face="serif"><u>Delaware</u></font></b></td>
    <td align="center" width="50%"><b><font size=2 face="serif"><u>94-2907258</u></font></b></td>
  </tr>
  <tr>
    <td align="center"><font size=2 face="serif">(State
      or other jurisdiction of</font><br> <font size=2 face="serif">incorporation
      or organization)</font></td>
    <td align="center"><font size=2 face="serif">(I.R.S.
      Employer<br>
      </font><font size=2 face="serif">Identification
      No.)</font></td>
  </tr>
  <tr>
    <td align="center">&nbsp;</td>
    <td align="center">&nbsp;</td>
  </tr>
  <tr>
    <td align="center" valign="bottom"><b><font size=2 face="serif">233
      Park Avenue South<br>
      </font></b><b><font size=2 face="serif"><u>New
      York, New York</u></font></b></td>
    <td align="center" valign="bottom"><b><font size=2 face="serif"><u>10003</u></font></b></td>
  </tr>
  <tr>
    <td align="center"><font size=2 face="serif">(Address
      of principal executive offices)</font></td>
    <td align="center"><font size=2 face="serif">(Zip
      Code)</font></td>
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    <td align="center">&nbsp;</td>
    <td align="center">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2" align="center"><b><u><font size=2 face="serif">(212)
      497-7000</font></u></b><font size=2 face="serif">&nbsp;</font></td>
  </tr>
  <tr>
    <td colspan="2" align="center"><font size=2 face="serif">(Registrant&#146;s
      telephone number, including area code)</font> </td>
  </tr>
</table>
<div style="text-indent: 3%">
  <p> <font size=2 face="serif">Indicate by
    check mark whether the registrant (1) has filed all reports required to be
    filed by Sections 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. </font><font size=2>Yes&nbsp;<img src="tickedbox.gif" title="checked box">
    No&nbsp;<img src="emptybox.gif" title="empty box"></font></p><font size=2 face="serif">

  <p> <font face="serif"></font><font size=2 face="serif">As
    of August 12, 2002, there were 55,931,181 shares of the registrant&#146;s
    common stock outstanding.</font></p>
  <p> <font size=2 face="serif">The amendment
    No. 1 for Form 10-Q is being filed to give effect to the restatement of the
    Company&#146;s consolidated financial statements as discussed in Note 14 to
    the financial statements.</font></p>
</font></div>
<font size=2 face="serif">
<p>&nbsp;</p>
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 <a name="p2"></a>
<p> <b><font size=2 face="serif">Item 1.&nbsp;Financial Statements</font></b><font face="serif"></font>
</p>
<p align="center"><b><font size=2 face="serif">ACTV, INC. AND SUBSIDIARIES<br>
  CONSOLIDATED BALANCE SHEETS</font></b></p>
<table width="80%" border=0 align="center" cellpadding=0 cellspacing=0>
  <tr>
    <td>&nbsp;</td>
    <td align="center" colspan=2><b><font size=1 face="serif">June&nbsp;30,&nbsp;2002</font></b></td>
    <td align="center">&nbsp;</td>
    <td colspan=2 align="center"><b><font size=1 face="serif">December&nbsp;31,&nbsp;2001</font></b></td>
    <td align="center">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="center"><hr noshade size=1></td>
    <td align="center"><hr noshade size=1></td>
    <td align="center">&nbsp;</td>
    <td align="center"><hr noshade size=1></td>
    <td align="center"><hr noshade size=1></td>
    <td align="center">&nbsp;</td>
  </tr>
  <tr>
    <td align="center"><b><font size=2 face="serif">ASSETS</font></b></td>
    <td>&nbsp;</td>
    <td align="center"><b><font size=1 face="serif">(Unaudited)</font></b></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2 face="serif">Current assets:</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Cash
        and cash equivalents</font></div></td>
    <td width="2%" align="left"><font size=2 face="serif">$</font></td>
    <td width="10%" align="right"><font size=2 face="serif">46,623,473</font></td>
    <td width="2%"></td>
    <td width="2%" align="left"><font size=2 face="serif">$</font></td>
    <td width="10%" align="right"><font size=2 face="serif">69,035,707</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Short-term
        investments</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">17,632,019</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">8,951,695</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Accounts
        receivable-net</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">1,208,149</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">1,319,805</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Other</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">1,818,373</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">1,696,617</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td> <hr noshade size=1></td>
    <td> <hr noshade size=1></td>
    <td>&nbsp;</td>
    <td> <hr noshade size=1></td>
    <td> <hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 9%; text-indent: -3%"><font size=2 face="serif">Total
        current assets</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">67,282,014</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">81,003,824</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2 face="serif">Property and equipment-net</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">5,272,041</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">6,344,631</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td><font size=2 face="serif">Other assets:</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Restricted
        cash</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">484,913</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">484,913</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Investment
        in warrant</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">6,975,148</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">16,255,355</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Investments-other</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">7,426,414</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">7,397,776</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Patents
        and patents pending</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">8,496,520</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">8,425,889</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Software
        development costs</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">5,652,852</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">5,310,100</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Goodwill</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">12,935,701</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">12,935,701</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Other</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">1,308,343</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">1,429,132</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td> <hr noshade size=1></td>
    <td> <hr noshade size=1></td>
    <td>&nbsp;</td>
    <td> <hr noshade size=1></td>
    <td> <hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 9%; text-indent: -3%"><font size=2 face="serif">Total
        other assets</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">43,279,891</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">52,238,866</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td> <hr noshade size=1></td>
    <td> <hr noshade size=1></td>
    <td>&nbsp;</td>
    <td> <hr noshade size=1></td>
    <td> <hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 12%; text-indent: -3%"><font size=2 face="serif">Total
        assets</font></div></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">115,833,946</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">139,587,321</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td> <hr noshade size=2></td>
    <td> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td> <hr noshade size=2></td>
    <td> <hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="center"><b><font size=2 face="serif">LIABILITIES AND STOCKHOLDERS&#146;
      EQUITY</font></b></td>
    <td><b></b></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2 face="serif">Current liabilities:</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Accounts
        payable and accrued expenses</font></div></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">3,489,051</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">5,664,088</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Deferred
        revenue</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">3,653,444</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">4,068,450</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td> <hr noshade size=1></td>
    <td> <hr noshade size=1></td>
    <td>&nbsp;</td>
    <td> <hr noshade size=1></td>
    <td> <hr noshade size=1></td>
    <td></td>
  </tr>
  <tr valign="bottom">
    <td> <div style="margin-left: 9%; text-indent: -3%"><font size=2 face="serif">Total
        current liabilities</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">7,142,495</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">9,732,538</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td><font size=2 face="serif">Deferred revenue</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">65,156,732</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">66,966,638</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2 face="serif">Minority interest</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">1,509,252</font></td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">3,215,652</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td><font size=2 face="serif">Stockholders&#146; equity:</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <div style="margin-left: 3%; text-indent: -3%"><font size=2 face="serif">Common
        stock, $0.10 par value, 200,000,000 shares authorized: issued and outstanding
        55,929,560 at June 30, 2002 and 55,881,938 at December 31, 2001 </font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">5,592,956</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">5,588,194</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Additional
        paid-in capital</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">311,468,567</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">317,496,700</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Stockholder
        loans</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(204,499</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(339,035</font></td>
    <td><font size=2 face="serif">)</font></td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 6%; text-indent: -3%"> <font size=2 face="serif">Accumulated
        deficit</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(274,831,557</font></td>
    <td align="left"><font size=2 face="serif">)</font></td>
    <td><font size=2 face="serif">&nbsp; </font></td>
    <td align="right"><font size=2 face="serif">(263,073,366</font></td>
    <td><font size=2 face="serif"> )</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td> <hr noshade size=1></td>
    <td> <hr noshade size=1></td>
    <td>&nbsp;</td>
    <td> <hr noshade size=1></td>
    <td> <hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 9%; text-indent: -3%"><font size=2 face="serif">Total
        stockholders&#146; equity</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">42,025,467</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">59,672,493</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td> <hr noshade size=1></td>
    <td> <hr noshade size=1></td>
    <td>&nbsp;</td>
    <td> <hr noshade size=1></td>
    <td> <hr noshade size=1></td>
  </tr>
  <tr valign="bottom">
    <td> <div style="margin-left: 12%; text-indent: -3%"><font size=2 face="serif">Total
        liabilities and stockholders&#146; equity</font></div></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">115,833,946</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">139,587,321</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="center"> <hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="center"> <hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td align="right">&nbsp;</td>
  </tr>
</table>
<p align="center"> <i><font size=2 face="serif">See notes to consolidated financial
  statements.</font></i></p>
<p align="center"> <font size=2 face="serif">2</font></p>
<hr noshade align="center" width="100%" size=2>
<div style="page-break-before:always"></div>
<page>
 <a name="p3"></a>
<p align="center"><b><font size=2 face="serif">ACTV, INC. AND SUBSIDIARIES</font></b>
  <br>
  <b><font size=2 face="serif">CONSOLIDATED STATEMENTS OF OPERATIONS</font></b>
  <br>
  <b><font size=2 face="serif">(Unaudited)</font></b><font face="serif"></font></p>
<table width=100% border=0 cellspacing=0 cellpadding=0>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td colspan=5 align="center"><b><font size=1 face="serif">For the Three Months
      Ended June 30,</font></b></td>
    <td align="center">&nbsp;</td>
    <td colspan=5 align="center"><b><font size=1>For the Six Months Ended June&nbsp;30,</font></b></td>
    <td align="center">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td colspan=2 align="center"><b><font size=1>2002</font></b></td>
    <td align="center">&nbsp;</td>
    <td colspan=2 align="center"><b><font size=1>2001</font></b></td>
    <td align="center">&nbsp;</td>
    <td colspan=2 align="center"><b><font size=1>2002</font></b></td>
    <td align="center">&nbsp;</td>
    <td colspan=2 align="center"><b><font size=1>2001</font></b></td>
    <td align="center">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td><font size=2>Revenue</font></td>
    <td width="2%" align="left"><font size=2>$</font></td>
    <td width="10%" align="right"><font size=2>3,233,518</font></td>
    <td width="2%">&nbsp;</td>
    <td width="2%" align="left"><font size=2>$</font></td>
    <td width="10%" align="right"><font size=2>4,226,452</font></td>
    <td width="2%">&nbsp;</td>
    <td width="2%" align="left"><font size=2>$</font></td>
    <td width="10%" align="right"><font size=2>6,419,939</font></td>
    <td width="2%">&nbsp;</td>
    <td width="2%" align="left"><font size=2>$</font></td>
    <td width="10%" align="right"><font size=2>7,499,894</font></td>
    <td width="1%">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2>Costs and expenses:</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 6%; text-indent: -3%"><font size=2>Selling, general
        and administrative</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>8,553,363</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>12,657,243</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>14,603,779</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>26,746,378</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td><div style="margin-left: 6%; text-indent: -3%"><font size=2>Depreciation
        and amortization</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>1,399,491</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>1,466,813</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>2,704,952</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>2,886,335</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 6%; text-indent: -3%"><font size=2>Amortization
        of goodwill</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>1,042,308</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>1,460,806</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td><div style="margin-left: 6%; text-indent: -3%"><font size=2>Stock-based
        compensation reduction</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>(4,121,649</font></td>
    <td><font size=2> )</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>(6,002,831</font></td>
    <td><font size=2>)</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>(2,819,155</font></td>
    <td><font size=2> )</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 9%; text-indent: -3%"><font size=2>Total costs
        and expenses</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>9,952,854</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>11,044,715</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>11,305,900</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>28,274,364</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td><font size=2>Loss from operations</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>(6,719,336</font></td>
    <td><font size=2> )</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>(6,818,263</font></td>
    <td><font size=2> )</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>(4,885,961</font></td>
    <td><font size=2> )</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>(20,774,470</font></td>
    <td><font size=2> )</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2>Interest income</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>413,037</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>1,171,229</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>701,577</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>2,791,638</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td><font size=2>Other (expense)/income</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>(6,820,334</font></td>
    <td><font size=2> )</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>12,955,697</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>(9,280,207</font></td>
    <td><font size=2>)</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>4,220,285</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 3%; text-indent: -3%"><font size=2>(Loss)/income
        before minority interest and cumulative effect of accounting change</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>(13,126,633</font></td>
    <td><font size=2> )</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>7,308,663</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>(13,464,591</font></td>
    <td><font size=2> )</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>(13,762,547</font></td>
    <td><font size=2> )</font></td>
  </tr>
  <tr valign="bottom">
    <td bgcolor="#eeeeee"><font size=2>Minority interest - subsidiaries</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2>917,584</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2>819,157</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2>1,706,400</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2>1,513,771</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 3%; text-indent: -3%"><font size=2>(Loss)/income
        before cumulative effect of accounting change</font></div></td>
    <td align="left"><font size=2>$</font></td>
    <td align="right"><font size=2>(12,209,049</font></td>
    <td><font size=2> )</font></td>
    <td align="left"><font size=2>$</font></td>
    <td align="right"><font size=2>8,127,820</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2>$</font></td>
    <td align="right"><font size=2>(11,758,191</font></td>
    <td><font size=2> )</font></td>
    <td align="left"><font size=2>$</font></td>
    <td align="right"><font size=2>(12,248,776</font></td>
    <td><font size=2> )</font></td>
  </tr>
  <tr valign="bottom">
    <td bgcolor="#eeeeee"><div style="margin-left: 3%; text-indent: -3%"><font size=2>Cumulative
        transition effect of adopting SFAS No. 133</font></div></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2>&#151;</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2>&#151;</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2>&#151;</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2>(58,732,197</font></td>
    <td bgcolor="#eeeeee"><font size=2> )</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2>Net (loss)/income</font></td>
    <td align="left"><font size=2>$</font></td>
    <td align="right"><font size=2>(12,209,049</font></td>
    <td><font size=2> )</font></td>
    <td align="left"><font size=2>$</font></td>
    <td align="right"><font size=2>8,127,820</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2>$ </font></td>
    <td align="right"><font size=2>(11,758,191</font></td>
    <td><font size=2>)</font></td>
    <td align="left"><font size=2>$</font></td>
    <td align="right"><font size=2>(70,980,973</font></td>
    <td><font size=2> )</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td colspan=2><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2>Net (loss)/income per share:</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 6%; text-indent: -3%"><font size=2>Basic</font></div></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td><div style="margin-left: 9%; text-indent: -3%"><font size=2>Before cumulative
        effect of accounting change</font></div></td>
    <td align="left"><font size=2>$</font></td>
    <td align="right"><font size=2>(0.22</font></td>
    <td><font size=2> )</font></td>
    <td align="left"><font size=2>$</font></td>
    <td align="right"><font size=2>0.15</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>$ </font></td>
    <td align="right"><font size=2>(0.21</font></td>
    <td><font size=2> )</font></td>
    <td align="left"><font size=2>$</font></td>
    <td align="right"><font size=2>(0.23</font></td>
    <td><font size=2> )</font></td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 9%; text-indent: -3%"><font size=2>Cumulative
        transition effect of adopting SFAS No. 133</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>(1.08</font></td>
    <td><font size=2> )</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td><div style="margin-left: 9%; text-indent: -3%"><font size=2>Basic net
        (loss)/income per share</font></div></td>
    <td align="left"><font size=2>$</font></td>
    <td align="right"><font size=2>(0.22</font></td>
    <td><font size=2> )</font></td>
    <td align="left"><font size=2>$</font></td>
    <td align="right"><font size=2>0.15</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2>$ </font></td>
    <td align="right"><font size=2>(0.21</font></td>
    <td><font size=2> )</font></td>
    <td align="left"><font size=2>$</font></td>
    <td align="right"><font size=2>(1.31</font></td>
    <td><font size=2> )</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td colspan=2><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 6%; text-indent: -3%"><font size=2>Diluted</font></div></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 9%; text-indent: -3%"><font size=2>Before cumulative
        effect of accounting change</font></div></td>
    <td align="left"><font size=2>$</font></td>
    <td align="right"><font size=2>(0.22</font></td>
    <td><font size=2> )</font></td>
    <td align="left"><font size=2>$</font></td>
    <td align="right"><font size=2>0.14</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2>$ </font></td>
    <td align="right"><font size=2>(0.21 </font></td>
    <td><font size=2>)</font></td>
    <td align="left"><font size=2>$</font></td>
    <td align="right"><font size=2>(0.23</font></td>
    <td><font size=2> )</font></td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td><div style="margin-left: 9%; text-indent: -3%"><font size=2>Cumulative
        transition effect of adopting SFAS No. 133</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>(1.08</font></td>
    <td><font size=2> )</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 9%; text-indent: -3%"><font size=2>Diluted net
        (loss)/income per share</font></div></td>
    <td align="left"><font size=2>$</font></td>
    <td align="right"><font size=2>(0.22</font></td>
    <td><font size=2> )</font></td>
    <td align="left"><font size=2>$</font></td>
    <td align="right"><font size=2>0.14</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2>$ </font></td>
    <td align="right"><font size=2>(0.21</font></td>
    <td><font size=2> )</font></td>
    <td align="left"><font size=2>$</font></td>
    <td align="right"><font size=2>(1.31</font></td>
    <td><font size=2> )</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td colspan=2><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td><font size=2>Shares used in basic calculations</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>55,936,341</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>55,916,619</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>55,910,282</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>54,147,428</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2>Shares used in diluted calculations</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>55,936,341</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>60,107,307</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>55,910,282</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2>54,147,428</font></td>
    <td>&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<p align="center"> <i><font size=2 face="serif">See notes to consolidated financial
  statements.</font></i><font face="serif"></font></p>
<p align="center"> <font size=2 face="serif">3</font> </p>
<hr noshade align="center" width="100%" size=2>
<div style="page-break-before:always"></div>
<page>
 <a name="p4"></a>
<p align="center"> <b><font size=2 face="serif">ACTV, INC. AND SUBSIDIARIES<br>
  </font></b><b><font size=2 face="serif">CONSOLIDATED STATEMENTS OF CASH FLOWS<br>
  </font></b><b><font size=2 face="serif">(Unaudited)</font></b><font face="serif"></font>
</p>
<table width=80% border=0 align="center" cellpadding=0 cellspacing=0>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td colspan=5 align="center"><b><font size=1 face="serif">For the Six Months<br>
      </font></b><b><font size=1 face="serif">Ended June 30,</font></b></td>
    <td align="center">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td colspan=2 align="center"> <hr noshade size=1></td>
    <td align="center">&nbsp;</td>
    <td colspan=2 align="center"> <hr noshade size=1></td>
    <td align="center">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td colspan=2 align="center"><b><font size=1 face="serif">2002</font></b></td>
    <td align="center">&nbsp;</td>
    <td colspan=2 align="center"><b><font size=1 face="serif">2001</font></b></td>
    <td align="center">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td colspan=2 align="center"> <hr noshade size=1></td>
    <td align="center">&nbsp;</td>
    <td colspan=2 align="center"> <hr noshade size=1></td>
    <td align="center">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2 face="serif">Cash flows from operating activities:</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td bgcolor="#eeeeee"><font size=2 face="serif">Net loss</font></td>
    <td width="2%"><font size=2 face="serif">$</font></td>
    <td width="10%" align="right"><font size=2 face="serif">(11,758,191</font></td>
    <td width="2%"><font size=2 face="serif"> )</font></td>
    <td width="2%"><font size=2 face="serif">$</font></td>
    <td width="10%" align="right"><font size=2 face="serif">(70,980,973</font></td>
    <td width="2%"><font size=2 face="serif"> )</font></td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Adjustments
        to reconcile net loss to net cash used in operations:</font></div></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 6%; text-indent:-3%"><font size=2 face="serif">Cumulative
        transition effect of adopting SFAS No. 133</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">58,732,197</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Change
        in fair value of warrant</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">9,280,207</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(4,220,285</font></td>
    <td><font size=2 face="serif"> )</font></td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Depreciation
        and amortization</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2,704,952</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">4,347,141</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Deferred
        compensation - other</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">75,000</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Stock-based
        compensation</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(6,002,831</font></td>
    <td><font size=2 face="serif"> )</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(2,819,155</font></td>
    <td><font size=2 face="serif"> )</font></td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Amortization
        of deferred revenue</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(1,809,906</font></td>
    <td><font size=2 face="serif"> )</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(1,809,906</font></td>
    <td><font size=2 face="serif"> )</font></td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Common
        stock issued in lieu of cash payment</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">89,156</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">1,767,275</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Deferred
        revenue</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(415,006</font></td>
    <td><font size=2 face="serif"> )</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">138,304</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Minority
        interest</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(1,706,400</font></td>
    <td><font size=2 face="serif"> )</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(1,513,771</font></td>
    <td><font size=2 face="serif"> )</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2 face="serif">Changes in assets and liabilities:</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td bgcolor="#eeeeee"> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Accounts
        receivable</font></div></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">111,656</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(1,528,965</font></td>
    <td bgcolor="#eeeeee"><font size=2 face="serif"> )</font></td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Other
        assets</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(106,676</font></td>
    <td><font size=2 face="serif"> )</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(2,097,101</font></td>
    <td><font size=2 face="serif"> )</font></td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Accounts
        payable and accrued expenses</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(2,175,037</font></td>
    <td><font size=2 face="serif"> )</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(957,675</font></td>
    <td><font size=2 face="serif"> )</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td> <hr noshade size=1></td>
    <td> <hr noshade size=1></td>
    <td>&nbsp;</td>
    <td> <hr noshade size=1></td>
    <td> <hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 9%; text-indent: -3%"><font size=2 face="serif">Net
        cash used in operating activities</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(11,788,076</font></td>
    <td><font size=2 face="serif"> )</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(20,867,914</font></td>
    <td><font size=2 face="serif"> )</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2 face="serif">Cash flows from investing activities:</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Investment
        in short-term investments</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(8,680,324</font></td>
    <td><font size=2 face="serif"> )</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Investment
        in patents</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(399,687</font></td>
    <td><font size=2 face="serif"> )</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(567,499</font></td>
    <td><font size=2 face="serif"> )</font></td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Investment
        in property and equipment</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(831,599</font></td>
    <td><font size=2 face="serif"> )</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(5,892,035</font></td>
    <td><font size=2 face="serif"> )</font></td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Investment
        in software development costs</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(708,750</font></td>
    <td><font size=2 face="serif"> )</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(2,192,252</font></td>
    <td><font size=2 face="serif"> )</font></td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Strategic
        investments</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(28,638</font></td>
    <td><font size=2 face="serif"> )</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(5,217,349</font></td>
    <td><font size=2 face="serif"> )</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 9%; text-indent: -3%"><font size=2 face="serif">Net
        cash used in investing activities</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(10,648,998</font></td>
    <td><font size=2 face="serif"> )</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(13,869,135</font></td>
    <td><font size=2 face="serif"> )</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp; </td>
    <td> <hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2 face="serif">Cash flows from financing activities:</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Transfer
        to restricted cash</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(1,066,278</font></td>
    <td><font size=2 face="serif"> )</font></td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Net
        proceeds from equity financings</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">6,089</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">106,320</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td bgcolor="#eeeeee"> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Repayment
        of stockholders loans</font></div></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">18,751</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">35,910</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 9%; text-indent: -3%"><font size=2 face="serif">Net
        cash provided by/(used in) financing activities</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">24,840</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(924,048</font></td>
    <td><font size=2 face="serif"> )</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td><font size=2 face="serif">Net decrease in cash and cash equivalents</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(22,412,234</font></td>
    <td><font size=2 face="serif"> )</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(35,661,097</font></td>
    <td><font size=2 face="serif"> )</font></td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Cash
        and cash equivalents, beginning of period</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">69,035,707</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">122,488,041</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td align="right"><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td align="right"><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Cash
        and cash equivalents, end of period</font></div></td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">46,623,473</font></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">86,826,944</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
</table>
<p><font size=2 face="serif"><b><font size=2 face="serif">Supplemental Disclosure
  to the Consolidated Statements of Cash Flows</font></b></font></p>
<p><font size=2 face="serif">The following schedule provides additional information
  concerning retirement of common stock and acquisitions:</font><font face="serif"></font></p>
<table width=80% border=0 align="center" cellpadding=0 cellspacing=0>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td colspan=5 align="center"><b><font size=1 face="serif">For the Six Months
      Ended June 30,</font></b></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td colspan=5 align="center"><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td colspan=2 align="center"><b><font size=1 face="serif">2002</font></b></td>
    <td>&nbsp;</td>
    <td colspan=2 align="center"><b><font size=1 face="serif">2001</font></b></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td colspan=2 align="center"><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td colspan=2 align="center"><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td bgcolor="#eeeeee"><font size=2 face="serif">Retirement of Common Stock:</font></td>
    <td width="2%" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td width="10%" align="right" bgcolor="#eeeeee"><font size=2 face="serif">115,786</font></td>
    <td width="2%" bgcolor="#eeeeee">&nbsp;</td>
    <td width="2%" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td width="10%" align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,520,000</font></td>
    <td width="2%" bgcolor="#eeeeee">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2 face="serif">Purchase Acquisitions:</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Assets
        acquired (excluding cash)</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2,089,071</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td bgcolor="#eeeeee"> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Liabilities
        assumed</font></div></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">2,695,524</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Market
        value of shares issued</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">27,475,090</font></td>
    <td>&nbsp;</td>
  </tr>
</table>
<p align="center"> <i><font size=2 face="serif">See notes to consolidated financial
  statements.</font></i> </p>
<p align="center"> <font size=2 face="serif">4</font>&nbsp;</p>
<hr noshade align="center" width="100%" size=2>
<div style="page-break-before:always"></div>
<page>
 <a name="p5"></a>
<p align="center"> <b><font size=2 face="serif">ACTV, INC. AND SUBSIDIARIES</font></b><br>
  <b><font size=2 face="serif">CONSOLIDATED STATEMENTS OF STOCKHOLDERS&#146; EQUITY</font></b><br>
  <b><font size=2 face="serif">(Unaudited)</font></b><font face="serif"></font>
</p>
<table width=100% border=0 cellpadding=0 cellspacing=0>
  <tr valign="bottom">
    <td rowspan="3">&nbsp;</td>
    <td colspan=4 align="center"><b><font size=1 face="serif">Common Stock</font></b></td>
    <td rowspan="3" align="center">&nbsp;</td>
    <td colspan=2 rowspan="3" align="center"><b><font size=1 face="serif">Stockholder</font></b><br>
      <b><font size=1 face="serif">Loans</font></b></td>
    <td rowspan="3" align="center">&nbsp;</td>
    <td colspan=2 rowspan="3" align="center"><b><font size=1 face="serif">Additional&nbsp;Paid&nbsp;in</font></b><br>
      <b><font size=1 face="serif">Capital</font></b></td>
    <td rowspan="3" align="center">&nbsp;</td>
    <td colspan=2 rowspan="3" align="center"><b><font size=1 face="serif">Accumulated</font></b><br>
      <b><font size=1 face="serif">Deficit</font></b></td>
    <td rowspan="3" align="center">&nbsp;</td>
    <td colspan=2 rowspan="3" align="center"><b><font size=1 face="serif">Total</font></b></td>
    <td rowspan="3" align="center">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="4" align="center"> <hr noshade size=1></td>
  </tr>
  <tr>
    <td align="center"><b><font size=1 face="serif">Shares</font></b></td>
    <td align="center">&nbsp;</td>
    <td colspan=2 align="center"><b><font size=1 face="serif">Amount</font></b></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="center"> <hr noshade size=1></td>
    <td align="center">&nbsp;</td>
    <td colspan=2 align="center"> <hr noshade size=1></td>
    <td align="center">&nbsp;</td>
    <td colspan=2 align="center"> <hr noshade size=1></td>
    <td align="center">&nbsp;</td>
    <td colspan=2 align="center"> <hr noshade size=1></td>
    <td align="center">&nbsp;</td>
    <td colspan=2 align="center"> <hr noshade size=1></td>
    <td align="center">&nbsp;</td>
    <td colspan=2 align="center"> <hr noshade size=1></td>
    <td align="center">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td bgcolor="#eeeeee"> <div style="margin-left: 3%; text-indent: -3%"><font size=2 face="serif">Balance
        at December 31, 2001</font></div></td>
    <td width="10%" align="right" bgcolor="#eeeeee"><font size=2 face="serif">55,881,938</font></td>
    <td width="2%" bgcolor="#eeeeee"><font size="2" face="serif">&nbsp;</font></td>
    <td width="2%" align="left"  bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td width="8%" align="right" bgcolor="#eeeeee"><font size=2 face="serif">5,588,194</font></td>
    <td width="2%" bgcolor="#eeeeee"><font size="2" face="serif">&nbsp;</font></td>
    <td width="2%" align="left"  bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td width="8%" align="right" bgcolor="#eeeeee"><font size=2 face="serif">(339,035</font></td>
    <td width="2%" bgcolor="#eeeeee"><font size=2 face="serif"> )</font></td>
    <td width="2%" align="left"  bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td width="8%" align="right" bgcolor="#eeeeee"><font size=2 face="serif">317,496,700</font></td>
    <td width="2%" bgcolor="#eeeeee"><font size="2" face="serif">&nbsp;</font></td>
    <td width="2%" align="left"  bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td width="8%" align="right" bgcolor="#eeeeee"><font size=2 face="serif">(263,073,366</font></td>
    <td width="2%" bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
    <td width="2%" align="left"  bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td width="8%" align="right" bgcolor="#eeeeee"><font size=2 face="serif">59,672,493</font></td>
    <td width="1%" align="left" bgcolor="#eeeeee"><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 3%; text-indent: -3%"><font size=2 face="serif">Issuance
        of shares in connection with exercise of stock options and warrants</font></div></td>
    <td align="right"><font size=2 face="serif">25,374</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2,537</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">3,552</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">6,089</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td bgcolor="#eeeeee"> <div style="margin-left: 3%; text-indent: -3%"><font size=2 face="serif">Adjustment
        to deferred stock compensation</font></div></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(6,002,831</font></td>
    <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(6,002,831</font></td>
    <td align="left" bgcolor="#eeeeee"><font size="2" face="serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 3%; text-indent: -3%"><font size=2 face="serif">Issuance
        of common stock for 401k plan</font></div></td>
    <td align="right"><font size=2 face="serif">67,141</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">6,714</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">82,442</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">89,156</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td bgcolor="#eeeeee"> <div style="margin-left: 3%; text-indent: -3%"><font size=2 face="serif">Retirement
        of common stock</font></div></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(44,893</font></td>
    <td bgcolor="#eeeeee"><font size=2 face="serif"> )</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(4,489</font></td>
    <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(111,296</font></td>
    <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(115,785</font></td>
    <td align="left" bgcolor="#eeeeee"><font size="2" face="serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 3%; text-indent: -3%"><font size=2 face="serif">Rescission/repayment
        of shareholder loans</font></div></td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">134,536</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">134,536</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td bgcolor="#eeeeee"><font size=2 face="serif">Net loss</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(11,758,191</font></td>
    <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(11,758,191</font></td>
    <td align="left" bgcolor="#eeeeee"><font size="2" face="serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2 face="serif">Balance at June 30, 2002</font></td>
    <td align="right"><font size=2 face="serif">55,929,560</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">5,592,956</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(204,499</font></td>
    <td><font size=2 face="serif"> )</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">311,468,567</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(274,831,557</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">42,025,467</font></td>
    <td align="left">&nbsp;</td>
  </tr>
</table>
<p align="center"> <i><font size=2 face="serif">See notes to consolidated financial
  statements.</font></i></p>
<p align="center"> <font size=2 face="serif">5</font></p>
<hr noshade align="center" width="100%" size=2>
<div style="page-break-before:always"></div>
<page>
 <a name="p6"></a>
<p align="center"> <b><font size=2 face="serif">NOTES TO CONSOLIDATED FINANCIAL
  STATEMENTS<br>
  THREE AND SIX MONTHS ENDED JUNE 30, 2002 AND 2001</font></b> </p>
</font>
<p><font size="2" face="serif"><b>1.&nbsp;&nbsp;&nbsp;Basis of Presentation</b></font></p>
<div style="text-indent: 3%">
  <p><font size=2 face="serif">The results of operations for the three and six
    months ended June 30, 2002 and 2001 are not necessarily indicative of a full
    year&#146;s operations. In the opinion of management, the accompanying consolidated
    financial statements include all adjustments of a normal recurring nature,
    which are necessary to present fairly such financial statements.</font></p>
  <p><font size=2 face="serif">All significant intercompany balances and transactions
    have been eliminated in consolidation. Certain information and footnote disclosures
    normally included in the financial statements prepared in accordance with
    generally accepted accounting principles have been condensed or omitted.</font></p>
  <p><font size=2 face="serif">These unaudited consolidated financial statements
    should be read in conjunction with the audited financial statements and notes
    thereto included in our annual report on Form 10-K/A for the year ended December
    31, 2001.</font></p>
  <p><font size=2 face="serif">We consider all highly liquid debt instruments
    purchased with an original maturity of three months or less to be cash equivalents.</font></p>
  <p><font size=2 face="serif">Certain reclassifications have been made to the
    prior years&#146; financial statements to conform to the 2002 presentation.</font></p>
</div>
<p><font size=2 face="serif"><b>2.&nbsp;&nbsp;&nbsp;Recent Accounting Pronouncements</b></font></p>
<div style="text-indent: 3%">
  <p><font size=2 face="serif">In July 2001, the Financial Accounting Standards
    Board issued Statement of Financial Accounting Standards No. 142 (&#147;SFAS
    142&#148;), Goodwill and Other Intangible Assets, effective for fiscal years
    beginning after December 15, 2001. Under SFAS 142, goodwill and intangible
    assets deemed to have indefinite lives will no longer be amortized but will
    be subject to annual impairment tests. Other intangible assets will continue
    to be amortized over their useful lives. We adopted SFAS 142 beginning on
    January 1, 2002. We completed the transitional goodwill impairment test as
    required by SFAS 142 using a measurement date of January 1, 2002. Based on
    the results of the transitional impairment test, we were not required to recognize
    an impairment of goodwill. We will continue to perform future impairment tests
    as required by SFAS 142. There can be no assurance that future impairment
    tests will not result in a charge to earnings.</font></p>
  <p><font size=2 face="serif">The following pro forma information for the three
    and six months ended June 30, 2001 presents net income/loss and income/loss
    per common share adjusted to exclude goodwill amortization expense of $1,042,308
    and $1,460,806 recognized respectively during the periods.</font></p>
</div>
<table width=80% border=0 align="center" cellpadding=0 cellspacing=0>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td colspan=2 align="center"><b><font size=1 face="serif">Three Months Ended</font></b><br>
      <b><font size=1 face="serif">June 30, 2001</font></b></td>
    <td>&nbsp;</td>
    <td colspan=2 align="center"><b><font size=1 face="serif">Six Months Ended</font></b><br>
      <b><font size=1 face="serif">June 30, 2001</font></b></td>
    <td align="center">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td colspan=2 align="center"><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td colspan=2 align="center"><hr noshade size=1></td>
    <td align="center">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2 face="serif">Net income/(loss):</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td><font size=2 face="serif">As reported</font></td>
    <td width="2%" align="left"><font size=2 face="serif">$</font></td>
    <td width="15%" align="right"><font size=2 face="serif">8,127,820</font></td>
    <td width="2%">&nbsp;</td>
    <td width="2%" align="left"><font size=2 face="serif">$</font></td>
    <td width="15%" align="right"><font size=2 face="serif">(70,980,973</font></td>
    <td width="2%"><font size=2 face="serif"> )</font></td>
  </tr>
  <tr valign="bottom">
    <td><font size=2 face="serif">Pro forma</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">9,170,128</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif"> (69,520,167</font></td>
    <td><font size=2 face="serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td><font size=2 face="serif">Income/(loss) per common share&#151;Basic:</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td><font size=2 face="serif">As reported</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.15</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(1.31</font></td>
    <td><font size=2 face="serif"> )</font></td>
  </tr>
  <tr valign="bottom">
    <td><font size=2 face="serif">Pro forma</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.16</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$ </font></td>
    <td align="right"><font size=2 face="serif">(1.28</font></td>
    <td><font size=2 face="serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2 face="serif">Income/(loss) per common share&#151;Diluted:</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td><font size=2 face="serif">As reported</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.14</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(1.31</font></td>
    <td><font size=2 face="serif"> )</font></td>
  </tr>
  <tr valign="bottom">
    <td><font size=2 face="serif">Pro forma</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.15</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif"> (1.28</font></td>
    <td><font size=2 face="serif">)</font></td>
  </tr>
</table>

<div style="text-indent: 3%">
  <p><font size=2 face="serif">In October 2001, the FASB issued Statement of Financial
    Accounting Standards No. 144, Accounting for the Impairment or Disposal of
    Long-Lived Assets, (&#147;SFAS 144&#148;), which is effective for financial
    statements issued for fiscal</font> </p>
  <p align="center"><font size="2" face="serif">6</font></p>
</div>
<font size=2 face="serif">
<hr noshade align="center" width="100%" size=2>
<div style="page-break-before:always"></div>
<page>
</font>
<p><font size=2 face="serif"> <a name="page_10"></a> </font></p>
<p><font size=2 face="serif">years beginning after December 15, 2001. The objectives
  of SFAS 144 are to address significant issues relating to the implementation
  of Statement of Financial Accounting Standard No. 121, (&#147;SFAS 121&#148;),
  Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
  to Be Disposed Of, and to develop a single accounting model, based on the framework
  established in SFAS 121, for long-lived assets to be disposed of by sale, whether
  previously held and used or newly acquired. The Company adopted SFAS 144 as
  of January 1, 2002. The adoption of SFAS 144 had no impact on the Company&#146;s
  financial statements.</font></p>
<p><b><font size=2 face="serif">3.&nbsp;&nbsp;&nbsp;Intangible Assets and Goodwill</font></b></p>
<div style="text-indent: 3%">
  <p><font size=2 face="serif">Goodwill totaled $12.9 million at June 30, 2002
    and December 31, 2001. Our other intangible assets consist of patents, which
    as of June&nbsp;30, 2002 and December 31, 2001 were as follows:</font></p>
</div>
<table width=80% border=0 align="center" cellpadding=0 cellspacing=0>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td colspan=2 align="center"><b><font size=1 face="serif">Gross<br>
      Intangible<br>
      Assets</font></b></td>
    <td>&nbsp;</td>
    <td colspan=2 align="center"><b><font size=1 face="serif">Accumulated<br>
      Amortization</font></b></td>
    <td align="center">&nbsp;</td>
    <td colspan="2" align="center"><b><font size=1 face="serif">Net Intangible<br>
      Assets</font></b></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td colspan=2 align="center"><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td colspan=2 align="center"><hr noshade size=1></td>
    <td align="center">&nbsp;</td>
    <td colspan="2" align="center"><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2 face="serif">June 30, 2002</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2 face="serif">Patents</font></td>
    <td width="2%" align="left"><font size=2 face="serif">$</font></td>
    <td width="10%" align="right"><font size=2 face="serif">10,432,846</font></td>
    <td width="2%">&nbsp;</td>
    <td width="2%" align="left"><font size=2 face="serif">$</font></td>
    <td width="10%" align="right"><font size=2 face="serif">(1,936,326</font></td>
    <td width="2%" align="left"><font size=2 face="serif"> ) </font></td>
    <td width="2%" align="left"><font size=2 face="serif">$</font></td>
    <td width="10%" align="right"><font size=2 face="serif">8,496,520</font></td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2 face="serif">December 31, 2001</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2 face="serif">Patents</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">10,033,157</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(1,607,268</font></td>
    <td align="left"><font size=2 face="serif"> ) </font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">8,425,889</font></td>
    <td>&nbsp;</td>
  </tr>
</table>
<div style="text-indent: 3%"><p><font size=2 face="serif">Amortization expense related to patents totaled $329,057
  and $302,819 during the six months ended June 30, 2002 and 2001, respectively.
  The estimated aggregate future amortization expense for intangible assets remaining
  as of June 30, 2002 is as follows:</font><font face="serif"></font></p>
</div>
<table width=60% border=0 align="center" cellpadding=0 cellspacing=0>
  <tr  bgcolor="#eeeeee">
    <td><font size=2 face="serif">Remainder of 2002</font></td>
    <td width="2%" align="left"><font size=2 face="serif">$</font></td>
    <td width="10%" align="right"><font size=2 face="serif">341,184</font></td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td><div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">2003</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">682,368</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr  bgcolor="#eeeeee">
    <td>
      <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">2004</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">682,368</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">2005</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">682,368</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr  bgcolor="#eeeeee">
    <td>
      <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">2006</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">682,368</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Thereafter</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">5,425,864</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr  bgcolor="#eeeeee">
    <td>
      <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Total</font></div></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">8,496,520</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="center"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
</table>
<p><b><font size=2 face="serif">4.&nbsp;&nbsp;&nbsp;Financial Instruments</font></b></p>
<div style="text-indent: 3%"><p><font size=2 face="serif">Effective January 1, 2001, we adopted Statement of
  Financial Accounting Standards (&#147;SFAS&#148;) No. 133,</font><font size=2 face="serif">&#147;Accounting
  for Derivative Instruments and Hedging Activities&#148; (&#147;SFAS 133&#148;),
  as amended by SFAS 137 and 138. SFAS 133 requires that all derivative financial
  instruments be recorded on the balance sheet at fair value. The provisions of
  SFAS 133 affected accounting for 2.5 million restricted warrants of Liberty
  Livewire Corporation held by us. Prior to the adoption of SFAS 133, we carried
  the warrants at cost. With the adoption of SFAS 133, we now record the warrants
  at fair value. The adoption of SFAS 133 resulted in our recording a cumulative
  effect transition adjustment loss of $58.7 million at January 1, 2001. Beginning
  in the first quarter of 2001, we have recorded subsequent changes in the fair
  value of the warrants in our statements of operations, which resulted in a charge
  of $6.8 million and a credit of $13.0 million for the three months ended June
  30, 2002 and 2001, respectively, and a charge of $9.3 million and a credit of
  $4.2 million for the six months ended June 30, 2002 and 2001, respectively.</font></p>
<p><font size=2 face="serif">There may be periods with significant non-cash increases
  or decreases to our net income/loss related to the changes in the fair value
  of the Livewire investment. The carrying value of our derivative instrument
  approximates fair value. We determine the fair value of the Livewire warrants
  by reference to underlying market values of Liberty Livewire&#146;s common stock
  as reported by Nasdaq, and on estimates using the Black-Scholes valuation model.</font></p>
</div>
<p><b><font size=2 face="serif">5.&nbsp;&nbsp;&nbsp;Acquisition of Intellocity</font></b></p>
<div style="text-indent: 3%"><p><font size=2 face="serif">In March 2001, we acquired all of the assets and
  business of Intellocity, Inc., a technology and engineering solutions provider
  focusing on the interactive television market. The aggregate purchase price
  of $27.5 million consisted of 4,007,890 shares of our common stock, aggregating
  $23.2 million, and options to purchase 762,665 shares of our common stock, valued
  at $4.3 million. Intellocity shareholders are subject to provisions restricting
  the sale of the ACTV stock; these restrictions range over 4 years. The acquisition
  was accounted for in the first quarter of 2001 under the purchase method of
  accounting.</font><font face="serif"></font></p>
<p><font size=2 face="serif">The fair value of assets acquired and liabilities
  assumed in the acquisition of Intellocity amounted to approximately $1.5 million.
  We calculated goodwill, representing the excess cost over the fair value of
  net assets acquired, to be $26.4 million. Through December 31, 2001, we were
  amortizing this amount over a seven-year period. In connection with our year-end
  review of 2001 results, we assessed the realizability of the goodwill value
  attributed to Intellocity at December 31, 2001. As a result of this assessment,
  we recorded an impairment charge to goodwill of $11.2 million during the fourth
  quarter of 2001, adjusting the asset value of such goodwill from $23.2 million
  to $12.0 million.</font></p></div>
<p align="center"> <font size="2" face="serif">7</font></p>
<hr noshade align="center" width="100%" size=2>
<div style="page-break-before:always"></div>
<page>
<a name="p8"></a>
<div style="text-indent: 3%">
  <p><font size=2 face="serif">We adopted SFAS 142 as of January 1, 2002 and accordingly
    recorded no amortization of goodwill for the six months ended June&nbsp;30,
    2002 (See Note 2). The results of Intellocity's operations are included in
    our consolidated results from the date of acquisition.</font> </p>
<p><font size=2 face="serif">The following table presents the pro forma results
  of operations had the acquisition of Intellocity been completed as of January
  1, 2001. The pro forma results are shown for illustrative purposes only and
  do not purport to be indicative of the results that would have been reported
  if the business combination had occurred on the date indicated or that may occur
  in the future. These pro forma amounts include estimates and assumptions that
  we believe are reasonable.</font><font face="serif"></font> </p>
</div>
<table width=80% border=0 align="center" cellpadding=0 cellspacing=0>
  <tr>
    <td>&nbsp;</td>
    <td colspan=2 align="center"><b><font size=1 face="serif">For the Six<br>
      Months<br>
      Ended<br>
      June&nbsp;30,&nbsp;2001</font></b></td>
    <td align="center">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="center" colspan=2><hr noshade size=1></td>
    <td align="center">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="center" colspan=2>&nbsp;</td>
    <td align="center">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="center" colspan=2>&nbsp;</td>
    <td align="center">&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Revenues</font></td>
    <td width="2%" align="left"><font size=2 face="serif">$</font></td>
    <td width="10%" align="right"><font size=2 face="serif">8,698,313</font></td>
    <td width="1%">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">
<hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><div style="margin-left: 3%; text-indent: -3%"><font size=2 face="serif">Loss
        before minority interest and cumulative effect of accounting change</font></div></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(14,610,251</font></td>
    <td><font size=2 face="serif"> )</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">
<hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><div style="margin-left: 3%; text-indent: -3%"><font size=2 face="serif">Loss
        before cumulative effect of accounting change</font></div></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(13,096,480</font></td>
    <td><font size=2 face="serif"> )</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">
<hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Net loss</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(71,828,677</font></td>
    <td><font size=2 face="serif"> )</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">
<hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Basic and diluted loss per share:</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr  bgcolor="#eeeeee">
    <td><font size=2 face="serif">Before cumulative effect of accounting change</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(0.24</font></td>
    <td><font size=2 face="serif"> )</font></td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Cumulative effect of accounting change</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(1.04</font></td>
    <td><font size=2 face="serif"> )</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">
<hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr  bgcolor="#eeeeee">
    <td><font size=2 face="serif">Basic and diluted loss per share</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(1.28</font></td>
    <td><font size=2 face="serif"> )</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">
<hr noshade size=1></td>
    <td align="right"><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
</table>
<p><b><font size=2 face="serif">6.&nbsp;&nbsp;&nbsp;Minority Interest</font></b></p>
<div style="text-indent: 3%">
  <p><font size=2 face="serif">We record a minority interest benefit resulting
    from Digital ADCO, in which third parties hold a minority equity position.
    Digital ADCO was formed in November 1999 by co-founders ACTV, Inc. and Motorola
    Broadband. Digital ADCO develops applications for the delivery of addressable
    advertising. Under the terms of our agreement with Motorola Broadband, we
    licensed five of our patents to Digital ADCO and Motorola Broadband licensed
    six of its patents and made a capital commitment to Digital ADCO. During August
    2000, OpenTV made a capital contribution and contributed patents on a non-exclusive
    basis to Digital ADCO. Additionally, we formed Digital ADCO International
    to license and distribute products and services outside of North America and
    other western hemisphere countries. Digital ADCO, Inc.&#146;s issued and outstanding
    shares of capital stock presently consist of Class A common stock, having
    one vote per share, and Class B common stock, having 25 votes per share.
    OpenTV currently owns all of the issued and outstanding Class A common shares.
    Motorola Broadband and we together own all of the issued and outstanding Class
    B common shares. We currently own 45.9% of Digital ADCO. We consolidate the
    results of our Digital ADCO subsidiary, despite our ownership position of
    45.9%, due to our exercise of voting control with respect to such subsidiary.</font></p>
<p><font size=2 face="serif">For the three months
  ended June 30, 2002 and 2001, we allocated losses in the amount of $794,172
  and $685,905, respectively, and for the six months ended June 30, 2002 and 2001,
  we allocated losses in the amount of $1,479,731 and $1,380,520, respectively,
  from Digital ADCO to its minority shareholders.</font></p>
  <p><font size=2 face="serif">We also record a minority interest benefit from one
    other subsidiary, Advision LLC, in which we currently hold 51% equity ownership.
    For the three months ended June 30, 2002 and 2001, we allocated losses in
    the amount of $123,412 and $133,251, respectively, and for the six months
    ended June 30, 2002 and 2001, we allocated losses in the amount of $226,669
    and $133,251, respectively, to the minority shareholders of this subsidiary.</font></p>
  <p><font size=2 face="serif">The minority interest on our balance sheet at December
    31, 2001, reflects a decrease of $6.9 million as compared to that recorded
    in previously reported financial statements (see Note 14). This decrease is
    the result of a correction in the calculation of our minority interest liability
    and does not affect the minority interest benefit reported on our previously
    reported statements of operations.</font></p>
</div>
<p align="center"><font size="2" face="serif">8</font></p>
<hr noshade align="center" width="100%" size=2>
<div style="page-break-before:always"></div>
<page>
<a name="p9"></a>
<p><b><font size=2 face="serif">7.&nbsp;&nbsp;&nbsp;Segment Information</font></b></p>
<div style="text-indent: 3%">
  <p><font size=2 face="serif">We have two principal business segments, which
    are delineated by their respective markets: Digital Television and Enhanced
    Media. Information concerning these business segments for the three and six
    months ending June 30, 2002 and 2001 is as follows:</font></p>
</div>
<table width=80% border=0 align="center" cellpadding=0 cellspacing=0>
  <tr valign="bottom">
    <td align="left">&nbsp;</td>
    <td colspan=5 align="center"><b><font size=1 face="serif">For&nbsp;the&nbsp;Three&nbsp;Months<br>
Ended&nbsp;June&nbsp;30,</font></b></td>
    <td>&nbsp;</td>
    <td colspan=5 align="center"><b><font size=1 face="serif">For the Six Months
      <br>
      Ended June 30,</font></b></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left">&nbsp;</td>
    <td colspan=5 align="center"><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td colspan=5 align="center"><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left">&nbsp;</td>
    <td colspan=2 align="center"><b><font size=1 face="serif">2002</font></b></td>
    <td align="left">&nbsp;</td>
    <td colspan=2 align="center"><b><font size=1 face="serif">2001</font></b></td>
    <td>&nbsp;</td>
    <td colspan=2 align="center"><b><font size=1 face="serif">2002</font></b></td>
    <td>&nbsp;</td>
    <td colspan=2 align="center"><b><font size=1 face="serif">2001</font></b></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=1></td>
    <td align="right"><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=1></td>
    <td align="right"><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=1></td>
    <td align="center"><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=1></td>
    <td align="right"><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left"><b><font size=2 face="serif">Revenues</font></b></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom"  bgcolor="#eeeeee">
    <td align="left"><font size=2 face="serif">Digital Television</font></td>
    <td width="2%" align="left"><font size=2 face="serif">$</font></td>
    <td width="10%" align="right"><font size=2 face="serif">849,385</font></td>
    <td width="2%" align="left">&nbsp;</td>
    <td width="2%" align="left"><font size=2 face="serif">$</font></td>
    <td width="10%" align="right"><font size=2 face="serif">1,820,097</font></td>
    <td width="2%" align="left">&nbsp;</td>
    <td width="2%" align="left"><font size=2 face="serif">$</font></td>
    <td width="10%" align="right"><font size=2 face="serif">1,705,494</font></td>
    <td width="2%" align="left">&nbsp;</td>
    <td width="2%" align="left"><font size=2 face="serif">$</font></td>
    <td width="10%" align="right"><font size=2 face="serif">2,549,413</font></td>
    <td width="1%" align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left"><font size=2 face="serif">Enhanced Media</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">2,384,133</font></td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">2,406,355</font></td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">4,714,445</font></td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">4,950,481</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=1></td>
    <td align="right"><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=1></td>
    <td align="right"><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=1></td>
    <td align="right"><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom"  bgcolor="#eeeeee">
    <td align="left"><font size=2 face="serif">Total</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">3,233,518</font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">4,226,452</font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">6,419,939</font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">7,499,894</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left">&nbsp;</td>
    <td align="left"> <hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td align="left">&nbsp;</td>
    <td align="left"> <hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td align="left">&nbsp;</td>
    <td align="left"> <hr noshade size=2></td>
    <td> <hr noshade size=2></td>
    <td align="left">&nbsp;</td>
    <td align="left"> <hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left"><b><font size=2 face="serif">Depreciation &amp; Amortization</font></b></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left"><font size=2 face="serif">Digital Television</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">813,131</font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">688,244</font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">1,557,628</font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">1,377,245</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom"  bgcolor="#eeeeee">
    <td align="left"><font size=2 face="serif">Enhanced Media</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">321,107</font></td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">405,597</font></td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">627,637</font></td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">824,312</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left"><font size=2 face="serif">Unallocated Corporate</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">265,253</font></td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">1,415,280</font></td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">519,687</font></td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">2,145,584</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=1></td>
    <td align="right"><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=1></td>
    <td align="right"><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=1></td>
    <td align="right"><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom"  bgcolor="#eeeeee">
    <td align="left"><font size=2 face="serif">Total</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">1,399,491</font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">2,509,121</font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">2,704,952</font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">4,347,141</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left"><b><font size=2 face="serif">Interest Income</font></b></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left"><font size=2 face="serif">Digital Television</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">12,231</font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">73,787</font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">23,883</font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">187,945</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom"  bgcolor="#eeeeee">
    <td align="left"><font size=2 face="serif">Enhanced Media</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">12,276</font></td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">490</font></td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">21,395</font></td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">3,298</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left"><font size=2 face="serif">Unallocated Corporate</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">388,530</font></td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">1,096,952</font></td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">656,299</font></td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">2,600,395</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=1></td>
    <td align="right"><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=1></td>
    <td align="right"><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=1></td>
    <td align="right"><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom"  bgcolor="#eeeeee">
    <td align="left"><font size=2 face="serif">Total</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">413,037</font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">1,171,229</font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">701,577</font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">2,791,638</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td align="left">&nbsp;</td>
    <td align="left"> <hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=2></td>
    <td> <hr noshade size=2></td>
    <td align="left">&nbsp;</td>
    <td align="left"> <hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left"><b><font size=2 face="serif">Net (Loss)/Income</font></b></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left"><font size=2 face="serif">Digital Television</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(3,312,790</font></td>
    <td align="left"><font size=2 face="serif">)</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(1,667,007</font></td>
    <td align="left"><font size=2 face="serif">)</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(4,851,444</font></td>
    <td align="left"><font size=2 face="serif">)</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(3,499,440</font></td>
    <td align="left"><font size=2 face="serif">)</font></td>
  </tr>
  <tr valign="bottom"  bgcolor="#eeeeee">
    <td align="left"><font size=2 face="serif">Enhanced Media</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(6,331,000</font></td>
    <td align="left"><font size=2 face="serif">)</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(2,212,320</font></td>
    <td align="left"><font size=2 face="serif">)</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(8,251,366</font></td>
    <td align="left"><font size=2 face="serif">) </font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(4,948,693</font></td>
    <td align="left"><font size=2 face="serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td align="left"><font size=2 face="serif">Unallocated Corporate</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(2,565,259</font></td>
    <td align="left"><font size=2 face="serif">)</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">12,007,147</font></td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">1,344,619</font></td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(62,532,840</font></td>
    <td align="left"><font size=2 face="serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=1></td>
    <td align="right"><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=1></td>
    <td align="right"><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=1></td>
    <td align="right"><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=1></td>
    <td align="right"><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom"  bgcolor="#eeeeee">
    <td align="left"><font size=2 face="serif">Total</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(12,209,049</font></td>
    <td align="left"><font size=2 face="serif">)</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">8,127,820</font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(11,758,191</font></td>
    <td align="left"><font size=2 face="serif">)</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(70,980,973</font></td>
    <td align="left"><font size=2 face="serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="center">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left"><b><font size=2 face="serif">Capital Expenditures</font></b></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="center">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left"><font size=2 face="serif">Digital Television</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">551,989</font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">320,095</font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">734,487</font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">4,517,605</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom"  bgcolor="#eeeeee">
    <td align="left"><font size=2 face="serif">Enhanced Media</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">1,847</font></td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">692,798</font></td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">1,847</font></td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">85,274</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left"><font size=2 face="serif">Unallocated Corporate</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">12,664</font></td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">2,209,195</font></td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">95,265</font></td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">1,289,156</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=1></td>
    <td align="right"><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=1></td>
    <td align="right"><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=1></td>
    <td align="right"><hr noshade size=1></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom"  bgcolor="#eeeeee">
    <td align="left"><font size=2 face="serif">Total</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"  bgcolor="#eeeeee"><font size=2 face="serif">566,500</font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">3,222,088</font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">831,599</font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">5,892,035</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td align="left">&nbsp;</td>
    <td align="left"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td align="left">&nbsp;</td>
  </tr>
</table>
<table width=80% border=0 align="center" cellpadding=0 cellspacing=0>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><b><font size=2 face="serif">Balance Sheet Accounts</font></b></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="center" colspan=2><b><font size=1 face="serif">June&nbsp;30,&nbsp;2002</font></b></td>
    <td>&nbsp;</td>
    <td align="center" colspan=2><b><font size=1 face="serif">December&nbsp;31,&nbsp;2001</font></b></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="center"><hr noshade size=1></td>
    <td align="center"><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td align="center"><hr noshade size=1></td>
    <td align="center"><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><b><font size=2 face="serif">Current Assets</font></b></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Digital Television</font></td>
    <td width="2%" align="center"><font size=2 face="serif">$</font></td>
    <td width="10%" align="right"><font size=2 face="serif">3,567,639</font></td>
    <td width="2%">&nbsp;</td>
    <td width="2%" align="center"><font size=2 face="serif">$</font></td>
    <td width="10%" align="right"><font size=2 face="serif">4,061,843</font></td>
    <td width="1%">&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Enhanced Media</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">6,283,656</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">4,735,475</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Unallocated Corporate</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">57,430,719</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">72,206,506</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Total</font></td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">67,282,014</font></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">81,003,824</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><b><font size=2 face="serif">Total Assets</font></b></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Digital Television</font></td>
    <td align="left" valign="bottom"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">11,076,491</font></td>
    <td>&nbsp;</td>
    <td align="left" valign="bottom"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">12,022,462</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Enhanced Media</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">16,339,066</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">24,471,782</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Unallocated Corporate</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">88,418,389</font></td>
    <td>&nbsp;</td>
    <td colspan=2 align="right"><font size=2 face="serif">103,093,077</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Total</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">115,833,946</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">139,587,321</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
</table>
<p align="center"><font size="2" face="serif">9</font></p>
<hr noshade align="center" width="100%" size=2>
<div style="page-break-before:always"></div>
<page>
<a name="p10"></a>
<p><b><font size=2 face="serif">8.&nbsp;&nbsp;&nbsp;Executive Incentive Compensation</font></b></p>
<p><font size=2 face="serif">We incurred executive
  incentive compensation expense related to an executive bonus of $2,300,000 for
  the six months ended June 30, 2001. This expense related to incentive compensation
  awarded in the 2000 fiscal year but paid in a series of quarterly installments,
  which were subject to forfeiture under certain conditions. The contractual provision
  that gave rise to this bonus, which was based on changes in the market value
  of our common stock and paid in unregistered securities, was cancelled during
  the second quarter of 2001.</font></p>
<p><b><font size=2 face="serif">9.&nbsp;&nbsp;&nbsp;Investment in Warrant</font></b></p>
<div style="text-indent: 3%">
  <p><font size=2 face="serif">ACTV and Liberty Livewire LLC, a unit of Livewire
    (formerly known as Todd AO Corporation), entered into a joint marketing agreement
    to market &#147;HyperTV(R) with Livewire&#148; in April 2000. Livewire has
    the right to use our patented HyperTV convergence technology in providing
    to advertisers, TV programmers, studios and networks such services as application
    hosting, web authoring, data management, and&nbsp;e-commerce.</font></p>
<p><font size=2 face="serif">In connection with
  our entering into the joint marketing agreement, we received warrants to acquire
  2,500,000 shares of Livewire at $30 per share. The warrants, which become exercisable
  at the rate of 500,000 shares per year, beginning April 13, 2001, include certain
  registration rights and may be exercised until March 31, 2015. With certain
  exceptions, the warrants are not transferable. We previously recorded an investment
  and corresponding deferred revenue in the amount of $76,016,175, the estimated
  value of the warrants as of April 2000. We are amortizing the deferred revenue
  into income over a period of 21 years, the contractual term of the joint marketing
  agreement.</font></p>
<p><font size=2 face="serif">The estimated fair
  value of the warrants at June 30, 2002 and December 31, 2001 was approximately
  $7.0 million and $16.3 million, respectively. We perform fair value estimates
  of the warrants using Black-Scholes pricing model. Currently, we account for
  the warrants under SFAS No. 133 (See Note 4).</font></p>
</div>
<p><b><font size=2 face="serif">10.&nbsp;&nbsp;&nbsp;Net (Loss)/Income Per Share</font></b></p>
<div style="text-indent: 3%"><p><font size=2 face="serif">The following table sets forth the computation of
  basic and diluted (loss)/income per share:</font></p>
</div>
<table width=80% border=0 align="center" cellpadding=0 cellspacing=0>
  <tr valign="bottom">
    <td align="center">&nbsp;</td>
    <td colspan=5 align="center"><b><font size=1 face="serif">Three Months Ended</font></b></td>
    <td>&nbsp;</td>
    <td colspan=5 align="center"><b><font size=1 face="serif">Three Months Ended</font></b></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="center">&nbsp;</td>
    <td colspan=5 align="center"> <hr noshade size=1></td>
    <td>&nbsp;</td>
    <td colspan=5 align="center"> <hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="center">&nbsp;</td>
    <td colspan=2 align="center"><b><font size=1 face="serif">June 30, 2002</font></b></td>
    <td align="center">&nbsp;</td>
    <td colspan=2 align="center"><b><font size=1 face="serif">June 30, 2001</font></b></td>
    <td>&nbsp;</td>
    <td colspan=2 align="center"><b><font size=1 face="serif">June 30, 2002</font></b></td>
    <td align="center">&nbsp;</td>
    <td colspan=2 align="center"><b><font size=1 face="serif">June 30, 2001</font></b></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="center">&nbsp;</td>
    <td colspan="2" align="center"> <hr noshade size=1></td>
    <td align="center">&nbsp;</td>
    <td colspan="2" align="center"> <hr noshade size=1></td>
    <td>&nbsp;</td>
    <td colspan="2" align="center"> <hr noshade size=1></td>
    <td align="center">&nbsp;</td>
    <td colspan="2" align="center"> <hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2 face="serif">Numerator</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">(Loss)/income
        before cumulative effect of accounting change</font></div></td>
    <td width="2%"><font size=2 face="serif">$</font></td>
    <td width="10%" align="right"><font size=2 face="serif">(12,209,049</font></td>
    <td width="2%"><font size=2 face="serif"> )</font></td>
    <td width="2%"><font size=2 face="serif">$</font></td>
    <td width="10%" align="right"><font size=2 face="serif">8,127,820</font></td>
    <td width="2%">&nbsp;</td>
    <td width="2%"><font size=2 face="serif">$</font></td>
    <td width="10%" align="right"><font size=2 face="serif">(11,758,191</font></td>
    <td width="2%"><font size=2 face="serif"> )</font></td>
    <td width="2%"><font size=2 face="serif">$</font></td>
    <td width="10%" align="right"><font size=2 face="serif">(12,248,776</font></td>
    <td width="1%"><font size=2 face="serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Cumulative
        transition effect of adopting SFAS No. 133</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(58,732,197</font></td>
    <td><font size=2 face="serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Net (loss)/income</font></td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(12,209,049</font></td>
    <td><font size=2 face="serif"> )</font></td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">8,127,820</font></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(11,758,191</font></td>
    <td><font size=2 face="serif"> )</font></td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(70,980,973</font></td>
    <td><font size=2 face="serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td> <hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2 face="serif">Denominator</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Basic
        weighted-average shares outstanding</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">55,936,341</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">55,916,619</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">55,910,282</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">54,147,428</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Weighted-average
        options outstanding</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">4,190,688</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 9%; text-indent: -3%"><font size=2 face="serif">Diluted
        weighted average shares outstanding</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">55,936,341</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">60,107,307</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">55,910,282</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">54,147,428</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2 face="serif">Net (loss)/income per share</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2 face="serif">Basic</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td height="20"> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Before
        cumulative effect of accounting change</font></div></td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(0.22</font></td>
    <td><font size=2 face="serif"> )</font></td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.15</font></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(0.21</font></td>
    <td><font size=2 face="serif"> )</font></td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(0.23</font></td>
    <td><font size=2 face="serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Cumulative
        transition effect of adopting SFAS No. 133</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(1.08</font></td>
    <td><font size=2 face="serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Basic
        net (loss)/income per share</font></div></td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(0.22</font></td>
    <td><font size=2 face="serif"> )</font></td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.15</font></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(0.21</font></td>
    <td><font size=2 face="serif"> )</font></td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(1.31</font></td>
    <td><font size=2 face="serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td> <hr noshade size=2></td>
    <td><hr noshade size=2> </td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td> <hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><font size=2 face="serif">Diluted</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Before
        cumulative effect of accounting change</font></div></td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(0.22</font></td>
    <td><font size=2 face="serif"> )</font></td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.14</font></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(0.21</font></td>
    <td><font size=2 face="serif"> )</font></td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(0.23</font></td>
    <td><font size=2 face="serif">)</font></td>
  </tr>
  <tr valign="bottom" bgcolor="#eeeeee">
    <td> <div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Cumulative
        transition effect of adopting SFAS No. 133</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(1.08</font></td>
    <td><font size=2 face="serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td><div style="margin-left: 6%; text-indent: -3%"><font size=2 face="serif">Diluted
        net (loss)/income per share</font></div></td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(0.22</font></td>
    <td><font size=2 face="serif"> )</font></td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.14</font></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(0.21</font></td>
    <td><font size=2 face="serif"> )</font></td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(1.31</font></td>
    <td><font size=2 face="serif">)</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
</table>
<p><b><font size=2 face="serif">11.&nbsp;&nbsp;&nbsp;Corporate Restructuring</font></b></p>
<div style="text-indent: 3%">
  <p><font size=2 face="serif">During the third and fourth quarter of 2001, we
    completed certain restructuring initiatives. The restructuring charges totaled
    $6.6 million and related to the surrender of real estate leases and employee
    severance expenses. We had paid out the remaining accrued restructuring charges
    of $0.8&nbsp;million in the six months ended June&nbsp;30, 2002.</font></p>
</div>
<p align="center"><font size="2" face="serif">10</font></p>
  <hr noshade align="center" width="100%" size=2>
  <div style="page-break-before:always"></div>
<page>
<a name="p11"></a>
<p><b><font size=2 face="serif">12.&nbsp;&nbsp;&nbsp;Agreement with iN DEMAND</font></b></p>
<div style="text-indent: 3%"><p><font size=2 face="serif">In April 2002, we signed
  a multi-year agreement with iN DEMAND, pursuant to which iN DEMAND will use
  our digital video technology to offer digital cable customers Nascar In-Car
  on iN DEMAND. Nascar In-Car is a multi-channel television package that uses
  a mix of digital compression technology, real-time telemetry data and superior
  graphics to give subscribers an enhanced, interactive viewing experience. iN
  DEMAND, is distributing the package on a pay-per-view basis through certain
  digital cable systems in the US. Our agreement with iN DEMAND, which covers
  a total of approximately 90 races through 2004, obligates us to incur certain
  production costs, which we estimate will average $170,000 per race. In turn,
  we receive a percentage of gross receipts from the sale of pay-per-view subscriptions.</font></p>
<p><font size=2 face="serif">We cannot be certain
  that subscription sales will produce more than negligible revenues for us, given
  that Nascar In-Car is the first such programming ever sold in the U.S. Because
  commercialization of the subscription package began in late June 2002, we do
  not yet have comprehensive data from the cable operators responsible for sales,
  billing and collection of the Nascar In-Car package fees. Accordingly, our reported
  revenues for the three and six months ended June 30, 2002 reflect no revenue
  from Nascar In-Car.</font></p>
</div>
<p><b><font size=2 face="serif">13.&nbsp;&nbsp;&nbsp;Supplemental Disclosure of
  Cash and Non-Cash Activities</font></b></p>
<div style="text-indent: 3%"><p><font size=2 face="serif">We recorded no reduction
  in non-cash stock-based compensation expense for the three months ended June
  30, 2002 and a reduction in non-cash stock-based compensation expense in the
  amount of $6,002,831 for the six months ended June 30, 2002. We recorded a reduction
  of non-cash, stock-based compensation expense in connection with vested variable
  options of $4,121,649 and $2,819,155 for the three and six months ended June
  30, 2001, respectively. In the first quarter of 2002, we rescinded the applicable
  option exercise provisions that resulted in the variable option accounting treatment
  for such options in our financial statements.</font></p>
<p><font size=2 face="serif">During both the three
  months and six months ended June 30, 2002 and June 30, 2001, we recorded revenue
  of $904,953 and $1,809,906, respectively from amortization of the deferred revenue
  recognized in connection with the Liberty Livewire warrants (See Note 9).</font></p>
<p><font size=2 face="serif">In January 2002, we
  canceled outstanding options totaling 2,093,334 shares at exercise prices of
  $6.50 to $13.50 and, in their place, granted new options totaling 1,046,667
  shares at an exercise price of $2.00 per share, which was above the market value
  of such shares at the time of grant. All the grantees were employees whose salary
  compensation had been reduced in conjunction with the Company's restructuring
  efforts in the second half of 2001. However, the executive officers whose salary
  compensation was reduced were not eligible to participate.</font></p>
<p><font size=2 face="serif">The newly granted options
  will be subject to variable option accounting treatment. That is, if the closing
  market price of our common stock is greater than $2.00 per share at any reporting
  date, we will recognize a non-cash compensation expense equal to the difference
  between such market price and $2.00 multiplied by the number of outstanding
  option shares subject to variable accounting treatment. To the extent that we
  are carrying an accrued expense of this type at any given reporting date and
  there is a decline in the market price of our stock at the end of the subsequent
  reporting period, we will recognize a reduction in expense for the subsequent
  period.</font></p>
<p><font size=2 face="serif">Our consolidated financial
  statements for the three and six months ended June 30, 2002, reflect no expense
  related to the 1,046,667 variable options, since the closing market price of
  our common stock at June 30, 2002 was less than the option exercise price of
  $2.00 per share.</font></p>
</div>
<p><b><font size=2 face="serif">14.&nbsp;&nbsp;&nbsp;Restatement</font></b></p>
<div style="text-indent: 3%">
  <p><font size=2 face="serif">The Company&#146;s consolidated financial statements
    included in our 2001 Annual Report on Form 10-K were amended to account for
    a correction in the calculation of our minority interest liability. The change
    does not affect the minority interest benefit reported on our ppreviously
    reported statements of operations. All references to the Annual report on
    Form 10-K/A in this Quarterly Report on Form 10-Q/A have been changed to reflect
    the restatement.</font></p>
  </div>
<p><b><font size=2 face="serif">15.&nbsp;&nbsp;&nbsp;Agreement with Liberty Media
  Corporation Regarding Possible Acquisition of ACTV, Inc.</font></b></p>
<div style="text-indent: 3%"><p><font size=2 face="serif">In May 2002, we signed
  a letter agreement with Liberty Media Corporation regarding a possible acquisition
  of all outstanding shares of ACTV common stock. Under the terms of the letter
  agreement, Liberty, which currently owns approximately 16% of our outstanding
  shares, would purchase all remaining shares at a price of $2.00 per share. We
  entered into a 65-day exclusive negotiating period with Liberty with respect
  to the possible transaction, during which Liberty conducted due diligence. In
  July 2002, we executed an amended agreement with Liberty that extended the exclusive
  negotiating period to August 15, 2002 and reduced the consideration to be paid
  for ACTV shares to $1.65 per share. Such purchase price would be payable in
  either cash, shares of Liberty Series A common stock, or the publicly traded
  common stock of a Liberty subsidiary or affiliate. On August 14, 2002, we agreed
  with Liberty to an extension of the amended agreement through September 15,
  2002. The proposed acquisition terms remained unchanged. Neither Liberty nor
  we can provide any assurances that a definitive agreement will be reached, or
  that a transaction ultimately will be consummated. Any potential transaction
  calling for the acquisition of all outstanding shares of our common stock would
  require the board approval of Liberty Media and ACTV as well as our shareholder
  approval.</font></p>
</div><p align="center"><font size="2" face="serif">11</font></p>
<hr noshade align="center" width="100%" size=2>
<div style="page-break-before:always"></div>
<page>
<a name="p12"></a>
<table width="100%" border=0 cellspacing=0 cellpadding=0>
  <tr valign="top">
    <td width="10%"><b><font size=2>ITEM 2.&nbsp;</font></b></td>
    <td colspan="2"><b><font size=2>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS</font></b>
      <b><font size=2>OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</font></b><font size=2>&nbsp;</font></td>
  </tr>
</table>
<p><b><font size=2 face="serif">Overview</font></b><font face="serif"></font>
</p>
<div style="text-indent: 3%"><p><font size=2 face="serif">You should read the following discussion together
  with our consolidated financial statements and related notes included elsewhere.
  The results discussed below are not necessarily indicative of the results to
  be expected in any future periods. To the extent that the information presented
  in this discussion addresses financial projections, information or expectations
  about our products or markets or otherwise makes statements about future events,
  such statements are forward-looking and are subject to a number of risks and
  uncertainties that could cause actual results to differ materially from the
  statements made. For further information about forward-looking statements, see
  &#147;Special Note Regarding Forward-Looking Statements&#148; in our annual
  report on Form 10-K/A for the year ended December 31, 2001.</font><font face="serif"></font></p>
<p><font size=2 face="serif">We are a digital media company that provides proprietary
  technologies, tools, and technical and creative services for interactive TV
  advertising, programming, and enhanced media applications. We have two operating
  business segments, which we call Digital TV and Enhanced Media.</font><font face="serif"></font></p>
<p><font size=2 face="serif">We believe that our Digital TV technologies are unique
  in providing targeting, interactivity and accountability for television commercials,
  and in giving viewers the ability to instantly customize their viewing experiences
  for a wide variety of programming applications. Our Enhanced Media technologies
  allow both for the enhancement of video and audio content, including standard
  TV programming, with Web-based information and interactivity.</font><font face="serif"></font></p>
<p><font size=2 face="serif">We believe the expansion of digital TV transmission
  systems and the emergence of platforms providing the simultaneous delivery of
  video and Internet content (convergence programming), will allow television
  distributors, advertisers and programmers to bring interactivity to a mass audience.
  We believe that our proprietary technologies, tools, and expertise in providing
  technical and creative services position us to
  capitalize on this growth.</font><font face="serif"></font></p>
<p><font size=2 face="serif">We have received strategic investments from Liberty
  Media Corporation, our largest shareholder, and Motorola Broadband Communications
  Sector.</font><font face="serif"></font></p>
</div><p> <b><font size=2 face="serif">Results of Operations</font></b><font face="serif"></font>
</p>
<p> <b><u><font size=2 face="serif">Comparison of Three-Month Periods Ended June
  30, 2002 and June 30, 2001</font></u></b><font face="serif"></font> </p>
<div style="text-indent: 3%"><p> <i><font size=2 face="serif">Revenues.</font></i><font size=2 face="serif">
  During the three-month period ended June 30, 2002, our revenues decreased 24%,
  to $3.2 million, compared with $4.2 million in the three-month period ended
  June 30, 2001. The decrease was principally the result of a decline in technical
  and professional service revenue from our Digital Television segment. Revenue
  recognized from the Livewire joint marketing arrangement was $904,953 for both
  periods. Such revenue represents 28% and 21% of our total revenues for the three
  months ended June 30, 2002 and 2001, respectively.</font><font face="serif"></font></p>
<p> <i><font size=2 face="serif">Total Selling,
  General and Administrative Expenses.</font></i><font size=2 face="serif"> Total
  selling, general and administrative expenses decreased approximately 32% in
  the second quarter of 2002, to $8.6 million, from $12.7 million in the second
  quarter of 2001. The decrease reflects significantly reduced personnel, occupancy
  and related expenses in the more recent quarter, which more than compensated
  for increased costs related to our Nascar In-Car project, launched in the second
  quarter of 2002.</font><font face="serif"></font></p>
<p> <i><font size=2 face="serif">Stock-Based Compensation</font></i><font size=2 face="serif">.
  We recorded no increase or decrease in stock-based compensation expense for
  the three months ended June 30, 2002, as compared to a credit of stock-based
  compensation expense of $4.1 million for the three months ended June 30, 2001.
  We had recorded a charge or credit to stock-based compensation expense based
  on increases in the market value of our common stock in excess of the exercise
  price of certain employee options, which were subject to variable option accounting
  treatment. In the first quarter of 2002, we rescinded the applicable option
  exercise provisions that resulted in the variable option accounting treatment
  of the options in question. Although we have other currently outstanding options
  subject to variable option accounting treatment, the exercise price of these
  options was greater than the market price on each reporting date since their
  issuance in January 2002. Accordingly, we recognized no stock-based compensation
  expense related to such options.</font><font face="serif"></font></p>
</div>
<p align="center"><font size="2" face="serif">12</font></p>
<hr noshade align="center" width="100%" size=2>
<div style="page-break-before:always"></div>
<page>
<a name="p13"></a>
<div style="text-indent: 3%">
  <p><i><font size=2 face="serif">Depreciation and Amortization</font></i><font size=2 face="serif">.
    Depreciation and amortization expense decreased 44%, to $1.4 million in the
    three months ended June 30, 2002, versus $2.5 million during the same period
    in 2001. The decrease is due principally to our adoption of SFAS 142 as of
    January 1, 2002, resulting in no amortization expense for goodwill in the
    three months ended June 30, 2002. Depreciation expense for our Digital Television
    segment showed a marginal increase, from $0.7 million in the second quarter
    of 2001 to $0.8 million in the more recent quarter, as the result of capital
    equipment purchases in 2002 related to the Nascar In-Car project.</font></p>
<p> <i><font size=2 face="serif">Interest Income</font></i><font size=2 face="serif">.
  Interest income in second quarter of 2002 was $0.4 million, compared with $1.2
  million in the second quarter of 2001. The decrease was the result of significantly
  reduced prevailing interest rates and lower average cash balances during the
  more recent quarter. We incurred no interest expense in the second quarter of
  2002 or 2001.</font><font face="serif"></font></p>
<p> <i><font size=2 face="serif">Other (Expense)/Income.</font></i><font size=2 face="serif">Other
  (expense)income comprises the change in fair value of warrants held by us, which
  we currently account for as a derivative instrument, pursuant to the requirements
  of SFAS No. 133. For the three months ended June 30, 2002, we recorded a decrease
  in the value of the warrants of $6.8 million, compared with an increase of $13.0
  million for the three months ended June 30, 2001.</font><font face="serif"></font>
</p>
<p> <i><font size=2 face="serif">Net (Loss)/Income</font></i><font size=2 face="serif">.
  For the three months ended June 30, 2002, our net loss was $12.2 million, or
  $0.22 per basic and diluted share, compared to net income of $8.1 million, or
  $0.15 per basic share and $0.14 per diluted share, for the three months ended
  June 30, 2001.</font><font face="serif"></font></p>
</div><p> <b><u><font size=2 face="serif">Comparison of Six-Month Periods Ended June
  30, 2002 and June 30, 2001</font></u></b><font face="serif"></font> </p>
<div style="text-indent: 3%"><p> <i><font size=2 face="serif">Revenues.</font></i><font size=2 face="serif">
  During the six-month period ended June 30, 2002, our revenues decreased 15%,
  to $6.4 million, compared with $7.5 million in the six-month period ended June
  30, 2001. The decrease was principally due to a decline in technical and professional
  service revenue from our Digital Television segment. The revenue decline was
  even greater on a fully comparable basis, given that the 2001 six-month period
  included only four months of results of Intellocity, which we acquired in March
  of that year. Revenue recognized from the Livewire joint marketing arrangement
  was $1,809,906 for both periods. Such revenue represents 28% and 24% of our
  total revenues for the six months
  ended June 30, 2002 and 2001, respectively.</font><font face="serif"></font></p>
<p> <i><font size=2 face="serif">Total Selling,
  General and Administrative Expenses.</font></i><font size=2 face="serif">Total
  selling, general and administrative expenses decreased approximately 45% in
  the first half of 2002, to $14.6 million, from $26.7 million in the first half
  of 2001. The decrease reflects significantly reduced personnel, occupancy and
  related expenses in the more recent quarter as a result of our corporate restructuring
  implemented in the second half of 2001.</font><font face="serif"></font></p>
  <p> <i><font size=2 face="serif">Stock-Based Compensation.</font></i><font size=2 face="serif">
    Stock-based compensation expense was credited $6.0 million for the six months
    ended June 30, 2002, and credited $2.8 million for the six months ended June
    30, 2001. We had recorded a charge or credit to stock-based compensation expense
    based on increases in the market value of our common stock in excess of the
    exercise price of certain employee options, which were subject to variable
    option accounting treatment. In the first quarter of 2002, we rescinded the
    applicable option exercise provisions that resulted in the variable option
    accounting treatment of the options in question. Although we have other currently
    outstanding options subject to variable options accounting treatment, the
    exercise price of these options was greater than the market price on each
    reporting date since their issuance in January 2002. Accordingly, we recognized
    no stock-based compensation expense related to such options.</font></p>
<p> <i><font size=2 face="serif">Depreciation and
  Amortization</font></i><font size=2 face="serif">. Depreciation and amortization
  expense decreased 37%, to $2.7 million in the six-month period ended June 30,
  2002, from $4.3 million in the six-month period ended June 30, 2001. The decrease
  is due principally to our adoption of SFAS 142 as of January 1, 2002, resulting
  in no amortization expense for goodwill in the
  six months ended June 30, 2002.</font><font face="serif"></font></p>
<p> <i><font size=2 face="serif">Interest Income</font></i><font size=2 face="serif">.
  Interest income in first half of 2002 was $0.7 million, compared with $2.8 million
  in the first half of 2001. The decrease was the result of lower average cash
  balances during the six months ended June 30, 2001. The decrease was the result
  of significantly reduced prevailing interest rates and lower average cash balances
  during the more period. We incurred no interest expense in the first half of
  2002 or 2001.</font><font face="serif"></font></p>
</div>
<p align="center"><font size="2" face="serif">13</font></p>
<hr noshade align="center" width="100%" size=2>
<div style="page-break-before:always"></div>
<page>
<a name="p14"></a>
<div style="text-indent: 3%"><p> <i><font size=2 face="serif">Other (Expense)/Income.</font></i><font size=2 face="serif">Other
  (expense)income comprises the change in fair value of warrants held by us, which
  we currently account for as a derivative instrument, pursuant to the requirements
  of SFAS No. 133. For the six months ended June 30, 2002, we recorded a decrease
  in the value of the warrants of $9.3 million, compared with an increase of $4.2
  million for the six months ended June 30, 2001.</font><font face="serif"></font></p>
<p> <i><font size=2 face="serif">Cumulative Transition
  Effect of Change in Accounting Principle.</font></i><font size=2 face="serif">
  Effective January 1, 2001, ACTV adopted FASB Statement No. 133, &#147;Accounting
  for Derivative Instruments and Hedging Activities&#148;, as amended by SFAS
  137 and 138 (&#147;SFAS 133&#148;). SFAS 133 requires that all derivative financial
  instruments be recorded in the balance sheet at fair value. The provisions of
  SFAS 133 affected the accounting for our investment of 2.5 million restricted
  warrants for Liberty Livewire Corporation(&#147;Livewire&#148;). Prior to the
  adoption of SFAS 133, these warrants were carried at cost. With the adoption
  of SFAS 133, the Livewire investment is recorded at fair value. This resulted
  in recording a cumulative effect transition adjustment loss of $58.7 million
  at January 1, 2001. There may be periods with significant non-cash increases
  or decreases to our net income/loss pertaining to
  the Livewire investment.</font><font face="serif"></font></p>
<p> <i><font size=2 face="serif">Net Loss</font></i><font size=2 face="serif">.
  For the six months ended June 30, 2002, our net loss was $11.8 million, or $0.21
  per basic and diluted share, compared to the net loss of $71.0 million, or $1.31
  per basic and diluted share, for the
  six months ended June 30, 2001.</font><font face="serif"></font></p>
</div>
<p> <b><u><font size=2 face="serif">Liquidity and Capital Resources</font></u></b><font face="serif"></font>
</p>
<div style="text-indent: 3%"><p><font size=2 face="serif">Since our inception, we have not generated revenues
  sufficient to fund our operations and have incurred operating losses. Through
  June 30, 2002, we had an accumulated deficit of $274.8 million. Our cash position
  on June 30, 2002 (including short-term investments) was $64.3 million, compared
  with $78.0 million on December 31, 2001.</font><font face="serif"></font></p>
<p> <i><font size=2 face="serif">Net Cash Used
  In Operating Activities.</font></i><font size=2 face="serif"> During the six
  month period ended June 30, 2002, we used cash of $11.8 million for operations,
  compared with $20.9 million for the six months ended June 30, 2001. The decrease
  in net cash used by operating activities principally relates to lower operating
  losses and decreased working capital uses.</font></p>
<p> <i><font size=2 face="serif">Net Cash Used
  In Investing Activities.</font></i><font size=2 face="serif"> With regard to
  investing activities, in the six months ended June 30, 2002, we used cash of
  $10.6 million, compared to $13.9 million in the six months ended June 30, 2001.</font></p>
<p> <font size=2 face="serif">Approximately $8.7 million of the more recent period&#146;s
  total related to investments in short-term financial instruments, compared to
  $0 of such investments in the 2001 quarter. The large decrease in cash used
  in other investing activities is due principally to a significant reduction
  in capital expenditures and strategic investments.</font><font face="serif"></font></p>
<p><font size=2 face="serif">In April 2001, we provided $5 million in financing
  to Playboy.com, Inc. in the form of an 8% convertible promissory note. The note
  was automatically converted on August 13, 2001 into shares of Series A Convertible
  Preferred Stock of Playboy.com. The Series A Convertible Preferred Stock is
  convertible into common stock of Playboy.com on a one-to-one basis, and may
  be redeemed at the holder&#146;s option, after five years, and has customary
  anti-dilution provisions. Holders of the Series A Convertible Preferred Stock
  will receive a non-cumulative 8% per annum dividend. If Playboy.com is unable
  to pay the redemption price for the Series A Convertible Preferred Stock, a
  holder can require payment by Playboy Enterprises, Inc. In this event, Playboy
  Enterprises, Inc. has the option of making such payment in cash or in shares
  of its common stock.</font><font face="serif"></font></p>
<p> <i><font size=2 face="serif">Net Cash Provided By (Used In) Financing Activities.</font></i><font size=2 face="serif">
  We had no significant cash provided by or used in financing activities for either
  the six-month periods ended June 30, 2002 or June 30, 2001. We have and continue
  to fund our cash requirements from the net proceeds of a public, follow-on offering
  completed in February 2000. Through a group of underwriters, we sold a total
  of 4.6 million common shares, resulting in net proceeds of $129.4 million. In
  addition, in the year ended December 31, 2000, Liberty Digital, Inc. invested
  an additional $20 million in us by exercising a warrant granted in March 1999,
  and OpenTV and Motorola invested a total of $13.0 million in our Digital ADCO
  subsidiary.</font></p>
</div>
<p align="center"><font size="2" face="serif">14</font></p>
<hr noshade align="center" width="100%" size=2>
<div style="page-break-before:always"></div>
<page>
<a name="p15"></a>
<p> <b><font size=2 face="serif">Critical Accounting Policies</font></b><font face="serif"></font>
</p>
<div style="text-indent: 3%"><p><font size=2 face="serif">The cost of patents, which represents patent acquisition
  costs and legal costs relating to patents pending, is being amortized on a straight-line
  basis over the estimated economic lives of the respective patents (averaging
  15 years), which is less than the statutory life of each patent.</font><font face="serif"></font></p>
<p><font size=2 face="serif">We capitalize costs incurred for the development
  of software products when economic and technological feasibility of such products
  has been established. Capitalized software costs are amortized on a straight-line
  basis over the estimated useful lives of the respective products.</font><font face="serif"></font></p>
<p><font size=2 face="serif">We record a charge or a credit to stock-based compensation
  expense for increases or decreases in the market value of our common stock in
  excess of the exercise price of certain employee options that are subject to
  variable option accounting treatment. Our financial results for the three-month
  period in 2001 and the six-month periods in both 2002 and 2001 reflect credits
  in stock-based compensation pursuant to certain employee options. These credits
  are the result of market price declines of our common stock during these periods.
  In the first quarter of 2002, we rescinded the applicable option exercise provisions
  that resulted in the variable option accounting treatment of such options, and
  therefore no charges were recorded in the second quarter of 2002.</font><font face="serif"></font></p>
  <p><font size=2 face="serif">In January 2002, we canceled outstanding options
    totaling 2,093,334 shares at exercise prices of $6.50 to $13.50 and, in their
    place, granted new options totaling 1,046,667 shares at an exercise price
    of $2.00 per share. All the grantees were employees whose salary compensation
    had been reduced in conjunction with the Company&#146;s restructuring efforts
    in the second half of 2001. However, the executive officers whose salary compensation
    was reduced were not eligible to participate. The newly granted options will
    be subject to variable option accounting treatment. That is, if the closing
    market price of our common stock is greater than $2.00 per share at any reporting
    date, we will recognize a non-cash compensation expense equal to the difference
    between such market price and $2.00 times the number of outstanding option
    shares subject to variable accounting treatment. To the extent that we are
    carrying an accrued expense of this type at any given reporting date and there
    is a decline in the market price of our stock at the end of the subsequent
    reporting period, we will recognize a reduction in expense for the subsequent
    period.</font><font face="serif"></font></p>
<p><font size=2 face="serif">The preparation of financial statements in conformity
  with generally accepted accounting principles requires us to make estimates
  and assumptions that affect the reported amount of assets and liabilities and
  disclosures of contingent assets and liabilities at the date of the financial
  statements and the reported amounts of revenues and expenses during the reporting
  period. Our actual results could differ from these estimates.</font><font face="serif"></font></p>
</div>
<p> <b><font size=2 face="serif">Impact of Inflation</font></b><font face="serif"></font></p>
<div style="text-indent: 3%"><p> <font size=2 face="serif">Inflation has not had any significant effect on
  our operating costs.</font><font face="serif"></font></p>
</div>
<p> <b><font size=2 face="serif">Item 3. Quantitative and Qualitative Disclosures
  About Market Risk</font></b><font face="serif"></font> </p>
<div style="text-indent: 3%"><p><font size=2 face="serif">Our interest income is affected by changes in the
  general level of U.S. interest rates. Changes in U.S. interest rates could affect
  the interest earned on our cash equivalents and investments. Currently, changes
  in U.S. interest rates would not have a material effect on the interest earned
  on our cash equivalents and investments. A majority of these cash equivalents
  and investments earn a fixed rate of interest while the remaining portion earns
  interest at a variable rate. We do not anticipate that exposure to interest
  rate market risk will have a material impact on us due to the nature of our
  investments.</font><font face="serif"></font></p>
<p><font size=2 face="serif">During April 2000, we received a warrant to acquire
  2,500,000 shares of Livewire, a publicly traded company. The warrant becomes
  exercisable at the rate of 500,000 shares per year, commencing on April 13,
  2001, includes certain registration rights and may be exercised until March
  31, 2015. The warrant is not transferable, except in certain circumstances.
  As of January 1, 2001, changes in fair value in the investment in warrant were
  recorded to the statement of operations as we adopted SFAS No. 133. The estimated
  value of the warrant at June 30, 2002 was $7.0 million. We expect the value
  of the warrant to fluctuate based on the underlying stock price of Livewire.
  We do not currently expect to exercise or register shares
  in the coming year.</font><font face="serif"></font></p>
<p><font size=2 face="serif">We record stock-based compensation expense based
  on increases and decreases in the market price of our common stock above the
  exercise price of employee options that are subject to variable option accounting
  treatment.</font></p>
</div>
<p align="center"><font size="2" face="serif">15</font></p>
<hr noshade align="center" width="100%" size=2>
<div style="page-break-before:always"></div>
<page>
<a name="p16"></a>
<div style="text-indent: 3%"><p> <font size=2 face="serif">To the extent that we have a stock-based compensation
  obligation at the beginning of a given reporting period, we recognize a reduction
  in stock-based compensation expense related to unexercised variable options
  for that period based on a reduction of the market price for our stock at the
  end of the period. The obligation will increase as the market price for our
  common stock increases at the end of a reporting period.</font><font face="serif"></font></p>
<p><font size=2 face="serif">In January 2002, we canceled outstanding options
  totaling 2,093,334 shares at exercise prices of $6.50 to $13.50 and, in their
  place, granted new options totaling 1,046,667 shares at an exercise price of
  $2.00 per share. All the grantees were employees whose salary compensation had
  been reduced in conjunction with the Company&#146;s restructuring efforts in
  the second half of 2001. However, the executive officers whose salary compensation
  was reduced were not eligible to participate. The newly granted options will
  be subject to variable option accounting treatment. That is, if the closing
  market price of our common stock is greater than $2.00 per share at any reporting
  date, we will recognize a non-cash compensation expense equal to the difference
  between such market price and $2.00 times the number of outstanding option shares
  subject to variable accounting treatment. To the extent that we are carrying
  an accrued expense of this type at any given reporting date and there is a decline
  in the market price of our stock at the end of the subsequent reporting period,
  we will recognize a reduction in expense for the subsequent period.</font><font face="serif"></font></p>
</div>
<p align="center"><b><font size=2 face="serif">PART II. OTHER INFORMATION</font></b><font face="serif"></font></p>
<p><b><font size=2 face="Times-Bold,Times New
Roman,Times,serif">Item 1. Legal Proceedings</font></b><font face="serif"></font>
</p>
<div style="text-indent: 3%"><p><font size=2 face="serif">ACTV, Inc. and its wholly-owned subsidiary HyperTV
  Networks, Inc. are co-plaintiffs in a civil action filed against The Walt Disney
  Co., ABC, Inc., and ESPN, Inc. in December 2000, which action alleges that the
  defendants&#146; &#147;Enhanced TV&#148; system synchronizing a web site application
  to, amongst others, ESPN <i>Sunday
  Night</i> and ABC <i>Monday Night Football</i>
  telecasts has infringed and is continuing to infringe certain of the plaintiffs&#146;
  patents. In May 2002, the United States District Court for the Southern District
  of New York granted summary judgment in favor of the defendants. Without addressing
  the validity and enforceability of the three patents in suit, the Court reached
  summary judgment on non-infringement alone. On July 3, 2002, the Company appealed
  the District Court&#146;s decision to the U.S. Court of Appeals for the Federal
  Circuit in Washington, D.C.</font></p></div>
<p> <b><font size=2 face="serif">Item 2.&nbsp;&nbsp;&nbsp;Changes in Securities</font></b><font face="serif"></font>
</p>
<div style="text-indent: 3%"><p> <font size=2 face="serif">Not applicable.</font><font face="serif"></font>
</p>
</div><p> <b><font size=2 face="serif">Item 3.&nbsp;&nbsp;&nbsp;Defaults Upon Senior
  Securities</font></b><font face="serif"></font> </p>
<div style="text-indent: 3%"><p> <font size=2 face="serif">Not applicable.</font><font face="serif"></font>
</p>
</div><p> <b><font size=2 face="serif">Item 4.&nbsp;&nbsp;&nbsp;Submission of Matters to a Vote of Stockholders</font></b><font face="serif"></font>
</p>
<div style="text-indent: 3%"><p> <font size=2 face="serif">None.</font><font face="serif"></font> </p>
</div>
<p> <b><font size=2 face="serif">Item 5.&nbsp;&nbsp;&nbsp;Other Information</font></b><font face="serif"></font>
</p>
<div style="text-indent: 3%"><p> <font size=2 face="serif">None.</font></p>
</div>
<p align="center"><font size="2" face="serif">16</font></p>
<hr noshade align="center" width="100%" size=2>
<div style="page-break-before:always"></div>
<page>
<a name="p17"></a>
<p> <b><font size=2 face="serif">Item 6.&nbsp;&nbsp;&nbsp;Exhibits and Reports
  on Form 8-K</font></b> </p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top"><font size=2>(a)&nbsp;&nbsp;</font></td>
    <td valign="top" colspan="6"><font size=2>Exhibits</font></td>
  </tr>
  <tr>
    <td width="3%" valign="top">&nbsp;</td>
    <td width="3%" valign="top">&nbsp;</td>
    <td width="3%" valign="top">&nbsp;</td>
    <td width="3%" valign="top">&nbsp;</td>
    <td width="3%" valign="top">&nbsp;</td>
    <td width="3%" valign="top">&nbsp;</td>
    <td width="12%" valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top"><font size=2>11</font></td>
    <td colspan="5" valign="top"><font size=2 face="serif">Computation of net
      (loss)/income per share &#151; See Note 10.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="5" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top"><font size=2>99.1&nbsp;&nbsp;</font></td>
    <td colspan="5" valign="top"><font size=2 face="serif">Certification by David
      Reese, Chief Executive Officer</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="5" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top"><font size=2>99.2&nbsp;&nbsp;</font></td>
    <td colspan="5" valign="top"><font size=2 face="serif">Certification by Christopher
      C. Cline, Chief Financial Officer</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top" colspan="6">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top"><font size=2>(b)&nbsp;&nbsp;</font></td>
    <td valign="top" colspan="6"><font size=2>Reports on Form 8-K:</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="4" valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="4" valign="top"><font size="2"><b>Date<br>
      <u>Filed</u></b></font></td>
    <td valign="top"><font size="2"><b>Item<br>
      <u>Reported</u></b></font></td>
    <td valign="top"><font size="2"><b><br>
      <u>Event</u></b></font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="4" valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="4" valign="top"><font size="2">May 10, 2002&nbsp;</font></td>
    <td valign="top"><font size="2">Items 5 and 7.</font></td>
    <td valign="top"><font size=2 face="serif">Press Release dated May 8, 2002
      announcing the execution of a Letter Agreement by and between ACTV, Inc.
      and Liberty Media Corporation.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="4" valign="top"><font size="2">&nbsp;</font></td>
    <td valign="top"><font size="2">&nbsp;</font></td>
    <td valign="top"><font size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="4" valign="top"><font size="2">May 30, 2002&nbsp;</font></td>
    <td valign="top"><font size="2">Items 5 and 7.</font></td>
    <td valign="top"><font size=2 face="serif">Press Release dated May 24, 2002
      announcing summary judgment in favor of </font><font size=2 face="serif">the
      Walt Disney Co. and certain of its subsidiaries (collectively &#147;Walt
      Disney&#148;) </font><font size=2 face="serif">in connection with ACTV,
      Inc.&#146;s patent infringement suit against Walt Disney. </font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="4" valign="top"><font size="2">&nbsp;</font></td>
    <td valign="top"><font size="2">&nbsp;</font></td>
    <td valign="top"><font size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="4" valign="top"><font size="2">July 16, 2002</font></td>
    <td valign="top"><font size="2">Items 5 and 7.</font></td>
    <td valign="top"><font size=2 face="serif">Press Release dated July 9, 2002
      announcing the execution of an Amendment to </font><font size=2 face="serif">the
      Letter Agreement by and between ACTV, Inc. and Liberty Media </font><font size=2 face="serif">Corporation.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td colspan="4" valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
  </tr>
</table>
<p> <font size=2 face="serif"></font></p>
<p align="center"><font size="2" face="serif">17</font></p>
<hr noshade align="center" width="100%" size=2>
<div style="page-break-before:always"></div>
<page>
<a name="p18"></a>

<p align="center"> <b><font size=2 face="serif">SIGNATURES</font></b></p>
<div style="text-indent: 3%">
  <p><font size=2 face="serif">Pursuant to the requirements of the Securities
    Exchange Act of 1934, the registrant has duly caused this report to be signed
    on its behalf by the undersigned thereunto duly authorized.</font></p>
</div>
<table width=100% border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><b><font size=2 face="serif">ACTV, Inc.</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="center">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Registrant</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Date: November 15, 2002</font></td>
    <td width="40%"><u><font size=2 face="serif">/s/ David Reese</font></u></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">David Reese</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Chairman, Chief Executive Officer and </font><font size=2 face="serif">Director</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Date: November 15, 2002</font></td>
    <td><u><font size=2 face="serif">/s/ Christopher C. Cline</font></u></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Christopher C. Cline</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Chief Financial Officer<br>(Principal
      Financial and Accounting Officer)</font></td>
  </tr>
</table>
<p align="center"><font size="2" face="serif">18</font></p>
<hr noshade align="center" width="100%" size=2>
<div style="page-break-before:always"></div>
<page>
 <a name="page_19"></a>
<p align="center"> <b><font size=2 face="serif">Form of Sarbanes-Oxley Section
  302(a) Certification</font></b> </p>
<p> <font size=2 face="serif">I, Christopher C. Cline, Chief Financial Officer
  of ACTV, Inc., certify that:</font></p>
<table width=100% border=0 cellpadding=0 cellspacing=0>
  <tr align="left" valign="top">
    <td width="3%"><font size=2 face="serif">1.</font></td>
    <td><font size=2 face="serif">I have reviewed this quarterly report on Form
      10-Q/A of ACTV, Inc.;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><font size=2 face="serif">2.</font></td>
    <td><font size=2 face="serif">Based on my knowledge, this quarterly report
      does not contain any untrue statement of a material fact or omit to state
      a material fact necessary to make the statements made, in light of the circumstances
      under which such statements were made, not misleading with respect to the
      period covered by this quarterly report;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><font size=2 face="serif">3.</font></td>
    <td><font size=2 face="serif">Based on my knowledge, the financial statements,
      and other financial information included in this quarterly report, fairly
      present in all material respects the financial condition, results of operations
      and cash flows of the registrant as of, and for, the periods presented in
      this quarterly report;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><font size=2 face="serif">4.</font></td>
    <td><font size=2 face="serif">The registrant&#146;s other certifying officers and
      I are responsible for establishing and maintaining disclosure controls and
      procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
      registrant and we have:</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><font size=2 face="serif">a) designed such disclosure controls and procedures
      to ensure that material information relating to the registrant, including
      its consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this quarterly report
      is being prepared;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><font size=2 face="serif">b) evaluated the effectiveness of the registrant&#146;s
      disclosure controls and procedures as of a date within 90 days prior to
      the filing date of this quarterly report (the &#8220;Evaluation Date&#148;); and </font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><font size=2 face="serif">c) presented in this quarterly report our conclusions
      about the effectiveness of the disclosure controls and procedures based
      on our evaluation as of the Evaluation Date.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><font size=2 face="serif">5.</font></td>
    <td><font size=2 face="serif">The registrant&#146;s other certifying officers and
      I have disclosed, based on our most recent evaluation, to the registrant&#146;s
      auditors and the audit committee of registrant&#146;s board of directors (or
      persons performing the equivalent functions):</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><font size=2 face="serif">a) all significant deficiencies in the design
      or operation of internal controls which could adversely affect the registrant&#146;s
      ability to record, process, summarize and report financial data and have
      identified for the registrant&#146;s auditors any material weaknesses in internal
      controls; and</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><font size=2 face="serif">b) any fraud, whether or not material, that
      involves management or other employees who have a significant role in the
      registrant&#146;s internal controls.</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><font size=2 face="serif">6.</font></td>
    <td><font size=2 face="serif">The registrant&#146;s other certifying officers and
      I have indicated in this quarterly report whether or not there were significant
      changes in internal controls or in other factors that could significantly
      affect internal controls subsequent to the date of our most recent evaluation,
      including any corrective actions with regard to significant deficiencies
      and material weaknesses.</font></td>
  </tr>
</table>
<p><font size=2 face="serif">Date: November 15, 2002</font></p>
<div style="margin-left: 60%"><font size=2 face="serif"><u>/s/ Christopher C.
  Cline</u></font><br>
  <font size=2 face="serif">Christopher C. Cline</font><br>
  <font size=2 face="serif">Chief Financial Officer</font></div>
<hr noshade align="center" width="100%" size=2>
<page>
<a name="p20"></a>
<p align="center"> <b><font size=2 face="serif">Form of Sarbanes-Oxley Section
  302(a) Certification</font></b></p>
<p> <font size=2 face="serif">I, David Reese, Chief Executive Officer of ACTV,
  Inc., certify that:</font></p>
<table width=100% border=0 cellspacing=0 cellpadding=0>
  <tr align="left" valign="top">
    <td width="3%"><font size=2 face="serif">1.</font></td>
    <td width="95%"><font size=2 face="serif">I have reviewed this quarterly report
      on Form 10-Q/A of ACTV, Inc.;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><font size=2 face="serif">2.</font></td>
    <td><font size=2 face="serif">Based on my knowledge, this quarterly report
      does not contain any untrue statement of a material fact or omit to state
      a material fact necessary to make the statements made, in light of the circumstances
      under which such statements were made, not misleading with respect to the
      period covered by this quarterly report;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><font size=2 face="serif">3.</font></td>
    <td><font size=2 face="serif">Based on my knowledge, the financial statements,
      and other financial information included in this quarterly report, fairly
      present in all material respects the financial condition, results of operations
      and cash flows of the registrant as of, and for, the periods presented in
      this quarterly report;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><font size=2 face="serif">4.</font></td>
    <td><font size=2 face="serif">The registrant&#146;s other certifying officers and
      I are responsible for establishing and maintaining disclosure controls and
      procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
      registrant and we have:</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><div style="text-indent: 3%"><font size=2 face="serif">a) designed such
        disclosure controls and procedures to ensure that material information
        relating to the registrant, including its consolidated subsidiaries, is
        made known to us by others within those entities, particularly during
        the period in which this quarterly report is being prepared;</font></div></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><div style="text-indent: 3%"><font size=2 face="serif">b) evaluated the
        effectiveness of the registrant&#146;s disclosure controls and procedures as
        of a date within 90 days prior to the filing date of this quarterly report
        (the &#147;Evaluation Date&#148;); and</font></div></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><div style="text-indent: 3%"><font size=2 face="serif">c) presented in
        this quarterly report our conclusions about the effectiveness of the disclosure
        controls and procedures based on our evaluation as of the Evaluation Date.</font></div></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><font size=2 face="serif">5.</font></td>
    <td><font size=2 face="serif">The registrant&#146;s other certifying officers and
      I have disclosed, based on our most recent evaluation, to the registrant&#146;s
      auditors and the audit committee of registrant&#146;s board of directors (or
      persons performing the equivalent functions):</font></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><div style="text-indent: 3%"><font size=2 face="serif">a) all significant
        deficiencies in the design or operation of internal controls which could
        adversely affect the registrant&#146;s ability to record, process, summarize
        and report financial data and have identified for the registrant&#146;s auditors
        any material weaknesses in internal controls; and</font></div></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td><div style="text-indent: 3%"><font size=2 face="serif">b) any fraud, whether
        or not material, that involves management or other employees who have
        a significant role in the registrant&#146;s internal controls.</font></div></td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><font size=2 face="serif">6.</font></td>
    <td><font size=2 face="serif">The registrant&#146;s other certifying officers and
      I have indicated in this quarterly report whether or not there were significant
      changes in internal controls or in other factors that could significantly
      affect internal controls subsequent to the date of our most recent evaluation,
      including any corrective actions with regard to significant deficiencies
      and material weaknesses.</font></td>
  </tr>
</table>
<p><font size=2 face="serif">Date: November 15, 2002</font></p>
<div style="margin-left: 60%"><font size=2 face="serif"><u>/s/ David Reese</u></font><br>
  <font size=2 face="serif">David Reese</font><br>
  <font size=2 face="serif">Chief Executive Officer</font></div>
<p>&nbsp;</p>
<hr noshade align="center" width="100%" size=2>
<div style="page-break-before:always"></div>
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<TEXT>
<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
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<head>
<title>ACTV, Inc. &#151; Exhibit 99.1 &#151; EDGAR Services Provided by St Ives Burrups</title>
</head>

<body>
<PAGE> <a name="page_27"></a>
<p align="right"> <b><font size=2 face="serif">Exhibit 99.1</font></b></p>
<p align="center"> <font face="serif"><b>CERTIFICATION PURSUANT TO 18 U.S.C. SECTION
  1350, AS ADOPTED<br>
  PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</b></font></p>
<p> <font size=2 face="serif">In connection with the Quarterly Report of ACTV,
  Inc. (the &#147;Company&#148;) on Form 10-Q/A for the period ending June 30, 2002 as filed
  with the Securities and Exchange Commission on the date hereof (the &#147;Report&#148;),
  I, David Reese, Chief Executive Officer of the Company, certify, pursuant to
  18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
  Act of 2002, that:</font></p>

<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" align="right" valign="top"><font size=2 face="serif">1)</font></td>
    <td width="3%">&nbsp;</td>
    <td align="left" valign="top"> &nbsp;<font size=2 face="serif">The Report
      fully complies with the requirements of section 13(a) or 15(d) of the Securities
      Exchange Act of 1934; and</font></td>
  </tr>
  <tr>
    <td align="right" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td align="right" valign="top"><font size=2 face="serif">2)</font></td>
    <td>&nbsp;</td>
    <td align="left" valign="top"> <font size=2 face="serif">The information contained
      in the Report fairly presents, in all material respects, the financial condition
      and result of operations of the Company.</font></td>
  </tr>
</table>

<div style="margin-left: 60%">
  <p>&nbsp; </p>
  <p><font size=2 face="serif">By: <u>/s/ David Reese</u></font><br>
    <font size=2 face="serif">Name: David Reese<br>
    Title: Chief Executive Officer</font></p>
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<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>6
<FILENAME>b321447_ex99-2.htm
<DESCRIPTION>CERTIFICATION BY CHIEF FINANCIAL OFFICER
<TEXT>
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<title>ACTV, Inc. &#151; Exhibit 99.2 &#151; EDGAR Services Provided by St Ives Burrups</title>
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<p align="right"> <b><font size=2 face="serif">Exhibit 99.2</font></b> </p>
<p align="center"> <b><font face="serif">CERTIFICATION PURSUANT TO 18 U.S.C. SECTION
  1350, AS ADOPTED<br>
  PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</font></b></p>
<p> <font size=2 face="serif">In connection with the Quarterly Report of ACTV,
  Inc. (the &#147;Company&#148;) on Form 10-Q/A for the period ending June 30,
  2002 as filed with the Securities and Exchange Commission on the date hereof
  (the &#147;Report&#148;), I, Christopher C. Cline, Chief Financial Officer of
  the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
  to Section 906 of the Sarbanes-Oxley Act of 2002, that:</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="top">
    <td width="3%" align="right"><font size=2 face="serif">1)</font></td>
    <td width="3%" align="right">&nbsp;</td>
    <td> <font size=2 face="serif">The Report fully complies with the requirements
      of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and</font></td>
  </tr>
  <tr align="left" valign="top">
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td align="right"><font size=2 face="serif">2)</font></td>
    <td align="right">&nbsp;</td>
    <td> <font size=2 face="serif">The information contained in the Report fairly
      presents, in all material respects, the financial condition and result of
      operations of the Company.</font></td>
  </tr>
</table>
<p>&nbsp;</p>
<div style="margin-left: 60%"><p> <font size=2 face="serif">By: <u>/s/ Christopher C. Cline</u><br>
  Name: Christopher C. Cline<br>
  Title: Chief Financial Officer</font></p>
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