-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JA21uZ7gqmrueLZJcBXtS9GH74bZhTg6C11D8f6n0ZCRkvOEcQgYIqrW8/ky1b2w 4+LYGjejsUQ9v6JMKm5UmA== 0001116502-02-001806.txt : 20021119 0001116502-02-001806.hdr.sgml : 20021119 20021119172143 ACCESSION NUMBER: 0001116502-02-001806 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACTIVEWORLDS COM INC CENTRAL INDEX KEY: 0001089531 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 133883101 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-15819 FILM NUMBER: 02833739 BUSINESS ADDRESS: STREET 1: 95 PARKER STREET CITY: NEWBURYPORT STATE: MA ZIP: 01950 BUSINESS PHONE: 9784990222 MAIL ADDRESS: STREET 1: 95 PARKER ST CITY: NEWBURYPORT STATE: MA ZIP: 01950 10QSB 1 activeworlds10qsb-902.txt QUARTERLY REPORT U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended: September 30, 2002 Commission File No. 001-15819 Activeworlds Corp. ------------------ (Exact name of small business issuer as specified in its charter) Delaware 13-3883101 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 85 Mountainside Trail Cortland Manor, N.Y. 10567 (914) 737-6883 -------------- (Address and telephone number of principal executive offices) State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: We had 5,319,790 shares of our common stock outstanding as of November 18, 2002. Transitional Small Business Disclosure Format (check one): Yes [ ] No [X] INDEX
Page PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements Condensed Consolidated Balance Sheets as of June 30, 2002 (unaudited) and December 31, 2001 1 Condensed Consolidated Statements of Income for the three and six months ended June 30, 2002 and 2001 (unaudited) 2 Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2002 and 2001 (unaudited) 3 Notes to unaudited condensed consolidated interim financial statements 4 - 7 ITEM 2. Management's Discussion and Analysis of Interim Financial Condition and Results of Operations 8 - 9 ITEM 3. Controls and Procedures 9 PART II - OTHER INFORMATION ITEM 1. Legal Proceedings 9 ITEM 2. Change in Securities 9 ITEM 3. Defaults upon Senior Securities 9 ITEM 4. Submission of Matters to a Vote of Security Holders 9 ITEM 5. Other Information 9 ITEM 6. Exhibits and Reports on Form 8-K 10
PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements ACTIVEWORLDS CORP. Consolidated Balance Sheet
September 30, December 31, 2002 2001 * ---- ------ (Unaudited) Assets Current assets Cash $ 402,535 $ 1,840,430 Accounts receivable, trade -- 774 Due from Activeworlds, Inc. 6,916 -- Prepaid expenses and other 22,156 42,950 Investments -- 65,307 ----------- ----------- Total current assets 431,607 1,949,461 ----------- ----------- Property and equipment, at cost Leasehold improvements -- 27,334 Equipment and fixtures -- 395,141 ----------- ----------- -- 422,475 Less: accumulated depreciation and amortization -- 181,341 ----------- ----------- Property and equipment, net -- 241,134 ----------- ----------- Total assets $ 431,607 $ 2,190,595 ----------- ----------- Liabilities and Stockholders' Equity Current liabilities Current portion - capital lease $ -- $ 878 Accounts payable 56,611 21,287 Accrued liabilities -- 52,857 Deferred revenue -- 185,665 ----------- ----------- Total current liabilities 56,611 260,687 ----------- ----------- Commitments and contingencies Stockholders' equity Preferred stock, $.001 par value, 500,000 shares authorized, no shares issued or outstanding -- -- Common stock, $.001 par value, 50,000,000 shares authorized, 5,319,790 shares issued and outstanding 5,320 8,515 Additional paid-in capital 6,344,393 6,344,393 Note receivable for shares issued -- (6,500) Treasury stock (867,664) (118,403) Accumulated deficit (5,107,053) (4,232,627) Accumulated other comprehensive income (loss) -- (65,470) ----------- ----------- Total stockholders' equity 374,996 1,929,908 ----------- ----------- Total liabilities and stockholders' equity $ 431,607 $ 2,190,595 ----------- -----------
*Derived from audited financial statements See notes to consolidated financial statements 1 ACTIVEWORLDS CORP. Consolidated Statement of Operations
Three Months Ended Nine Months Ended September 30 September 30 ------------ ------------ 2002 2001 2002 2001 ---- ---- ---- ---- (Unaudited) (Unaudited) Revenues $ 11,452 $ 115,482 $ 268,956 $ 378,152 ----------- ----------- ----------- ----------- Operating expenses Selling, general and administrative expenses 204,119 537,664 939,806 1,967,131 Research and development expenses 10,039 99,756 218,397 217,009 ----------- ----------- ----------- ----------- Total operating expenses 214,158 637,420 1,158,203 2,184,140 Loss from operations (202,706) (521,938) (889,247) (1,805,988) Interest income 2,171 19,169 14,821 90,675 ----------- ----------- ----------- ----------- Income (loss) before (provision for) benefit from income taxes (200,535) (502,769) (874,426) (1,715,313) (Provision for) benefit from income taxes -- -- -- -- ----------- ----------- ----------- ----------- Net loss (200,535) (502,769) (874,426) (1,715,313) Other comprehensive income (loss) - unrealized (losses) on securities -- (65,470) -- (65,470) ----------- ----------- ----------- ----------- Comprehensive income (loss) $ (200,535) $ (568,239) $ (874,426) $(1,780,783) Earnings (loss) per share of common stock Basic $ (.036) $ (.067) $ (.116) $ (.201) ----------- ----------- ----------- -----------
See notes to consolidated financial statements 2 ACTIVEWORLDS CORP. Consolidated Statement of Cash Flows
Nine Months Ended September 30 ------------ 2002 2001 ---- ---- (Unaudited) Operating activities Net loss $ (874,426) $(1,715,313) Adjustment to reconcile net loss to net cash used in operating activities Depreciation and amortization 18,405 52,262 Contract billing adjustment -- 216,880 Options issued for compensation and services -- 13,500 Contracts in progress in excess of billings -- 91,857 Changes in operating assets and liabilities which provided (used) cash Accounts receivable 774 (6,223) Advances to officer/employees -- (939) Due from Activeworlds, Inc. (6,916) -- Prepaid expenses 20,794 194,155 Accounts payable 35,324 (35,818) Accrued liabilities (52,857) (26,191) Deferred revenue -- 32,958 ----------- ----------- Net cash used in operating activities (858,902) (1,182,872) ----------- ----------- Investing activities Purchases of equipment and leasehold improvements (1,434) (51,952) ----------- ----------- Net cash used in investing activities (1,434) (51,952) ----------- ----------- Financing activities Payments on capital lease obligation (878) (7,583) Purchase of Treasury stock (576,681) -- ----------- ----------- Net cash used in financing activities (577,559) (7,583) ----------- ----------- Net decrease in cash (1,437,895) (1,242,407) Cash at beginning of period 1,840,430 3,491,818 ----------- ----------- Cash at end of period $ 402,535 $ 2,249,411 ----------- ----------- Supplemental disclosure information Cash paid for interest during the period $ -- $ 356 ----------- ----------- Cash paid for income taxes during the period $ -- $ -- ----------- ----------- Supplemental schedule of non cash investing and financing activities Common stock received in lieu of cash on contracts receivable $ -- $ 130,770 ----------- ----------- Non-cash items in connection with the sale of subsidiary $ (175,775) $ -- ----------- -----------
See notes to consolidated financial statements 3 Note 1 - Basis of presentation The accompanying 2002 and 2001 unaudited interim consolidated financial statements included herein have been prepared by Activeworlds Corp. ("the Company"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to prevent the information presented from being misleading. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's Form 10-KSB, which contains financial information for the years ended December 31, 2001 and 2000. The information provided in these financial statements reflects all adjustments (consisting solely of normal recurring accruals) that are, in the opinion of management, necessary to present fairly the results of operations for this period. The results for this period are not necessarily indicative of the results to be expected for the full year. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. The Company suffered a substantial consolidated net loss during the year ended December 31, 2001 and has net capital at December 31, 2001 in an amount less than its net loss for 2001. The Company expended significant funds towards its marketing effort and for investments in people to expand the Company's revenue during 2001. These costs continued to impact operating results during the nine months ended September 30, 2002. As discussed more fully in note 7, the Company has completed the sale of its existing business as part of the sale of its wholly-owned subsidiary, Activeworlds, Inc. Management is exploring future business opportunities to best utilize Company assets. Note 2 - Deferred revenue Deferred revenue consists of the following: September 30, December 31, 2002 2001 (Unaudited) Deferred memberships $ -- $ 71,293 Advances on royalties -- 24,227 Deferred licenses -- 90,145 -------- -------- $ -- $185,665 -------- -------- Note 3 - Income taxes At September 30, 2002, the Company has a net operating loss carryforward of approximately $4,680,000 that may be used to offset future taxable income. An allowance has been established for the full amount of gross deferred tax assets of approximately $1,872,000 due to the uncertainty of utilizing the deferred taxes in the future. 4 Note 4 - Net (loss) per share of common stock The number of shares on which the basic net (loss) per share of common stock has been calculated is as follows: Periods -------------------------------- Weighted Average Three Months Ended September 30, Number of Shares -------------------------------- ---------------- (Unaudited) 2002 5,632,388 2001 8,515,235 Weighted Average Nine Months Ended September 30, Number of Shares ------------------------------- ---------------- (Unaudited) 2002 7,543,726 2001 8,515,235 Diluted net (loss) per share of common stock has not been presented for the three and nine months ended September 30, 2002 and 2001 since the effect of including the stock options and warrants outstanding would be antidilutive. Note 5 - Long-term contracts In 1999, the Company entered into a significant long-term contract. Revenue from the contract was recognized as the phases were accepted by the customer. At December 31, 1999, the Company had not completed a phase under the contract and contract payments received were recognized as deferred revenue. At December 31, 2000, as the contract developed and more reliable estimates were available, the percentage-of-completion method of accounting was determined to be the preferable method of accounting for long-term contracts. Under the percentage-of-completion method of accounting, costs and estimated gross margins are recorded as revenue as work is performed based on the percentage that incurred costs bear to estimated total costs utilizing the most recent estimates of costs. Billings on the contract are recorded as advance billings until the contract is substantially completed. As of September 30, 2002 and December 31, 2001, costs and estimated gross margin on the contract in excess of advanced billings was $-0- as there was not any significant work in progress as of those dates. Note 6 - Revenue Sharing Agreement - litigation During 2000, the Company entered into an agreement with an internet on-line service provider to promote and market the Activeworlds Corp. services to the service provider's members. The term of the agreement was one year. Revenue from new members generated under the agreement is shared equally. The agreement required Activeworlds Corp. to make four quarterly installments in the amount of $112,500 each as a guarantee against further 5 revenues earned from memberships derived from the on-line provider. As of September 30, 2002 and December 31, 2001, the Company made three installments in the total amount of $337,500. Approximately $18,039 was received from memberships under the contract as of December 31, 2001. The contract expired in 2001. The Company is currently in litigation regarding adjustments to the contract due to the lack of registrations received under the agreement. At this time the outcome of the litigation process cannot be determined. Note 7 - Sale of subsidiary (Activeworlds, Inc.) On July 10, 2002 Activeworlds Corp. entered into an Agreement and Plan of Exchange (the "Agreement"). Under the Agreement, the Company agreed to sell all of the issued and outstanding shares of common stock of its subsidiary, Activeworlds, Inc. to the Company's management as of the date of the Agreement (the "Former Management"). The Former Management agreed to sell the Company 2,595,445 shares of the Company's common stock representing approximately 30% of the outstanding shares. Under the Agreement, the Former Management resigned, terminated their employment agreements and assumed all expenses associated with the business of Activeworlds, Inc., and the Company agreed to pay Former Management $425,000 and up to $15,000 of their legal fees. At the same time, in a separate transaction, Former Management agreed to sell 1,000,000 shares of common stock to a 10% stockholder (the "Stockholder"), contingent upon closing the transactions under the Agreement. The Agreement is subject to the approval of a majority of the outstanding shares of common stock of the Company. The Former Management issued irrevocable proxies to the Stockholder who has the power to vote a majority of outstanding shares and intends to vote in favor of sale of Activeworlds, Inc. to the Former Management. On September 9, 2002 the sale of Activeworlds, Inc. was approved by the consent of the majority of outstanding shares of common stock and the transactions under the Agreement closed. In accordance with the terms of the agreement, the subsidiary was sold to the Former Management effective as of the date of the Agreement (July 10, 2002). Noncash items in connection with the sale of the subsidiary are as follows:
Property and equipment (net of accumulated depreciation of $199,746) $ (224,163) Investment in ASCM (65,307) Unrealized loss on investment in ASCM (65,407) Deferred revenue 185,602 Note receivable for shares issued (6,500) --------------- $ (175,775)
Note 8 - Issuance of common stock warrants On August 27, 2002 the Company issued 300,000 common stock warrants to the Stockholder in connection with a contract to provide consulting services. The common stock warrants are exercisable for five years and can be exercised at $.06 per share, the fair market value of the stock at the date of the agreement. 6 Note 9 - Issuance of common stock options On July 15, 2002, two members of the Board of Directors received 200,000 stock options and another board member, Mr. Sean Deson, the Company's current president, received 100,000 stock options of the Company. Mr. Deson cancelled his options for no consideration out of concern for existing stockholders. The options expire on July 15, 2007 and are exercisable at the fair market value of the stock at the date of the agreement. Note 10 - Pro forma information On July 10, 2002, the Company sold Activeworlds, Inc. to Former Management (see note 7). The Company currently has limited activity after the sale of the subsidiary. As required, the following schedule provides pro forma financial information for the periods presented as though the sale of the subsidiary occurred at the beginning of the periods.
Three Months Ended Nine Months Ended September 30 September 30 ------------ ------------ 2002 2001 2002 2001 ---- ---- ---- ---- (Unaudited) (Unaudited) Revenues $ -- $ -- $ -- $ -- -------- -------- -------- -------- General and administrative 7,500 7,500 30,000 30,000 -------- -------- -------- -------- Loss from operations (7,500) (7,500) (30,000) (30,000) Interest income 2,000 4,000 6,000 12,000 -------- -------- -------- -------- Loss before (provision for) benefit from income (5,500) (3,500) (24,000) (18,000) taxes (Provision for) benefit from income -- -- -- -- taxes Net loss $ (5,500) $ (3,500) $(24,000) $(18,000) -------- -------- -------- -------- Loss per share of common stock Basic $ (.001) $ (.001) $ (.003) $ (.002) -------- -------- -------- --------
7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF INTERIM FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of our financial condition and results of operations should be read together with the financial statements and related notes included in this Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in those forward-looking statements as a result of certain factors, including, but not limited to, those contained in the discussion on forward-looking statements that follows this section. Overview The discussion below is based upon the historical financial operations of the Company as required by the rules of the SEC. On September 9, 2002, we sold Activeworlds, Inc. to the Former Management. Effective July 10, 2002 when the Agreement was signed, the Former Management began operating the business of Activeworlds, Inc. While technically the results of operations prior to that date are included in the Company's results of operations for the current quarter, the Company's cash resources were not used to support the losses of Activeworlds, Inc. which had continued at least through July 10th. We did, however, make payments to the Former Management equal to their former salaries which payments were a credit against the sums due to them under the Agreement. Results of Operations Net Revenues. During the quarter ended June 30, 2002, net revenues were $11, 452 which was a substantial decrease from $115,482 for the same period in 2001. This resulted from the sale of Activeworlds, Inc. effective as of July 10, 2002. For the nine months ended September 30, 2002, net revenues were $268,956 in contrast to $378,152 for the same period in 2001. Expenses. Operating expenses were $214,158 for the quarter ended September 30, 2002 in contrast to $637,420 for the same quarter in 2001. Total operating expenses for the nine months ended September 30, 2002 were $1,158,203 or an almost 50% reduction from the $2,184,140 for the same period in 2001 Net Loss. The Company sustained a net loss for the three months of $200,535 in contrast to a net loss of $502,769 for the same period in 2001. For the nine months ended September 30, 2002, the Company's net loss of $874,426 was in contrast to a net loss of $1,715,313 for the same period in 2001. Liquidity and Capital Resources For the nine months ended September 30, 2002, net cash used in operating activities was $858,902 versus $1,182,872 for the same period in 2001. In the nine months ended September 30, 2002, the Company used $1,434 in investing activities while in the same period in 2001, we used $51,952. For the nine months ended September 30, 2002, the Company used net cash of $577,559 in financing activities in contrast to $7,583 in the same period in 2001. The change occurred almost solely as a result of the Company's purchase of shares of common stock from the Former Management. At September 30, 2002, the Company's cash balance was $402,535. Although we have limited cash on hand, we believe cash is sufficient for the next 12 months because we have no business operations and only minimal costs. However, we are actively looking to acquire an existing business in order to provide an opportunity to create stockholder value. Depending upon the business and financial condition of any company we acquire, we may need future financing. 8 Forward-Looking Statements The statement made above relating to the adequacy of our working capital is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act of 1995. The statements that express the "belief", "anticipation", "plans", "expectations", "will" and similar expressions are intended to identify forward-looking statements. The results anticipated by any or all of these forward-looking statements might not occur. Important factors, uncertainties and risks that may cause actual results to differ materially from these forward-looking statements include (1) our ability to complete an acquisition and (2) the business and financial condition of any company we acquire. We undertake no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise. ITEM 3. CONTROLS AND PROCEDURES In accordance with Section 302 of the Sarbanes-Oxley Act of 2002 and the rules thereunder, our chief executive officer and chief financial officer (who is the same person) reviewed our disclosure controls and procedures. This review was completed within the time required by law. Because of our inactive status, one person is our sole officer and director. Accordingly, this review was not reported to the board of directors in the sense contemplated by this Item. Based upon this review, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective and are sufficient to meet the requirements for this report. In addition, we reviewed our internal controls, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date we carried out this evaluation. Previously, when we were engaged in the operation of a business, we had a bookkeeper report to our then chief financial officer and we had an independent board of directors. PART II - OTHER INFORMATION Item 1. Legal Proceedings Not applicable. Item 2. Changes in Securities Not applicable. Item 3. Defaults Upon Senior Securities Not applicable. Item 4. Submission of Matters to a Vote of Security Holders Although no consents or authorizations were solicited, the Company's principal stockholder approved the sale of Activeworlds, Inc. to its former management. A Schedule 14C filed with the Securities and Exchange Commission on September 17, 2002 was mailed to the Company's other stockholders. Item 5. Other Information Not applicable. 9 Item 6. Exhibits and Reports on Form 8-K (a) Exhibit Index Exhibit Number Description - -------- --------------------------------------------------------------------- 10.1 Agreement and Plan of Exchange(1) 10.2 Amendment to Agreement and Plan of Exchange 99.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by the Chief Executive Officer and Chief Financial Officer (1) Contained in Form 8-K filed on July 12, 2002. (b) Reports on Form 8-K. Two Reports on Form 8-K were filed during the quarter ended September 30, 2002 . The first Report was filed on July 12, 2002 to report entering into the Agreement. The second Report, filed on September 12, 2002, disclosed the closing of the transactions contemplated by the Agreement. 10 SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf on November 18, 2002 by the undersigned, thereunto duly authorized. Activeworlds Corp. /s/ Sean Deson Sean Deson, President and Chief Financial Officer 11 CERTIFICATION I, Sean Deson, certify that: 1) I have reviewed this report on Form 10-QSB of Activeworlds Corp.; 2) Based on my knowledge, this 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 report; 3) Based on my knowledge, the financial statements, and other financial information included in this 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 report; 4) I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made know to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report my conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5) I have disclosed, based on my most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function); a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6) I have indicated in this 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 or our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Dated: November 18, 2002 /s/ Sean Deson -------------------------------------- Sean Deson President and Chief Financial Officer 12 EX-10.2 3 letteragreement_ex10-2.txt LETTERAGREEMENT EXHIBIT 10.2 ACTIVEWORLDS, INC. 85 Mountainside Trail Cortland Manor, N. Y. 10567 (914) 737-6883 Fax: (914) 737-1541 August 13, 2002 VIA FACSIMILE (978) 499-0221 Mr. J.P. McCormick Mr. Richard F. Noll Activeworlds Corp. 95 Parker Street Newburyport, MA 01950 Dear J.P. and Rick: This letter agreement serves to amend the Agreement and Plan of Exchange by and between Activeworlds Corp., Activeworlds, Inc., JP McCormick and Richard F. Noll (the "Agreement") in the following respects: 1. Section 1.02 shall be amended to change the date from August 15, 2002 to September 15, 2002. 2. Section 7.01(vi) shall be amended to change the date from August 15, 2002 to September 15, 2002. In all other respects the Agreement is ratified and confirmed. Please execute a copy of this Agreement and fax it to me at the number indicated above. Sincerely yours, /s/ Alex Adelson ---------------- Alex Adelson President We hereby agree to the foregoing: /s/ J.P. McCormick - ------------------ J.P. McCormick /s/ Richard F. Noll - ------------------- Richard F. Noll EX-99.1 4 ceo-certification.txt CEO CERTIFICATION Exhibit 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the report of Activeworlds Corp. (the "Company") on Form 10QSB for the period ending September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Sean Deson, President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge, such knowledge being limited by the fact that I was not an officer of the Company until August 26, 2002: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Sean Deson - ----------------- Name: Sean Deson Title: President and Chief Financial Officer Date: November 19, 2002 -----END PRIVACY-ENHANCED MESSAGE-----