<PAGE>
 
<PAGE>

     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 20, 1996

                         REGISTRATION STATEMENT NO. 33-
                         --------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                       ----------------------------------
                             WASHINGTON, D.C. 20549
                             ----------------------

                                  ------------


                                    FORM S-8

             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                                  ------------


                                   ACTV, INC.
             (Exact name of Registrant as specified in its charter)


DELAWARE                         4894                           94-2907258
- --------------------------------------------------------------------------------
(State or other            (Primary Standard                  (IRS Employer
 jurisdiction of        Industrial Classification           Identification No.)
 incorporation or                Code)
 organization)


                           1270 AVENUE OF THE AMERICAS
                            NEW YORK, NEW YORK 10020
                                 (212) 262-2570
                                 --------------
               (Address, including zip code and telephone number,
        including area code, of Registrant's principal executive offices)

                  CONSULTING AGREEMENT DATED FEBRUARY 15, 1996
                ------------------------------------------------
                            (Full Title of the Plan)

                               WILLIAM C. SAMUELS
                                    PRESIDENT
                                   ACTV, INC.
                           1270 AVENUE OF THE AMERICAS
                            NEW YORK, NEW YORK 10020
                                 (212) 262-2570
                                  ------------
            (Name, address, including zip code and telephone number,
                   including area code, of agent for service)
                                  ------------
                                   Copies To:
                             JAY M. KAPLOWITZ, ESQ.
                    GERSTEN, SAVAGE, KAPLOWITZ & CURTIN, LLP
                              575 LEXINGTON AVENUE
                            NEW YORK, NEW YORK 10022
                                 (212) 752-9700

If any of the  securities  being  registered on this Form are to be offered on a
delayed or continuous  basis  pursuant to Rule 415 under the  Securities  Act of
1933, check the following box [x]



<PAGE>
 
<PAGE>



                         CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================================================
Title of              Amount Being         Proposed Maximum           Proposed             Amount of
Securities To Be      Registered(1)        Offering Price Per         Maximum              Registration Fee
Registered                                 Security(2)                Aggregate
                                                                      Offering Price
- ---------------------------------------------------------------------------------------------------------------
<S>                <C>                <C>                        <C>                  <C>
Common
Stock, par value
$.10 per share
                      6,500(3)                      $4.03(4)            $26,195              $100
                                                     ----              -------

===============================================================================================================
Total
Registration
Fee                                                                                         $100
===============================================================================================================
</TABLE>

(1)        Pursuant to Rule 416, the  Registration  Statement also relates to an
           indeterminate number of additional interests to be offered or sold to
           the employee benefit plan described herein.

(2)        The price is estimated in accordance  with Rule  457(h)(i)  under the
           Securities  Act of  1933,  as  amended,  solely  for the  purpose  of
           calculating the registration fee.

(3)        These shares were issued pursuant to a consulting  agreement  between
           the Company and Mr. Charles Payne dated February 15, 1996.

(4)        Based on the average of the closing bid and asked prices per share of
           the Common Stock as quoted by the National  Association of Securities
           Dealers Automated Quotation System on May 27, 1996.


                                      (ii)

<PAGE>
 
<PAGE>


                                   ACTV, INC.
                                    -------

                              CROSS-REFERENCE SHEET
                   (BETWEEN ITEMS OF FORM S-3 AND PROSPECTUS)
                                    --------
<TABLE>
<CAPTION>
FORM S-3 ITEM AND CAPTION                              PROSPECTUS CAPTIONS
- -------------------------                              --------------------
<S>   <C>                                            <C>
1.     Forepart of Registration                        Front Cover Page
       Statement and Cover Page
       of Prospectus

2.     Inside Front and Outside                        Inside Front and Outside Back Cover
       Back Cover Pages of Prospectus                  Page;  Additional Information,
                                                       Incorporation of Certain Documents
                                                       by Reference

3.     Summary Information and Risk                    The Company; Risk Factors
       Factors

4.     Use of Proceeds                                 Use of Proceeds

5.     Determination of Offering Price                 Inside Front Cover

6.     Dilution                                        *

7.     Selling Security Holders                        Selling Stockholder

8.     Plan of Distribution                            Plan of Distribution

9.     Description of Securities                       *
       to be Registered

10.    Interests of Named Experts                      Legal Matters, Experts
       and Counsel

11.    Material Changes                                Risk Factors

12.    Incorporation of Certain                        Incorporation of Certain Information
       Information by Reference                        by Reference

13.    Disclosure of Commission                        Indemnification of Officers
       Position on Indemnification                     and Directors
       for Securities Act Liabilities
</TABLE>

* Not Applicable

                                      (iii)

<PAGE>
 
<PAGE>



                                EXPLANATORY NOTE


This Registration Statement on Form S-8/S-3 relates to the registration of 6,500
shares (the  "Shares")  of Common  Stock,  par value $.10 per share (the "Common
Stock") of ACTV, Inc., a Delaware  Corporation  ("ACTV" or the "Company") by the
Company,  on behalf of Charles  Payne (the "Selling  Stockholder").  Such Shares
were issued to the Selling  Stockholder in connection with a written  consulting
agreement  between the Selling  Stockholder and the Company,  dated February 15,
1996 (the "Consulting Agreement").  A Prospectus has been prepared in accordance
with the requirements of Form S-3 pursuant to General  Instruction C of Form S-3
relating to the Shares.



                                     PART I

              INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS

Pursuant to the Note to Part I of the Form S-8, the information required by Part
I is not required to be filed with the Securities and Exchange  Commission  (the
"Commission").

The  Company  will  provide  without  charge to each  person to whom a copy of a
Section  10(a)  Prospectus  hereunder  is  delivered,  upon the oral or  written
request of such person, a copy of any document incorporated in this Registration
Statement by reference,  except  exhibits to such  documents.  Requests for such
information should be directed to ACTV, Inc., 1270 Avenue of Americas, New York,
New York 10020, Attention: Secretary, telephone number (212) 262- 2570.

                                      (iv)

<PAGE>
 
<PAGE>



PROSPECTUS
                                   ACTV, INC.


                          6,500 SHARES OF COMMON STOCK

                            Par Value, $.10 Per Share


This Prospectus  relates to the offer and sale of 6,500 shares (the "Shares") of
Common Stock,  par value $.10 per share (the "Common  Stock"),  of ACTV, Inc., a
Delaware  corporation  ("ACTV" or the "Company"),  by the Company,  on behalf of
Charles Payne (the "Selling Stockholder"). The Shares were issued to the Selling
Stockholder  pursuant  to a written  consulting  agreement  between  the Selling
Stockholder  and  the  Company,   dated  February  15,  1996  (the   "Consulting
Agreement").  The  Company's  Common  Stock is traded on the  over-the-  counter
market on the NASDAQ Small Cap Market  ("NASDAQ")  and the Boston Stock Exchange
("BSE").  On May 27, 1996,  the closing bid and asked  quotations for the Common
Stock as reported on NASDAQ were 3 15/16 and 4 1/8 per share, respectively.

The Shares covered by this  Prospectus may be offered and sold from time to time
directly by the Selling  Stockholder or through brokers in the  over-the-counter
market or otherwise at market prices  prevailing at the time of such sales or in
one or  more  negotiated  transactions  at  prices  acceptable  to  the  Selling
Stockholder. No specified brokers or dealers have been designated by the Selling
Stockholder  and no  agreement  has been  entered  into in respect of  brokerage
commissions or for the exclusive or coordinated sale of any securities which may
be  offered  pursuant  to this  Prospectus.  The  net  proceeds  to the  Selling
Stockholder will be the proceeds received by him upon such sales, less brokerage
commissions,  if any.  The  Company  will  pay all  expenses  of  preparing  and
reproducing this Prospectus. The Company will receive proceeds from the exercise
of the Options,  but will not receive any other  proceeds  from any sales by the
Selling Stockholder.

THESE  SECURITIES  HAVE NOT BEEN APPROVED OR DISAPPROVED BY THIS  SECURITIES AND
EXCHANGE  COMMISSION (THE  "COMMISSION") OR ANY STATE SECURITIES  COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE  COMMISSION OR ANY STATE  SECURITIES  COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.  ANY  REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.


NO  DEALER,  SALESMAN  OR ANY  OTHER  PERSON  HAS  BEEN  AUTHORIZED  TO GIVE ANY
INFORMATION  OR  TO  MAKE  ANY   REPRESENTATION   OTHER  THAN  AS  CONTAINED  OR
INCORPORATED  BY REFERENCED  HEREIN AND IF GIVEN OR MADE,  SUCH  INFORMATION  OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
THIS  PROSPECTUS  DOES NOT CONSTITUTE AN OFFER TO SELL OR A  SOLICITATION  OF AN
OFFER TO BUY SECURITIES BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY
NOT BE LAWFULLY BE MADE.  NEITHER THE DELIVERY OF THIS  PROSPECTUS  NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THE INFORMATION HEREIN SINCE
THE DATE HEREOF. SEE "RISK FACTORS."

                   ------------------------------------------

                   The date of this Prospectus is June , 1996


<PAGE>
 
<PAGE>


                              AVAILABLE INFORMATION


The  Company is  subject to the  informational  requirements  of the  Securities
Exchange Act of 1934 (the  "Exchange  Act") and in  accordance  therewith  files
reports  and  other  information  with  the  Commission.   Such  reports,  proxy
statements,  registration  statements  and  other  information  can be  examined
without charge at the public reference  section  maintained by the Commission at
450 Fifth Street,  N.W.,  Washington,  D.C.  20549 and, upon payment of the fees
prescribed by the Commission, copies may be obtained therefrom and at certain of
the Commission's Regional Offices located at 7 World Trade Center, New York, New
York 10048, 5757 Wilshire Boulevard, Los Angeles, California 90024; and 500 West
Madison  Street,  Northeastern  Atrium  Center,  Suite 1400,  Chicago,  Illinois
60661-2511.

The  Company's  Common Stock is quoted on The Nasdaq  Stock  Market  ("NASDAQ").
Reports,  proxy  statements,   information  statements,  and  other  information
concerning  the  Company  can  be  inspected  at  the  office  of  the  National
Association  of  Securities  Dealers,  Inc.,  located  at 1735 K  Street,  N.W.,
Washington, DC 20006.

This  Prospectus  is part of a  registration  statement  on  Form  S-8/S-3  (the
"Registration  Statement")  under the  Securities  Act of 1933 (the  "Securities
Act") which the Company has filed with the  Commission for the  registration  of
the securities offered by this Prospectus.  This Prospectus does not contain all
of the information set forth in the Registration  Statement and the exhibits and
schedules  thereto.  For  further  information  with  respect  to  the  Company,
reference is hereby made to such Registration Statement, exhibits and schedules,
which may be obtained  from the  Commission's  principal  office in  Washington,
D.C., upon payment of the fees prescribed by the Commission.


                                        2

<PAGE>
 
<PAGE>


                INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The  following   documents   filed  by  the  Company  with  the  Commission  are
incorporated herein by reference:

          (1)  The  Company's  Registration  Statement on Form S-1 (File No. 33-
               34618) which was declared effective on May 4, 1990.

          (2)  Annual Report on Form 10-K for the year ended December 31, 1994.

          (3)  Annual  Report on Form  10-K/A-1 for the year ended  December 31,
               1994.

          (4)  Quarterly  Report on  Form  10-Q for the  quarterly  period ended
               March 31, 1995.

          (5)  Quarterly Report on Form 10-Q for the quarterly period ended June
               30, 1995.

          (6)  Quarterly  Report  on Form  10-Q  for  quarterly  period  ended
               September 30, 1995.

          (7)  Annual Report on Form 10K for year ended December 31, 1995.

          (8)  Annual Report on Form 10K/A-1 for year ended December 31, 1995.

          (9)  Post-Effective Amendment  No.  1 to  The  Company's  Registration
               Statement on  Form  S-1 (File No.  33-63879)  which was  declared
               effective on March 20, 1996.

          (10) Quarterly  Report on  Form 10-Q for quarterly  period ended March
               31, 1996.

In addition to the foregoing,  all documents  subsequently  filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the
filing  of a  post-effective  amendment  indicating  that all of the  securities
offered  hereunder have been sold or deregistering all securities then remaining
unsold shall be deemed to be incorporated by reference in this Prospectus and to
be part hereof from the date of filing of such documents.

Any statement contained in a document  incorporated or deemed to be incorporated
by reference in this Prospectus shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement  contained  herein or
in any subsequently filed document which also is or is deemed to be incorporated
by reference  herein  modifies or supersedes  such  statement.  Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to  constitute  a part of this  Prospectus.  All  information  appearing in this
Prospectus  is  qualified  in its  entirety  by the  information  and  financial
statements  (including  notes thereto)  appearing in the documents  incorporated
herein by reference, except to the extent set forth in the immediately preceding
statement.

The Company  will provide  without  charge to each person to whom a copy of this
Prospectus is delivered, upon the oral or written request of such person, a copy
of any document incorporated in this Prospectus by reference, except exhibits to
such  information,  unless such  exhibits  are also  expressly  incorporated  by
reference herein. Requests for such information should be directed


                                       3

<PAGE>
 
<PAGE>

to ACTV, Inc., 1270 Avenue of the Americas, New York, New York 10020, Attention:
Secretary, telephone number (212) 262-2570.

                                        4

<PAGE>
 
<PAGE>



                                   THE COMPANY

ACTV,  Inc.  ("ACTV" or the  "Company")  has developed  proprietary  Programming
Technologies  (the  "Programming   Technology")  that  individualize  television
programming.   ACTV's   Programming   Technology   permits   the   delivery   of
individualized television,  which, in the Company's view, significantly enhances
the  quality  of most  genres  of  television  programming.  ACTV's  Programming
Technology  provides  instant and  seamless  changes in the live or  prerecorded
video picture and/or audio and/or graphics in response to the various selections
supplied by each viewer.  A specially  prepared ACTV program (the "ACTV Program"
or "ACTV Programming") is like a linear TV program, except that it appears to be
individualized  for  each  viewer.  (Linear  programs  are  standard  television
programs  that can be viewed  only as  created  and do not offer the  viewer the
option to make  choices as to the  content  of the  program or to respond to the
contents  of the  program in an  individualized  way.)  There is no limit to the
number of viewers who can interact simultaneously with an ACTV Program.

ACTV's  individualized  programming  is  designed  to work with both  single and
multiple  channels of 6MHz band-width and with different modes of  transmission:
cable, direct broadcast satellite ("DBS"),  multi-microwave distribution systems
("MMDS"),  broadcast  systems,  distance  learning  networks and closed  circuit
televisions  systems.  It is compatible with commonly  available  one-way analog
systems as well as the newer  digital  systems  that have  recently  begun to be
deployed.

ACTV's strategy is to generate  revenues from the sale of ACTV  Programming that
it either  owns,  has licensed or that has been created by a third party under a
license from ACTV,  including fees paid by subscribers to premium cable networks
in which the Company has an  ownership  interest.  The  Company's  mission is to
improve the quality of entertainment and education television programming.

The  Company  also  believes  that the  Programming  Technology  can enhance the
quality of television  advertising  by enabling the advertiser to customize each
commercial for various audience segments.  It is the Company's objective to seek
advertiser support for its individualized home entertainment networks.

The chief  markets  presently  targeted by the Company for the ACTV  Programming
Technology are in-home  entertainment,  education  (with an emphasis on distance
learning), site-based entertainment and internet applications. The Company seeks
to  exploit  these  markets,  principally  in the U.S.,  through  licensing  the
Programming Technology,  by creating joint venture relationships,  and by direct
sales.

The  Company  has eight  subsidiaries,  which  include a national  entertainment
company, a national education company,  a  three-dimensional  company,  and five
regional  television  networks:  ACTV Entertainment Inc., a New York corporation
("ACTV Entertainment") incorporated on March 9, 1988, ACTV Interactive,  Inc., a
Delaware corporation  incorporated on July 8, 1992, 3D Virtual, Inc., a Delaware
corporation  incorporated  on July  20,  1995,  The Los  Angeles  Individualized
Television Network, Inc., a Delaware corporation  incorporated on March 7, 1995,
The  San  Francisco   Individualized   Television  Network,   Inc.,  a  Delaware
corporation  incorporated  on December  22,  1995,  The  Chicago  Individualized
Television Network,  Inc., a Delaware  corporation  incorporated on December 22,
1995,  The  New  York  Individualized   Television  Network,  Inc.,  a  Delaware
corporation incorporated on December 22, 1995, and The

                                       5

<PAGE>
 
<PAGE>

Atlanta   Individualized   Television  Network,  Inc.,  a  Delaware  corporation
incorporated on December 22, 1995. Unless otherwise indicated, all references in
this Prospectus to the Company or ACTV include ACTV and its eight subsidiaries.

ACTV was incorporated  under the laws of the State of Delaware on July 24, 1989.
The Company is the  successor,  by merger  effective  November 1, 1989, to ACTV,
Inc.,  a California  corporation,  organized  on July 11,  1983.  The  Company's
executive offices are located at 1270 Avenue of the Americas, New York, New York
10020, telephone number (212) 262-2570.

ENTERTAINMENT

The Company  anticipates  that its  individualized  programming will be launched
through    regional    premium    cable    programming    services    that   are
advertiser-supported,  with monthly subscription prices comparable to other U.S.
premium channels.

In March 1995,  the Company  formed The Los  Angeles  Individualized  Television
Network,  Inc., one of its wholly-owned operating  subsidiaries,  to operate the
Company's individualized television trial in Southern California and the planned
regional  television  network that would  roll-out to the  potential 4.8 million
sports  subscribers in the region that reaches from Los Angeles to San Diego and
Phoenix, if the trial is successful.

The trial,  which marked the  introduction of the Company's first U.S.  regional
individualized  network (the "Regional  Network"),  commenced in the Los Angeles
area in May 1995.  The  trial  involves  1,000  cable  subscribers  and will run
throughout 1996 and may extend into 1997. The Company believes that the Regional
Network is the first  programming  service in the U.S. to both enhance  existing
programming and offer new individualized content.

Programming for the Regional Network is being provided to ACTV by Prime Sports -
West, a unit of Liberty Sports,  which is a joint venture of  Telecommunication,
Inc.'s ("T.C.I.") Liberty Media and the News Corporation.  Prime Sports-West has
4.8 million  subscribers in the Southwest region of the U.S. Prime Sports - West
is providing the Company with access to all its regional  sports  programming at
no cost to the Company. Similarly, Cable News Network, Inc. ("CNN") provides, at
no cost to the Company,  access to Prime News,  Sports Tonight,  Inside Politics
and other selected shows. Similarly, the Game Show Network ("GSN"), a subsidiary
of Sony  Entertainment,  Inc.  ("Sony")  provides GSN  programming  and Viacom's
Nickelodeon  children's  programming  at no cost to the  Company  in return  for
consumer research,  pursuant to agreements entered into in November 1995 and May
1996,  respectively.  The cable  operator for the  Regional  Network is T.C.I.'s
Ventura County Cablevision.

In  all  cases,  the  Company  is  responsible  for  the  incremental   content,
transmission,  delivery and master control costs incurred in connection with the
enhancement of the Prime Sports West CNN, Sony and Nickelodeon programming.

The Company  entered into the  arrangement  with Prime Sports in February  1994,
with respect to the Regional  Network.  Assuming future  commercialization  of a
regional  network in the footprint of Prime Sports - West no later than December
31, 1996,  Prime Sports - West would  receive an exclusive in its  footprint for
sports  programming  and the companies will pursue a business  understanding  of
revenue sharing anticipated to include a license fee paid to Prime Sports - West
for each subscribing household on a monthly basis.


                                        6

<PAGE>
 
<PAGE>


The Company  entered into the agreement  with CNN in August 1995 with respect to
the Regional  Network.  Upon  commercialization,  CNN and ACTV will  negotiate a
royalty  agreement  and/or  advertising  split  for use of CNN  programming.  In
addition,  CNN shall receive protection until December 31, 1997 to become ACTV's
exclusive  provider of national and  international  news. CNN will also be given
the opportunity to be an equity investor in any new regional networks created by
ACTV.

Regional Network viewers,  in addition to sports, news game shows and children's
programming, are able to individualize education programs produced by ACTV.

The Company plans, assuming a successful test phase, to direct initial marketing
of the Regional Network toward a majority of Ventura City  Cablevision's  90,000
subscribers in the Los Angeles and Ventura County areas. In addition,  expansion
could  follow in other Prime  Sports - West  markets  and,  in stages,  in other
regional   markets  within  the  U.S.  The  Company  has  established  four  new
wholly-owned   subsidiaries   which   would   serve   as   additional   regional
individualized  networks  covering  the San  Francisco,  Chicago,  New  York and
Atlanta  regions in the event that the Company decides to expand and provide the
services  provided by the Regional  Network in other regions  across the U.S. To
date, the four new  wholly-owned  subsidiaries  have not engaged in any business
activities,  nor does the Company  have any present  intention  to launch  their
activities.  The Regional Network,  and any expansion plans related thereto,  is
part  of the  Company's  plan  to  develop  the  entertainment  division  of its
business,  which to date,  does not generate any revenue for the Company.  There
can be no  assurance  that the results  predicted  with  respect to the Regional
Network will be realized, or if realized, will generate significant revenues for
the Company.

ACTV  first   introduced  its   individualized   programming   applications  for
entertainment  outside  the  United  States  through  a  license  with Le Groupe
Videotron, Ltee. ("LGV"), the second largest Canadian cable/broadcast television
company.  The license was  modified  in June 1993  whereby  ACTV gave up all its
royalty income for Canada and Europe. See  "Reorganization of ACTV Entertainment
LGV Agreements."

EDUCATION

ACTV's principal  strategy in education is to become the leading  individualized
programming  technology in the developing field of distance  learning,  in which
ACTV Programming, both live and pre-recorded,  can be transmitted simultaneously
to multiple sites in a satellite, fiber or microwave network.

ACTV  is  currently  developing  new  two-way  analog  and  digital  programming
technologies for distance learning.  This is a  point-to-multipoint  interactive
broadcast system that can deliver  prerecorded  interactive lessons or integrate
interactive  segments into live  distance  learning  lessons.  By using a simple
remote  control,  the student is able to alter program  content to suit specific
needs and interests.  Students receive individualized  responses to their input,
and at the end of the lesson,  the classroom  teacher receives a printout of the
performance of each class member.

ACTV's new distance learning system is being  commercially  introduced,  with an
installation  in Georgia,  that the Company  believes will  represent one of the
industry's  most  advanced  distance  learning  projects.  ACTV and the State of
Georgia have entered into an agreement  through which ACTV's  distance  learning
system and software will be integrated into the Georgia

                                       7

<PAGE>
 
<PAGE>

Statewide  Academic and Medical System ("GSAMS"),  an existing fully interactive
service providing audio, video and data to classrooms.

In  addition,  127  individualized  television  titles  have been  produced  and
introduced  into the  kindergarten  to 12th grade market.  The programs focus on
reading,  math, and vocational  education.  To date,  programs have been sold to
approximately  300  different  schools  across  the  U.S.,  along  with  an ACTV
classroom  system -- a terminal with compatible ACTV  Programming  functionality
that  currently  permits up to 24 students in a classroom to view single channel
ACTV Programs  simultaneously.  Education products are marketed through a direct
and distributor sales force.

Individualized  programming is produced jointly through license  agreements with
educational publishers,  including Turner Educational Services, Inc. ("Turner"),
Phoenix, Bergwall, AIT, AIMS, Hasty Pudding and TakeOff.

In 1995,  the Company  also signed a distance  learning  agreement  with General
Instrument  Corporation  ("GI").  ACTV's  Programming  Technology  for  distance
learning  will be integrated  with GI's  DigiCipher'r'  system.  The new digital
system will be called "DigiCipher/ACTV  Distance Learning System" and will allow
programming  networks to develop  individualized  programming  and distribute it
digitally to their customers.

The  Company  markets its  products  through its wholly  owned  subsidiary  ACTV
Interactive,  Inc., which was formed in 1992. Originally a joint venture general
partnership  with the  Washington  Post  Company  (the  "Post  Company")  , ACTV
Interactive became a wholly owned subsidiary of the Company in March 1994.

SITE-BASED ENTERTAINMENT AND INTERNET APPLICATIONS

In  January  1995,  the  Company  granted  an  exclusive  license  to  Greenwich
Entertainment  Group  ("The  Greenwich  Group")  for the use of its  Programming
Technology in the theater  environment,  specifically in shopping malls, museums
and entertainment  centers.  In April, 1996, the Company invested  approximately
$250,000 in the Greenwich Group.


The  Company  will  receive  an 8% to 10%  royalty  of annual  ticket  sales per
theater,  dependent  upon each  theater's  volume.  The Company  will  receive a
minimum  royalty of $200,000  in 1996,  $500,000  in 1997,  $1,000,000  in 1998,
$1,250,000  in 1999 and  $1,500,000  in the year  2000  and  thereafter.  If the
minimum  is not paid,  the  Company  has the right to cancel  its  license as to
future theaters.

The first  theater  opened in the Mall of America in  Minneapolis,  Minnesota on
November 18, 1995.  Recently,  the  Greenwich  Group  reached an agreement  with
United Artists  Theatre Circuit ("UA") to build one to five theaters within UA's
entertainment  complexes. The first theater will be built in the Meadows Mall in
Denver,  Colorado.  The Greenwich Group will need to raise additional capital in
order to complete this project.

In July 1995, the Company established a new wholly-owned subsidiary, 3D Virtual,
Inc., to explore the commercial  possibilities of integrating  three-dimensional
("3D") technology and the Company's Programming Technology, using new technology
for which a patent is  currently  pending.  Initial  business  activity  for the
development of a prototype has just commenced.

                                        8

<PAGE>
 
<PAGE>



In December  1995,  the Company  entered  into a joint  venture  agreement  with
EarthWeb,  LLC, a developer of internet  technologies  and a pioneer in JAVA(TM)
language applications, to develop new joint internet software applications.  The
first program being  developed,  Hyper TV, will enable  television  producers to
launch  web pages that  directly  correspond  to their  video  content  during a
broadcast.

ACTV PROGRAMMING TECHNOLOGY

The ACTV  Programming  Technology  provides  instant and seamless changes in the
live or prerecorded  video picture and/or audio and/or graphics based on various
selections made by viewers.  The program appears to be a standard TV program, as
if it were individualized for each viewer.  Viewer selections are made through a
four button remote control, thereby limiting the viewer's number of choices when
inputting each response to four answers previously  anticipated by the program's
creators.

ACTV's process of creating individualized television programming involves viewer
selection from a multiple number of frame-synchronized  video, graphics,  and/or
audio  signals  delivered at one time.  The viewer sees and/or hears only one of
the signals at a given moment; the other signals are transparent. Using a remote
control,  the viewer  interacts  with the  television  by making  selections  or
decisions  called for by the  specially  prepared  programming.  In  response to
viewer's inputs, the ACTV Programming  Technology,  which uses a microprocessor,
automatically  switches at pre-determined  intervals between various segments of
the multiple signals. In one-way analog transmission,  this switching will occur
in the  viewer's  cable  box,  such  as  LGV's  Videoway,  while  with  two  way
transmission, it may occur at the source of the transmission.  The viewer cannot
detect when such a switch takes place because it occurs instantly and with frame
accuracy.

The results appear seamless and  uninterrupted -- for the viewer the programming
is  completely  individualized.  Although  an  individualized  program  and  its
associated  branches are taped in a normal  linear  fashion,  the program,  when
shown, has thousands of possible  permutations  and  combinations  available for
each viewer to experience. The particular version seen is based on each viewer's
individually selected preferences and inputs. An unlimited number of independent
viewers can interact with an ACTV Program simultaneously.

The ACTV  microprocessor  receives digital  information from codes embedded into
the video program  material.  It thus maintains  "memory" on the progress of the
viewer  and  provides  automatic  branching.  At  appropriate  times  during the
program, the microprocessor  circuitry will make branch switches  automatically,
accumulate  data,  recall  information,   create  graphics  and/or  implement  a
pre-programmed set of instructions.

In single channel analog (6MHz of band-width)  applications,  ACTV's Programming
Technology can individualize  audio and/or graphics,  based on multiple signals.
When  additional  analog  channels of  band-width  are  available,  video can be
individualized  as well. In digital systems  multiple video,  audio and graphics
can be individualized in 6MHz of band-width.

To develop individualized  programming the Company generally seeks to form joint
ventures or licensing agreements with producers of standard linear shows or with
networks that have rights to such shows.  ACTV  Programming  can be created in a
number  of ways:  enhancing  existing  programs  that have  been  produced  in a
standard  linear format,  adding  "piggy-back"  branch  alternatives  during the
shooting of ongoing shows, or creating entirely original productions that

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are solely for ACTV's purposes.

The cost of ACTV  original  productions  has been on average  approximately  20%
higher than a linear version of the same program of comparative length. However,
production costs are  significantly  lower than regular linear  television shows
when existing material can be enhanced,  or when productions are "piggy-backed."
Production  costs  vary  significantly   based  upon  the  nature  and  type  of
programming to be produced.  An advantage of  individualized  programming is its
higher   repeatability,   as  compared  to   standard   programming,   since  an
individualized  program's  cost  can be  amortized  over  a  greater  number  of
showings.

The types of  entertainment  programs  that the Company  plans to emphasize  are
sports, news, education,  game shows, children's programs and music. The Company
envisions  that  its  in-home  services  will  be  supported  by  individualized
advertising. The programming focus for education is reading, math and vocational
education. Examples of ACTV Programming are:

1) Sports.  Sporting events in the ACTV individualized  format allow each viewer
in essence to become the  director of the program by selecting  close-ups,  wide
angle shots, replays, statistics, player interviews and other features as may be
provided.  ACTV's  Programming  Technology  also allows the viewer to respond to
questions posed throughout the game. The system's memory records these responses
and  winners  may be  offered  promotional  premiums,  such as tickets to future
games.

2) News.  In the first  segment of a news  program,  viewers can choose  between
in-depth  follow-ups  of headline  stories.  Later in the  program,  viewers can
choose  segments on  different  categories  of news  (international,  financial,
entertainment, politics, etc.).

3)  Children's  Programs.  ACTV's  Programming  Technology  allows  children  to
participate in television programs by answering questions from the characters on
screen,  giving the characters  advice -- even changing the plot of the program.
In addition to this dialogue children can have with the characters, children can
also be asked to predict the outcome of events, or as with sports,  see an event
from different angles.

4) Music.  Viewers are able to select a particular music video they want to see,
or the order they want to see them. Viewers may also choose to see the lyrics of
a music video,  or access other  information  about the musicians.  In addition,
with live or  prerecorded  concert  performances,  viewers can select from up to
four camera angles in a manner similar to live sports broadcasting.

5) Game Shows. The Programming  Technology  allows game show viewers to actively
participate in the game.  They can decide which celebrity team to play on, enter
their  answers  and  receive  individualized  responses  to their  choices.  The
system's  memory  ability keeps the viewers  informed of their  performance  and
provides final results at the conclusion of the show. This provides  advertisers
and sponsors with the opportunity to offer promotional  premiums to viewers with
the best scores.

6) Advertising.  ACTV's  Programming  Technology offers  television  advertisers
unique  opportunities  to target  their  message.  Commercials  can be  targeted
demographically:  Men, women,  boys and girls can all see different  commercials
during the same  commercial  break.  By asking the viewer basic questions at the
beginning  of the  program,  the ACTV  Programming  Technology  can recall  this
information during a commercial break and based upon such

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information  send the viewer the appropriate  advertisement.  A second advantage
for  advertisers  is the concept of  individualized  commercials.  For  example,
before a commercial  break in a sporting event,  viewers are asked which type of
car they would like to hear about:  sedan, truck, sport utility or luxury sedan.
ACTV's Programming  Technology  records this choice,  then sends the appropriate
commercial  to  each  viewer.  This  same  choice  can be  recalled  at a  later
commercial break to provide additional information.

7) Live Distance Learning. Distance learning ("DL") networks typically involve a
teacher  broadcasting  a lesson to dozens or even  hundreds of remote  classroom
sites.  ACTV's  Programming  Technology  for DL allows  the DL teacher to create
questions or offer choices relating to the lesson and pre-record  individualized
responses.  At selected  points in the lesson,  the DL teacher can  initiate the
questions  and  interactions,  with each  student  across the network  receiving
individualized responses. In addition, the ACTV Programming Technology gives the
teacher immediate feedback on the students'  responses,  allowing the teacher to
pace the lesson  accordingly.  The  system's  memory  component  can recall each
student's  performance  throughout  the entire  semester,  giving the  teacher a
detailed accounting of their progress.

8) Educational  Programming.  Younger classroom students learn basic reading and
math  skills,  and  older  students  learn  vocational  and  career  skills,  in
pre-recorded  individualized  television  programs  using  the ACTV  Programming
Technology.  Just as in the  case  of the DL  programming,  as the  pre-recorded
television program progresses, a teacher appears on screen and asks the students
questions about the material presented.  Students respond to the questions, then
receive  individualized  feedback  based  on  their  answers.  At the end of the
lesson,  the classroom  teacher  receives a report  detailing the results of the
performance of the entire class,  as well as the  performance of each individual
student.

RESEARCH AND DEVELOPMENT

The Company is engaged in a field  characterized  by extensive  research efforts
and rapid, significant  technological change. During 1993, the Company began its
current research and development projects, relating primarily to the development
of a new  analog/digital  two-way  distance  learning  system.  There  can be no
assurance that research or development by others will not render the Programming
Technology  obsolete  or that the  research  and  development  performed  by the
Company and/or its licensees and joint venture partners will continue or will be
successful.  The Company entered into a collaborative  agreement in August, 1995
with  The  David  Sarnoff   Research  Center   ("Sarnoff")  to  investigate  and
potentially  develop  digital   applications  of  the  Programming   Technology.
Currently,  the Company,  Sarnoff, and General Instrument Corporation ("GI") are
working  together to  incorporate  ACTV's  programming  technology  into GIs new
MPEG-2 digital terminal.

The Company expended approximately $250,000 in the first quarter of 1996 related
to these research and development  projects and may spend an additional $500,000
during the remainder of 1996.

GOVERNMENT REGULATION

The  Company  believes,  on the basis of its review of current  legislation  and
regulations that neither its present nor any proposed commercial  implementation
of the ACTV Programming Technology on distance learning networks, closed circuit
television  systems,  cable,  DBS or MMDS will require  governmental  license or
approval. Certain broadcast applications and


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copper pairs with ADSL may require  governmental  approval.  No assurance can be
given that applicable  laws will not change.  In the event such approval were to
be required,  there can be no assurance that the Company would be able to obtain
such  approval or the licenses  required for the further  implementation  of the
ACTV Programming Technology.

MARKETING AND PROGRAM PRODUCTION

The primary markets targeted by the Company for the ACTV Programming  Technology
are in-home  entertainment,  education (with an emphasis on distance  learning),
and  site-based  entertainment.  The  Company  seeks to  exploit  these  markets
principally in the US through licensing the Programming Technology,  by creating
joint venture relationships, and by direct sales. To date, the Company's capital
requirements to develop the Programming  Technology,  produce ACTV  Programming,
develop  marketing  approaches  and strategic  alliances,  and to cover costs of
sales and general and administrative expenses, have been significant,  resulting
in an accumulated deficit as of March 31, 1996 of approximately $32.9 million.

The Company will  continue to implement a marketing  program  consisting  of the
employment  of  sales  and  marketing  personnel,  contracting  with  sales  and
marketing  consultants,  and the use of promotional  efforts,  including product
demonstrations  and  participation in trade shows and  conferences.  The Company
currently has two  entertainment  marketing  executives,  four educational sales
people and fifteen educational distributors.

In entertainment, the Company has licensed the Programming Technology to LGV and
The  Greenwich  Group and  continues to seek other  licensees  and joint venture
partners both in and outside the United States. The Company is and will continue
to be dependent  upon the ability of  licensees  and joint  venture  partners to
offer  products  and  services  that are  commercially  viable,  and to actively
promote and distribute the Programming Technology.

Since 1993, ACTV has not been active with LGV in Canada and Europe and no longer
receives any royalty income from the license. Focus group testing in Los Angeles
that preceded the Prime Sports - West and CNN agreements  indicated  interest in
ACTV  sports,   news,  game  shows,   and  in  its  educational  and  children's
programming.

The  Greenwich  Group has licensed  the  Programming  Technology  for use in the
theater environment, principally in shopping malls. The first children's theater
opened in the Mall of America in Minneapolis, Minnesota, on November 18, 1995.

In March 1995,  the Company  formed The Los  Angeles  Individualized  Television
Network,  Inc., one of its wholly-owned operating  subsidiaries,  to operate the
Company's individualized television trial in Southern California and the planned
regional  television  network that would  roll-out to the  potential 4.8 million
sports  subscribers in the region that reaches from Los Angeles to San Diego and
Phoenix, if the trial is successful.

The trial,  which marked the  introduction of the Company's first U.S.  regional
individualized  network (the "Regional  Network"),  commenced in the Los Angeles
area in May 1995.  The  trial  involves  1,000  cable  subscribers  and will run
throughout 1996 and may extend into 1997. The Company believes that the Regional
Network is the first  programming  service in the U.S. to both enhance  existing
programming and offer new individualized content.

Programming for the Regional Network is being provided to ACTV by Prime Sports -
West,

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a unit of Liberty Sports, which is a joint venture of Liberty Media and the News
Corporation.  Prime Sports - West has approximately  4.8 million  subscribers in
the Southwest region of the U.S., CNN, GSN and  Nickelodeon.  The cable operator
is  Ventura   County   Cablevision,   a  subsidiary  of  TCI.  See  "BUSINESS  -
Entertainment."

The Company has established four new wholly-owned subsidiaries which would serve
as  additional  regional  individualized  networks  covering the San  Francisco,
Chicago,  New York and Atlanta  regions in the event that the Company decides to
expand and  provide  the  services  provided  by the  Regional  Network in other
regions across the U.S. To date, the four new wholly-owned subsidiaries have not
engaged  in any  business  activities,  nor does the  Company  have any  present
intention to launch their activities. There can be no assurance that the results
predicted with respect to the Regional Network will be realized, or if realized,
will generate significant revenues for the Company.

The Company, its licensees or joint venture partners must produce and/or provide
individualized  programming for the Company to continue commercial entertainment
operations in the U.S. For the most part,  the Company,  its licensees and joint
venture  partners  are  dependent  upon third  parties as sources for the linear
programming that is to be enhanced into ACTV Programming.  For the entertainment
market,  all  programming to date has been produced either through LGV or by the
Company itself.

With respect to the  education  market,  the Company has executed  non-exclusive
agreements with seven entities to obtain linear  programming that it can enhance
to create ACTV Programs.  Linear programs are standard  television programs that
can be viewed  only as  created  and do not offer the  viewer the option to make
choices  as to the  content of the  program  or to respond to the  program in an
individualized way.

The Company has entered into agreements with Turner Educational Services,  Inc.,
Phoenix  Learning Group,  Bergwall  Productions,  Inc., The Hasty Pudding Puppet
Co., AIMS Media,  Agency for Instructional  Technology ("AIT") and Takeoff/Video
Educational Excellence. Each of these agreements gives ACTV worldwide, perpetual
marketing  rights (except for the AIT  agreement,  which limits the rights to 15
years) to the  programming  produced.  The  companies  are to receive  quarterly
royalties, based on the number of units of ACTV Programs sold.

There can be no  assurance  that the  Company  will be  successful  in  reaching
agreements  with  licensees  and  joint  venture  partners,  that the  Company's
strategy of marketing the Programming Technology through its licensees and joint
venture partners will be successful,  or that the methods that its licensees and
joint  venture  partners  choose to market the  Programming  Technology  will be
successful.  Further, the Company may be adversely affected by the financial and
business  considerations  of its licensees and joint  venture  partners.  Future
joint  venture and license  agreements  may provide that the licensees and joint
venture  partners  will  receive  equity  interest  in the  Company  and/or  its
subsidiaries.

SET-TOP CONVERTERS, TERMINALS, AND OTHER INTERACTIVE DEVICES

The Company does not intend to manufacture set-top converters,  terminals, video
servers, or other interactive devices.

In  the  entertainment  market,  ACTV  signed,  on  June  8,  1993,  a  20-year,
non-exclusive,   royalty-free  manufacturing  license  with  LGV.  The  Videoway
terminal manufactured through

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LGV is an  analog  ACTV-compatible  set-top  converter  available  to  potential
distributors of ACTV  Programming.  In April 1996,  ACTV and General  Instrument
Corporation  ("GI")  signed a  non-exclusive  manufacturing  agreement  for GI's
MPEG-2  digital  terminal.  The digital  terminals are scheduled for delivery in
late 1996 or early 1997. The Company intends to grant  licensees  similar to the
one granted to LGV and GI to other manufacturers that are selected by the future
distributors of ACTV Programming.

ACTV's  Programming  Technology  can work with different  modes of  transmission
(cable,  DBS,  broadcast,  and MMDS), and is compatible with commonly  available
one-way,  analog systems.  In addition,  it is compatible with the newer digital
systems that are just starting to be deployed. Therefore, there are many ways to
design  a  distribution  system  that  is  compatible  with  ACTV's  Programming
functionality.  The Company  believes that the  incremental  cost of adding ACTV
Programming functionality will not be significant in digital systems.

There can be no assurance  that the Company  will be  successful  in  developing
additional manufacturing licenses.

In the education market,  the Company entered into an arrangement in March 1995,
with General Instrument  Corporation ("GI") pursuant to which ACTV's Programming
Technology for distance learning will be integrated with GI's DigiCipher system.
The DigiCipher is a digital decoder used by many distance learning networks that
distribute  their  television  signal  digitally  and require that the signal be
decoded  at  their  downlink  sites.  The new  digital  system  will  be  called
"DigiCipher/ACTV  Distance Learning System," and will allow programming networks
to develop  individualized  programming  and  distribute  it  digitally to their
customers. Under the arrangement, the companies will cooperate technically, each
paying their own costs,  and GI would  receive any revenues  generated  from the
DigiCipher  decoder while the Company would receive any revenues  generated from
the digital learning unit. At present,  the Company and GI's concerted  research
and technical  work toward the  development  of the new digital system is in its
initial stage and will take most of the remainder 1996 to complete. There can be
no assurance  that the new digital  system will be  developed,  or if developed,
that it will generate significant revenues for the Company.

The Company  executed a non-exclusive  agreement in June 1992 with KDI Precision
Products,  Inc. ("KDI") to manufacture  ACTV's  classroom and distance  learning
systems, with compatible ACTV Programming  functionality.  KDI sells the systems
to ACTV at prices and in accordance  with a delivery  schedule  agreed upon from
time to  time.  KDI  also is a  distributor  of  components  such as  television
monitors, VCRs, remote controls,  printers and cabinets used in conjunction with
the  systems.  The  agreement  is subject to  automatic  renewal for  additional
one-year terms unless terminated by either party on six-months' written notice.

KDI is currently the only  manufacturer  of the classroom and distance  learning
systems.  The Company believes that KDI can produce  sufficient  systems to meet
the anticipated  needs of ACTV in the education  marketplace.  In the event that
KDI were  unable to supply  the  systems,  there  can be no  assurance  that the
Company  could  produce  sufficient  systems or obtain  sufficient  systems from
another  manufacturer  at an acceptable  price.  The inability of ACTV to obtain
systems would have a material adverse affect on the business of the Company.

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CONSOLIDATION OF EDUCATIONAL PARTNERSHIP INTO ACTV

On July 14, 1992, ACTV  Interactive,  Inc. entered into a partnership  agreement
with  Post-Newsweek  Education,  Inc.,  a  wholly-owned  subsidiary  of the Post
Company,  pursuant to which ACTV  Interactive  was formed as a Delaware  general
partnership,  for the purpose of selling products and services incorporating the
ACTV Programming Technology to the education market. The Post Company received a
51%  interest  in ACTV  Interactive;  ACTV  Interactive,  Inc.,  a  wholly-owned
subsidiary of the Company, received a 49% interest in ACTV Interactive.

In connection with the formation of the partnership,  the Company entered into a
license agreement (the "License  Agreement") with ACTV Interactive.  Pursuant to
the License Agreement, ACTV Interactive was given licenses to exploit certain of
the Company's patents and related technology (collectively the "Patents") in the
creation and  distribution  of educational  programming.  The License  Agreement
provided that the Company receive five percent (5%) of all revenues generated by
ACTV Interactive.

On March 11, 1994, the Company purchased the Post Company's full 51% interest in
ACTV Interactive for  consideration of $4.5 million,  consisting of $2.5 million
in cash at closing and a $2 million  promissory  note. The note was paid in full
in October 1995.  The  consideration  paid by the Company for the Post Company's
full  51%  interest  in  ACTV  Interactive  was  determined  after   arms-length
negotiations between the parties. The Company and the Post Company agreed to the
amount of such consideration  without receiving a valuation from a disinterested
third party.

REORGANIZATION OF ACTV ENTERTAINMENT AND THE LGV AGREEMENTS

In March 1988, the Company formed ACTV  Entertainment as equal stockholders with
a subsidiary of LGV,  Videotron  Technologies  Ltd. The Company  granted to ACTV
Entertainment the exclusive right to use the Company's Programming Technology in
the United States DBS, cable and broadcast television markets.

On June 8, 1993, LGV withdrew from its ownership in ACTV Entertainment,  and the
Company became the sole shareholder in ACTV Entertainment  under the terms of an
agreement with the subsidiary of LGV,  thereby  settling all  outstanding  legal
disputes between the companies.

While ACTV  gained  full  ownership  and  control of ACTV  Entertainment  in the
settlement, it did agree to give up the royalty income it was receiving from its
Videoway  terminal  license  with LGV for Canada and Europe  ($3.00 per user per
year).  Simultaneously  with  the  June 8,  1993  change  in  ownership  of ACTV
Entertainment, the 1987 LGV exclusive foreign license for Canada, Europe and the
Soviet  Union was  renegotiated.  The new license  provides  LGV with a 20-year,
non-exclusive,  royalty-free  license to manufacture its Videoway  terminal with
compatible ACTV Programming functionality. Videoway is an analog cable converter
box  capable of  providing a variety of advanced  services,  including  standard
cable tuning and decoding capabilities, access to videotext,  closed-captioning,
data banks,  video games,  software  downloading and electronic mail. LGV is not
currently  producing  ACTV  programming  in  Montreal  and is in the  process of
selling its London, England cable systems.

Under the  modified  license,  LGV has a  20-year,  non-exclusive,  royalty-free
license to manufacture  Videoway  terminals that incorporate  ACTV's Programming
Technology. The agreement also allows LGV to produce ACTV Programming itself for
a certain number of

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potential Videoway subscribers in Canada (1,300,000),  Europe (500,000), and the
United States  (500,000).  The license is subject to the condition  that neither
LGV nor its sub-licensees receive any royalty or other fees with respect to ACTV
Programming,  except for promotion and direct  production  expenses paid by LGV.
Any royalties from third parties will be paid exclusively to ACTV.

The Company and LGV entered into their original  agreement during the infancy of
the  development  of interactive  television.  LGV had developed its Videoway TV
set-top  converter,  which,  among  other  things,  enabled  it to  provide  its
subscribers with interactive capacity. The arrangement provided the Company with
an outlet for its ACTV Programming while providing LGV with interactive  product
for its Videoway converter. As both companies developed, however, their missions
began to  diverge:  LGV wanted to market its  Videoway  converter  in the United
States,  and was less interested in the actual  production of ACTV  Programming,
while the Company was  interested in expanding its  programming  capacity and in
making  its  ACTV  Programming   available  for  use  with  set-top   converters
manufactured  and distributed by others.  The  restructuring of the relationship
with LGV enabled both companies to focus on their respective  goals, in that LGV
now has the non-exclusive  right to market the Videoway  converter in the United
States,  and the  Company  has  control  of ACTV  Programming  development.  See
"Reorganization of ACTV Entertainment and the LGV Agreements."

PATENTS, APPLICATIONS, AND PROPRIETARY TECHNOLOGY

The Company has sought to protect the  proprietary  features of the  Programming
Technology it employs through patents,  copyrights,  confidentiality agreements,
and trade  secrets  both in the United  States and  overseas.  As of the present
time,  the United States  Patent and  Trademark  Office has issued nine patents,
with five additional  patents pending,  three of which name Dr. Michael Freeman,
the Company's Advanced Product Development  Liaison, as an inventor thereof, and
two of which name Dr. Freeman and Gregory Harper, former President -- Technology
Consulting Group, and one of which named Richard Bennett,  who is not affiliated
with the Company, as inventors thereof.  The patents,  which deal with different
aspects of the ACTV Programming Technology, expire at various dates from 1998 to
2009.

Corresponding  patents for some of the above U.S.  patents  have been granted or
are pending in Canada,  Japan,  Australia and the European Patent Office. When a
patent  is  granted  by the  European  Patent  Office,  and upon the  filing  of
appropriate  translations,  protection  will  be  available  in  the  designated
European  countries.  The Company  believes  such  patents will  strengthen  its
competitive position in the aforementioned countries.

Dr. Freeman,  Mr. Harper and Mr. Bennett have assigned to the Company all right,
title, and interest in and to the above US patents and any corresponding foreign
patents or applications  based thereon.  In addition,  Dr. Freeman has agreed to
assign to the  Company  the rights and title in and to all  future  patents  and
applications,  and any corresponding  foreign patents or application relating to
the ACTV Programming Technology.

There can be no assurance that the patents held by the Company are  enforceable,
particularly in view of the high cost of patent litigation, nor can there be any
assurance that the Company will derive any competitive advantages therefrom.  To
the extent that patents are not issued for any other  products  developed by the
Company,  the  Company  would be subject to more  competition.  The  issuance of
patents may be insufficient to prevent competitors from essentially  duplicating
the Company's  products by designing around the patented  aspects.  In addition,
there

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can be no assurance  that the  Company's  products  will not infringe on patents
owned by others, licenses to which may not be available to the Company, nor that
competitors  will  not  develop   functionally   similar  products  outside  the
protection of any patents the Company has or may obtain.

The Company requires each of its employees,  consultants and advisors to execute
a  confidentiality  and  assignment of  proprietary  rights  agreement  upon the
commencement of employment or a consulting  relationship with the Company. These
arrangements generally provide that all inventions, ideas, and improvements made
or conceived  by the  individual  arising out of the  employment  or  consulting
relationship  shall be the exclusive  property of the Company.  This information
shall be kept confidential and not disclosed to third parties, except by consent
of the Company or in other specified  circumstances.  There can be no assurance,
however,  that  these  agreements  will  provide  effective  protection  for the
Company's proprietary information in the event of unauthorized use or disclosure
of such information.

COMPETITION

The development of interactive  television  applications is highly  competitive.
The Company competes within the television industry with many other applications
which may be considered  interactive.  Moreover,  the Company also competes with
other forms of entertainment and educational programming, many of which are much
more  established,  including  standard  television  programming and the rapidly
growing  CD-ROM  market.  Among the  Company's  competitors  in both the area of
interactive  television  and in other  media are  companies  that  have  greater
financial, technical and marketing resources than the Company.

At the present  time,  there are a number of  different  interactive  television
applications  that have been developed or are under  development by others which
might be considered to be competitive with the Company's Programming Technology.
These  other  interactive  applications  in  general  are  delivered  via  cable
television,  or through  play-along devices that are attached to the television.
To the best of the Company's knowledge, none of the point to multi-point systems
based on these  technologies  allow the  viewer  to  affect  what is seen on the
television  in  the  same  manner  or to the  extent  of  the  ACTV  Programming
Technology.

The new  interactive  television  applications  principally  fit in six  primary
categories:  (1)  information  and channel  guide  services,  (2)  transactional
services,  (3)  quantity/video-on-demand,  (4) separate device  play-along,  (5)
video games and (6) individualized TV.

ACTV fits in the  individualized  TV category.  Only  individualized  television
allows every  television  viewer to interact  personally  with and change the TV
program itself. Within the limits of the programmed choices, each sports fan can
watch the action the way he or she chooses,  and each child receives  individual
instructions  based  on his or  her  own  response  to  the  on-screen  teacher.
Individualized   television   technology  is  the  only   technology  that  uses
traditional filmed entertainment where the program itself is interactive.

ACTV's process of creating individualized television programming involves viewer
selection from a multiple number of frame-synchronized  video, graphics,  and/or
audio  signals  delivered at one time.  The viewer sees and/or hears only one of
the signals at a given moment; the other signals are transparent. Using a remote
control,  the viewer  interacts  with the  television  by making  selections  or
decisions called for by the specially-prepared  programming. Based on a viewer's
inputs, the ACTV Programming Technology, which uses a microprocessor,

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automatically  switches at pre-determined  intervals between various segments of
the multiple  signals.  The viewer  cannot detect when such a switch takes place
because it occurs instantly and with frame accuracy.

The results appear seamless and  uninterrupted -- for the viewer the programming
is  completely  individualized.  Although  an  individualized  program  and  its
associated  branches are taped in a normal  linear  fashion,  the program,  when
shown, has thousands of possible segment combinations  available for each viewer
to experience. The particular version one sees is based on individually selected
preferences and inputs. An unlimited number of independent  viewers can interact
with an ACTV Program simultaneously. See "ACTV Programming Technology."

A summary of each of the other interactive application follows:

1) Information and Channel Guide Services This form of interactivity enables the
television to serve as a tool for information  accessibility and retrieval.  The
most immediate application is for channel guide services, which allow viewers to
easily  determine  the  locations of programs in an expanded  channel  universe.
Information   services  include  access  to  large  external  text  and  graphic
information databases, such as those provided by America On-Line and Prodigy.

2)  Transactional  Services This  application  allows the  television  viewer to
purchase  merchandise  displayed  on-screen  by  pressing a button on his or her
remote control.  Transactional  services could be in the form of a home shopping
program or an addendum to a commercial.  Through their television sets,  viewers
may receive video, still pictures, text or audio about the selected products.

3) Quantity/Video on Demand Cable, DBS and MMDS systems that incorporate digital
television delivery will be able to offer substantially more channels than their
analog  predecessors.  Programs  transmitted  digitally can be randomly accessed
through  menu  selection  items.  Extensive  pay-per-view  movies  could be made
available,  popular shows might be aired at many different  starting times,  and
the viewer could purchase,  on an a la carte basis,  television  shows following
their initial air date on broadcast or cable TV.

4) Separate Device Play-Along This application allows viewers to play along with
television  programs  such as game shows or  sporting  events.  The viewer has a
separate  controller that receives  information about the show in progress,  and
either displays it on the controller  itself,  or overlays  television  pictures
with text and/or  graphics.  Players can compete with the on-screen  contestants
for prizes.  Although the TV  programming  itself is unchanged,  game players at
home see their results displayed on the play-along device's screen.

5) Video  Games  Interactive  television  services  will allow a user to call up
video games, like those now marketed by Nintendo and Sega,  through the cable TV
box.  Historically,  video games have been delivered on cartridges inserted into
special-purpose terminals attached to a television set.

Since the Company's  business  strategy  depends in large part on its ability to
attract joint venture partners and/or licensees, the Programming Technology must
be more  appealing to potential  joint venture  partners or licensees than other
technologies  which  currently  exist  or are now  under  development  or may be
developed in the future.


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EMPLOYEES

At March 31,  1996,  the Company  employed 25 full-time  employees.  The Company
believes that its relationships with its employees are generally satisfactory.

PROPERTY

The Company and its subsidiaries  maintain their principal and executive offices
at Rockefeller  Center,  1270 Avenue of the Americas,  New York, New York, where
they lease  approximately  6,300 square feet at a rent of approximately  $17,400
per  month  pursuant  to a lease  that  expire  January  2001.  The lease may be
terminated by the Company beginning in May 1999, but if it is so terminated, the
Company must pay an early termination fee to the landlord. the Company maintains
an engineering staff and an editing studio at 1600 Broadway, New York, New York,
where it leases  approximately  2,500 square feet at a rent of $3,450 per month,
pursuant to a lease that expires in December 1999. The lease agreement  provides
for  cancellation  by  either  party  with no  penalty  at the end of  1996.  In
addition,  the Company  maintains  offices at 9454 Wilshire  Boulevard,  Beverly
Hills, California,  which are leased on a month-to-month basis for approximately
$1,350 per month by The Los Angeles Individualized  Television Network, Inc. The
Company believes its current facilities are suitable and adequate, and that they
provide the productive  capacity necessary for the performance of the operations
of the  Company.  None of the  Company's  properties  is leased from  affiliated
persons.

LEGAL PROCEEDINGS

In March 1988, LGV and the Company formed ACTV Entertainment, in which they were
to be equal  stockholders,  each owning 50 shares of Common  Stock.  The parties
also  entered  into a license  agreement  regarding  the use of the  Programming
Technology by LGV in Canada,  Europe and the Soviet Union.  LGV had pledged 28.5
of its shares to secure  two  $4,000,000  payments  it was to have made upon the
occurrence of certain  conditions.  The parties had a dispute as to whether such
conditions had been met, the payments were not made, and ACTV  foreclosed on the
28.5 shares.  An  arbitration  was commenced and  subsequently  stayed,  pending
settlement discussions between the parties. On June 8, 1993, the parties reached
a  settlement  pursuant  to  which  ACTV  became  the sole  stockholder  of ACTV
Entertainment and the license  agreement  between the parties was modified.  See
"-- Reorganization of ACTV Entertainment and the LGV Agreements."

In August,  1993, a lawsuit was commenced  against the Company by Nolan Bushnell
in the United  States  District  Court for the  Southern  District  of New York,
seeking  damages in the amount of  $290,872,  plus  interest on such amount from
April 1986,  arising out of an alleged  payment by plaintiff of a guaranty of an
equipment  lease of the  Company.  On April 25, 1994 the Company  entered into a
Settlement  Agreement  with Nolan  Bushnell  and Catalyst  Technologies,  a sole
proprietorship  owned  by Mr.  Bushnell,  pursuant  to  which  (a)  the  lawsuit
commenced by Mr.  Bushnell in connection with his guaranty of an equipment lease
($290,872)  was  withdrawn,  and  (b) Mr.  Bushnell  and  Catalyst  Technologies
relinquished  any and all right to receive  payments  from the  Company out of a
repayment  pool  established  pursuant  to the  terms of a 1985  agreement.  The
obligation to Mr.  Bushnell and Catalyst under the 1985 agreement were reflected
on the  Company's  books,  as of December  31, 1993 at  $121,333,  plus  accrued
interest thereon.

Pursuant to the terms of the Settlement Agreement,  the Company paid $100,000 to
Mr. Bushnell

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and  issued a  promissory  note in the  principal  amount of  $190,000,  payable
$100,000  on June  30,  1995 and  $90,000  on June 30,  1996.  Of the  aggregate
settlement  amount,  $255,000  was  paid by the  Company  in  settlement  of Mr.
Bushnell's  claims in the  lawsuit  relating to his  guaranty  of the  Company's
equipment  lease,  and the balance of $35,000 is in full and final settlement of
the claims of Mr.  Bushnell and  Catalyst  Technologies  for  payments  from the
repayment  pool. In January 1995, the Company  prepaid the $190,000 Note in full
for a discounted amount of $100,000 in full satisfaction of this obligation.

There are no other pending material legal  proceedings to which the Company is a
party.



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                                  RISK FACTORS

The  purchase  of the  securities  being  offered  hereby  involves  a number of
significant  risks that  include,  but may not be limited  to,  those  described
below.  Each prospective  investor should carefully  consider the following risk
factors  inherent in and affecting the business of the Company and this Offering
before making an investment decision.

1. OPERATING LOSSES TO DATE. The Company has operated at a loss through the date
of this  Prospectus.  The  Company's net losses for the three months ended March
31,  1996 and 1995  (the  "March  1996  period"  and the  "March  1995  period,"
respectively)  were  $2,560,883  and  $1,952,836,  respectively.  The March 1995
Period includes an extraordinary gain of $94,117.  The Company had net losses of
$6,826,789  in  the  fiscal  year  ended  December  31,  1995  ("Fiscal  1995"),
$4,465,240  in the fiscal year ended  December  31, 1994  ("Fiscal  1994"),  and
$4,465,240 in the fiscal year ended December 31, 1993 ("Fiscal  1993").  Through
March 31, 1996, the Company had an accumulated  deficit of  approximately  $32.9
million.  To date, the Company has had limited revenues,  including  revenues of
$350,674 in the March 1996 period, $1,311,860 in Fiscal 1995, $938,416 in Fiscal
1994, and $164,602 in Fiscal 1993.

The  increase  in  revenues  in  Fiscal  1994 was  partially  the  result of the
Company's  including  for the period  March 11 to December 31 of Fiscal 1994 all
education  sales,  which were  reported for Fiscal 1993 by ACTV  Interactive,  a
partnership  in which ACTV held a 49%  interest  from July 14, 1992 to March 11,
1994. ACTV Interactive's gross sales were $839,165 in Fiscal 1993, compared with
$348,473 for the period from July 14, 1992, the  partnership  formation date, to
December 31, 1992.  ACTV  Interactive's  results  were  accounted  for under the
equity method of accounting.

There can be no assurance that the Company will generate significant revenues or
achieve profitability in the future.

2. UNPROVEN  BUSINESS  STRATEGY.  Other than the activities of ACTV Interactive,
the Company's prior  activities in the education market and the arrangement with
LGV in the  entertainment  market,  the Company has not had significant sales of
the Programming  Technology.  While ACTV has recently consummated its first sale
of the new distance  learning  technology,  there can be no  assurance  that the
results of this project will support the  continuation of the project or lead to
other sales. Also, while the Company has recently entered into agreements with a
large regional cable sports network, a national news service, other programmers,
and a cable  operator  to  create  a trial  for  Los  Angeles-based  programming
service,  which was launched in mid-1995,  there can be no assurance  that these
agreements  will  result  in  the  development  of  a  commercially   successful
programming  service.  In addition,  the Company is dependent on  co-ventures or
licenses  with third  parties to produce  ACTV  Programs and the Company will be
required to  demonstrate a market for such  programs.  There can be no assurance
that  co-venturers  or  licensees,  or ACTV's direct sales force will succeed in
marketing the ACTV Programs. See "BUSINESS - Entertainment."

Furthermore,  the likelihood of the success of the Company must be considered in
light of the problems,  costs, difficulties and delays encountered in connection
with the  operation  of a  business,  the  operations  of which  consist  of the
development  and  commercialization  of new and unproven  technologies,  and the
competitive environment in which the Company operates. Accordingly, there can be
no assurance that the Company will successfully market the

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<PAGE>

Programming Technology or operate on a profitable basis. See "BUSINESS."

3. POSSIBLE  NEED FOR  ADDITIONAL  FINANCING.  To date,  the  Company's  capital
requirements to develop the Programming  Technology,  produce ACTV  Programming,
develop  marketing  approaches  and strategic  alliances,  and to cover costs of
selling  and  general  and  administrative   expenses,  have  been  significant,
resulting in an accumulated  deficit as of March 31, 1996 of approximately $32.9
million.

The Company's continued marketing of all of its products and services on planned
levels and timetables is dependent  upon the Company's  obtaining the additional
capital  necessary to support the Company's  future  operations at these levels.
Management is continuing its efforts to obtain such additional financing. If the
Company is not successful in obtaining  such  additional  financing,  management
believes  that the Company can fund its  operations  at least through the end of
March  1997.  To fund its  operations  at least  through  the end of March 1997,
without  additional  financing,  the Company will be required to reduce  certain
planned  expenditures in certain of the markets it is attempting to develop.  If
management's  assumptions  regarding future events prove incorrect,  the Company
may be unable to fund its operations,  even at a reduced level,  through the end
of March 1997.

4.  PATENTS  AND  PROPRIETARY  INFORMATION.  The Company  has  obtained  patents
covering  certain aspects of the Programming  Technology and has patents pending
with respect to other developments or enhancements thereof.  However,  there can
be no  assurance  (i) that  patents  applied for will be granted,  (ii) that the
patents the Company  owns or has rights to or that may be granted or obtained by
the Company in the future will be  enforceable  or will provide the Company with
meaningful protection from competition, (iii) that any products developed by the
Company  will not  infringe  any  patent or rights of  others,  or (iv) that the
Company will  possess the  financial  resources  necessary to enforce any patent
rights which it holds.  See "BUSINESS -- Patents,  Applications  and Proprietary
Information."

The Company requires each of its employees,  consultants and advisors to execute
a  confidentiality  and  assignment of  proprietary  rights  agreement  upon the
commencement of employment or a consulting  relationship with the Company. These
arrangements generally provide that all inventions,  ideas and improvements made
or conceived  by the  individual  arising out of the  employment  or  consulting
relationship  shall be the exclusive  property of the Company.  This information
shall be kept  confidential and not disclosed to third parties except by consent
of the Company or in other specified  circumstances.  There can be no assurance,
however,  that these  arrangements  will  provide  effective  protection  of the
Company's proprietary information in the event of unauthorized use or disclosure
of such information.

5. TECHNOLOGICAL OBSOLESCENCE;  RESEARCH AND DEVELOPMENT. The Company is engaged
in a field  characterized by extensive  research efforts and rapid,  significant
technological  change. There can be no assurance that research or development by
others will not render the Programming  Technology  obsolete or that the limited
research  and  development  performed  by the Company  will  continue or will be
successful. In 1995, outside research and development costs totaled $476,155 and
were primarily related to development of a new  analog/digital  two-way distance
learning  system.  The  Company  believes  that  it may be  required  to  expend
approximately  $200,000  during 1996 to  facilitate  the  completion  of current
research  and  development  projects.  There  can be no  assurance  that the new
distance  learning  system  can be  deployed  on a timely  basis,  or that  once
deployed,  it will  function  satisfactorily.  If the  Company  determines  that
additional research and development is required,  there can be no assurance that

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the Company will have sufficient  funds or access to additional  funds to engage
in substantial  additional  research and development.  See "BUSINESS -- Research
and Development."

6. POSSIBLE SHORTAGE OF AVAILABLE  CHANNELS FOR IN-HOME CABLE  APPLICATIONS.  In
order for the ACTV Programming  Technology to be delivered over cable,  MMDS and
DBS systems for the in-home market,  it must compete for channel space on cable,
MMDS and DBS systems,  many of which have limited  available  channel  capacity.
Although a simpler form of  individualization  can be achieved by the  Company's
using one channel of band-width,  the more  sophisticated  applications  of ACTV
Programming currently require three to four channels of analog band-width. There
is no  assurance  that cable,  MMDS and DBS  operators  will devote a sufficient
number of channels of  band-width to the  Programming  Technology in the future.
Nor is there any  assurance  that the  Company  will be able to  expand,  unless
cable,  MMDS,  or DBS operators  continue to upgrade and increase  their channel
capacity  by  using  some  form  of   "compression   technology,"   whereby  the
digitalization  of the  information  required  to produce a  television  picture
reduces the channel  capacity  required for programming  that  incorporates  the
Programming Technology. The compression technologies recently deployed and those
currently  under  development  could  enable the Company to use the more complex
applications  of the  Programming  Technology on one channel of band-width.  The
Company believes,  although there can be no assurance,  that the cable, MMDS and
DBS  industry is, in general,  moving in the  direction  of  increasing  channel
capacity.  The costs associated with such  compression  technology may result in
substantial  additional  costs to cable,  MMDS and DBS operators.  However,  the
Company's  management cannot currently quantify such additional costs, which may
adversely affect the Company's future operations. See "BUSINESS."

7. DEPENDENCE UPON LICENSEES AND JOINT  VENTURERS.  The Company has adopted as a
business  strategy  the  exploitation  of  the  Programming  Technology  through
licensing,  the  arrangement  of joint  ventures  and by means of a direct sales
force.  While the Company has established a direct sales force of four employees
and fifteen  distributors,  and intends to increase its direct sales forces, the
Company will continue to be, in substantial part,  dependent upon the ability of
its  licensees and  prospective  joint  venture  partners to offer  products and
services that are commercially  viable. In addition,  the Company, its licensees
or joint venture  partners will need to provide  individualized  programming  to
continue commercial cable operations,  and they are dependent upon third parties
for such programming.  The Company will be dependent upon its ability,  and that
of its licensees and joint venture partners,  to actively promote and distribute
the  Programming  Technology  and the products.  There is no assurance  that the
Company's  marketing  strategy will be successful.  Further,  the Company may be
adversely affected by the financial and business considerations of its licensees
and joint venture partners.

The  Company  is  engaged  in  an  ongoing  program  designed  to  evaluate  the
Programming Technology as applied to the cable television market. The results of
such  programs  cannot yet be  determined.  No  assurance  can be given that the
results of the  evaluation  will be  positive or that one or more of the markets
which the  Company  is  evaluating  may prove to be viable  for the  Programming
Technology.

There is a  possibility  that in the  structuring  of future joint  ventures and
license  agreements that the licensees and joint venture partners may be granted
interests in the Company, and or any of its subsidiaries,  in the form of equity
securities or options to acquire equity  securities.  See "BUSINESS -- Marketing
and Program Production."

8. DEPENDENCE  UPON SUPPLIERS OF PROGRAMMING.  The Company is dependent upon the

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producers  of linear  programming  that can be  enhanced  using the  Programming
Technology to create  individualized  ACTV  Programs.  To date,  the Company has
entered into agreements with eight such producers, but there can be no assurance
that such  agreements  will  provide the  Company  with  sufficient  programming
appropriate for enhancement, that the Company will be able to develop additional
sources  of  programming,  or that the  enhanced  programs  can be  successfully
marketed in an  individualized  format.  See  "BUSINESS - Marketing  and Program
Production."

9. GOVERNMENT REGULATION.  The Company believes that neither its present nor any
proposed commercial  implementation of the ACTV Programming Technology on cable,
DBS or MMDS will require  governmental  license or approval.  Certain  broadcast
application  and copper pairs with ADSL may require  governmental  approval.  No
assurance can be given that applicable  laws will not change.  In the event such
approval were to be required,  there can be no assurance  that the Company would
be able to  obtain  such  approval  or the  licenses  required  for the  further
implementation  of the ACTV Programming  Technology.  See "BUSINESS - Government
Regulation."

10.  DEPENDENCE UPON KEY PERSONNEL.  The Company has been largely dependent upon
the  efforts  of  William  C.  Samuels  in his roles as  Chairman  of the Board,
President,  Chief Executive Officer and Director of the Company,  David Reese as
Executive Vice President,  President of ACTV Entertainment and a Director of the
Company,  and  Bruce  Crowley,  Executive  Vice-President,   President  of  ACTV
Interactive,  Inc. and a Director of the  Company.  The Company has entered into
five-year  employment  agreements  with Mr.  Samuels and Mr. Reese.  The Company
currently  does not maintain  "key  employee"  insurance on the lives of Messrs.
Samuels,  Reese or Crowley  and there can be no  assurance  that such  insurance
would be  available  at an  acceptable  cost to the  Company,  should it seek to
acquire  such  insurance  in  the  future.  See  "MANAGEMENT  -  Employment  and
Consulting Agreements."

In order to  compete  in a  marketplace  with  rapidly  changing  and  expanding
technology,  the Company requires  employees not only with extensive  management
experience,  but also with certain  technical  abilities to direct the Company's
continuing research and development efforts.  While the Company believes that it
currently  employs such  personnel,  and that other persons could be retained in
such capacities,  there can be no assurance that if the Company were required to
replace such personnel,  it could readily do so, or that, even if such qualified
replacements were retained,  the development of the Company's business would not
be delayed. See "BUSINESS -- Research and Development."

11.  COMPETITION.  The Programming  Technology competes with many other forms of
entertainment,  education  and  information  dissemination,  many of  which  are
significantly more established,  including the standard television industry, the
movie  industry,  cable  television,  programming  services  and other  forms of
entertainment.   There  can  be  no   assurance   that   products  and  services
incorporating  the  Programming  Technology  will  ever  be  established  in the
marketplace in a significant enough manner to make the Company profitable.

In addition,  the  Programming  Technology  may compete with other  technologies
described as interactive television,  some of which may be developed or promoted
by  companies  with  resources  significantly  greater than the  Company's.  See
"BUSINESS -- Competition."

12.  DEPENDENCE  ON EQUIPMENT  SUPPLIERS.  The Company does not intend itself to
manufacture set-top converters,  terminals,  video servers, or other interactive
devices. Currently,

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<PAGE>

in the entertainment  market, the Videoway terminal  manufactured through LGV is
the only ACTV compatible set-top converter  available to potential  distributors
of ACTV  Programming.  The Company intends to grant licenses  similar to the one
granted  to  LGV  to  other  manufacturers  that  are  selected  by  the  future
distributors  of  ACTV  Programming.  All of the  ACTV  classroom  and  distance
learning  systems which  incorporate the Programming  Technology and are sold by
ACTV in the education  market are manufactured by KDI Precision  Products,  Inc.
("KDI").  While the Company believes that KDI can produce  sufficient systems to
meet the anticipated  needs of ACTV in the education  marketplace,  in the event
that KDI were unable to supply the systems,  there can be no assurance  that the
Company  could  produce  sufficient  systems or obtain  sufficient  systems from
another  manufacturer  at an acceptable  price.  The inability of ACTV to obtain
systems  would have a material  adverse  effect on the  business of the Company.
There  is no  assurance  that  the  Company  will be  successful  in  developing
additional  manufacturing  licenses for the entertainment and education markets;
the failure of the Company to do so would have a material  adverse effect on the
business of the Company. See "BUSINESS - Set Top Converters, Terminals and Other
Interactive Devices."

13. NO ASSURANCE OF PUBLIC MARKET FOR SECURITIES.  Although the Company's Common
Stock is quoted on NASDAQ and listed on the Boston Stock Exchange,  there can be
no  assurance  that the  Company  will be able to  maintain  such  quotation  or
listing, or that, if maintained,  a significant public market will be sustained.
For continued  listing on NASDAQ,  the Company is required to maintain a minimum
stockholders'  equity of $1,000,000 and assets of  $2,000,000.  The Boston Stock
Exchange's  maintenance  criteria require the Company to have total assets of at
least $1,000,000 and total stockholders'  equity of at least $500,000.  At March
31,  1996,  the Company had  stockholders'  equity of  $6,336,221  and assets of
$8,614,395.  The Company has  continued to operate at a loss through the date of
this Prospectus.

In the event the Common Stock were delisted from NASDAQ,  trading, if any, would
be conducted on the Boston Stock Exchange and in the over-the-counter  market on
the NASD's  electronic  bulletin board, in what are commonly  referred to as the
"pink  sheets." As a result,  an investor may find it more  difficult to dispose
of,  or to  obtain  accurate  quotations  as to  the  price  of,  the  Company's
securities.  In addition,  the Common Stock would be subject to Rules  15g1-15g6
promulgated under the Securities  Exchange Act of 1934 (the "Exchange Act") that
impose additional sales practice  requirements on  broker-dealers  who sell such
securities to persons other than established  customers and accredited investors
(generally,  a person  with  assets  in excess of  $1,000,000  or annual  income
exceeding   $200,000  or  $300,000  together  with  his  or  her  spouse).   For
transactions  covered  by these  rules,  the  broker-dealer  must make a special
suitability  determination  for the purchaser and have received the  purchaser's
written consent to the transaction prior to sale. Consequently,  these rules may
affect the ability of  broker-dealers  to sell the Company's  securities and may
affect the ability of purchasers in the Offering to sell their securities in the
secondary market.

The Commission has also recently adopted regulations that define a "penny stock"
to be any equity  security  that has a market  price (as  defined)  of less than
$5.00 per share or an  exercise  price of less than $5.00 per share,  subject to
certain exceptions.  For any transaction involving a penny stock, unless exempt,
the regulations require the delivery, prior to the transaction,  of a disclosure
schedule  prepared by the  Commission  relating to the penny stock  market.  The
broker-dealer   must  also  disclose  the   commissions   payable  to  both  the
broker-dealer  and the  registered  representative,  current  quotations for the
securities and, if the broker-dealer is the sole market-maker, the broker-dealer
must  disclose  this  fact and the  broker-dealer's  presumed  control  over the
market.  Finally,  monthly  statements  must be  sent  disclosing  recent  price
information

                                       25

<PAGE>
 
<PAGE>

for the penny stock held in the account and information on the limited market in
penny stocks.

While many  NASDAQ-listed  securities  are  covered by the  definition  of penny
stock, transactions in a NASDAQ-listed security are exempt from all but the sole
market-maker  provision for (i) issuers who have  $2,000,000 in tangible  assets
($5,000,000 if the issuer has not been in continuous operation for three years),
(ii) transactions in which the customer is an institutional accredited investor,
or  (iii)  transactions  that  are  not  recommended  by the  broker-dealer.  In
addition,  transactions in a NASDAQ security directly with a NASDAQ market-maker
for such security are subject only to the sole market-maker disclosure,  and the
disclosure with respect to commissions to be paid to the  broker-dealer  and the
registered representative.

Finally,  all  NASDAQ  securities  would be  exempt  from  the  recently-adopted
regulations  regarding  penny  stocks  if NASDAQ  raised  its  requirements  for
continued  listing so that any issuer with less than  $2,000,000 in net tangible
assets or stockholders' equity would be subject to delisting. These criteria are
more stringent than the current NASDAQ maintenance requirements.

14. NO  DIVIDENDS.  The  Company has not paid any cash  dividends  on its Common
Stock since  inception  and does not intend to pay cash  dividends on its Common
Stock for the  foreseeable  future.  Although there are no  restrictions  on the
Company's  ability to pay dividends,  the Company  intends to follow a policy of
retaining  earnings,  if any, to finance the  development  and  expansion of its
business.

15.  PREFERRED  STOCK  AUTHORIZED.  The  Company's  Board of  Directors  has the
authority,  without  further  action  of the  stockholders,  to issue  shares of
preferred stock which have conversion,  dividend,  liquidation and voting rights
that could adversely affect holders of Common Stock or could be used to restrict
the Company's ability to merge with or sell its assets to a third party, thereby
preserving  control of the Company by its present  owners.  Although the Company
has no present intention to issue any shares of preferred stock, there can be no
assurance that the Company will not do so in the future.

16.  RULE 144  SALES.  Of the shares of the  Company's  Common  Stock  presently
outstanding,  approximately 3.0 million are "restricted securities" as that term
is defined by Rule 144  promulgated  under the  Securities Act and in the future
may be sold only in compliance with Rule 144 or pursuant to  registration  under
the Securities Act or pursuant to another  exemption  therefrom.  For so long as
the  Registration  Statement  of which the  Concurrent  Prospectus  is a part is
current and effective,  the shares owned by the Selling  Stockholder  thereunder
and  offered   thereby  (6,500)  may  be  sold  without  regard  to  the  volume
limitations,  described below, set forth in Rule 144. Generally, under Rule 144,
each person  having held  restricted  securities  for a period of two years may,
every three months, sell in ordinary brokerage  transactions an amount of shares
which does not exceed the  greater of one  percent  (1%) of the  Company's  then
outstanding  shares of Common Stock,  or the average weekly volume of trading of
such  shares of Common  Stock as reported  during the  preceding  four  calendar
weeks.  A person who has not been an  affiliate  of the Company for at least the
three months  immediately  proceeding  the sale and who has  beneficially  owned
shares of the Common  Stock for at least  three  years is  entitled to sell such
shares under Rule 144 without regard to any of the limitations  described above.
Of the restricted  shares, a substantial number have been held by non-affiliates
of the Company for more than three years or have been held by  affiliates of the
Company for more than two years.  Actual sales,  or the prospect of sales by the
present  stockholders  of  the  Company  or  by  future  holders  of  restricted
securities under Rule 144, or otherwise, may, in the future, have a

                                       26

<PAGE>
 
<PAGE>


depressive  effect upon the price of the Company's shares of Common Stock in any
market that may develop  therefor,  and also could render difficult sales of the
Company's securities purchased by investors herein.

17.  CONTROL BY OFFICERS,  DIRECTORS AND PRINCIPAL  STOCKHOLDERS.  The Company's
officers and directors own, of record,  2,613,263  outstanding  shares of Common
Stock. In addition,  William C. Samuels,  Chairman,  President,  Chief Executive
Officer  and a director of the  Company,  pursuant  to a voting  agreement,  has
voting  control of the  2,341,334  shares of Common Stock owned of record by the
Post Company. In addition,  pursuant to a separate voting agreement, Mr. Samuels
has voting control of the shares owned by Dr. Freeman. Consequently, Mr. Samuels
has voting control over 3,321,917 shares of Common Stock, or approximately 26.7%
of the outstanding  shares of Common Stock,  assuming issuance of 533,035 shares
of Common Stock upon exercise of options.  Accordingly,  Mr.  Samuels could have
substantial influence over the affairs of the Company, including the election of
directors.

18.  POSSIBLE  ACQUISITION  OF CONTROL BY THE WASHINGTON  POST COMPANY.  Through
March 17, 1997 (subject to extension in certain circumstances), the Post Company
shall have the right to purchase from the Company,  at a price which has not yet
been  determined,  the amount of shares of Common  Stock  necessary to bring its
percentage  ownership  of the total then  outstanding  shares of Common Stock to
51%. If the Post Company should choose to exercise its right, the purchase price
would be established after arms-length  negotiations between the parties. In the
event that the parties fail to agree on a purchase price, the parties would seek
an outside  appraisal.  At  present,  the Company  does not have  enough  shares
authorized  to  accommodate  the Post Company  should it choose to exercise such
right. If the Post Company decides to exercise its right,  the Company will seek
to take the  necessary  action to  fulfill  its  obligations.  If such  right is
exercised, the ability, pursuant to agreement, of William C. Samuels,  Chairman,
President and Chief Executive  Officer of the Company,  to vote the shares owned
of record by the Post Company will terminate,  and the Post Company will be able
to control the affairs of the Company.

19.  OUTSTANDING  OPTIONS AND WARRANTS.  As of the date of this Prospectus,  the
Company had granted  options and  warrants to purchase an aggregate of 2,707,582
shares of Common  Stock  that had not been  exercised.  Of the  shares of Common
Stock subject to these unexercised options and warrants, 10,000 may be purchased
for less than $1.00;  12,000 may be  purchased  for between  $1.00 and $1.99 per
share; 694,082 may be purchased for between $2.00 and $2.99 per share; 1,521,500
may be purchased for between $3.00 and $3.99 per share; 367,500 may be purchased
for between $4.00 and $4.99 per share;  and 102,500 may be purchased for between
$5.00 to $5.99 per share. To the extent that the  outstanding  stock options and
warrants are exercised,  dilution to the interests of the Company's stockholders
will occur.  Moreover,  the terms upon which the Company  will be able to obtain
additional  equity capital may be affected  adversely,  since the holders of the
outstanding options and warrants can be expected to exercise them at a time when
the Company would,  in all  likelihood,  be able to obtain any needed capital on
terms more  favorable  to the Company  than those  provided  in the  outstanding
options and warrants.

20. POSSIBLE  VOLATILITY OF SECURITIES PRICES. The market price of the Company's
securities may be highly  volatile,  as has been the case with the securities of
other companies  engaged in high technology  research and  development.  Factors
such as announcements by the Company or its competitors concerning technological
innovations,   new  commercial  products  or  procedures,   proposed  government
regulations and developments or disputes relating to patents

                                       27

<PAGE>
 
<PAGE>

or proprietary  rights may have a significant  impact on the market price of the
Company's securities.


                                       28

<PAGE>
 
<PAGE>



                                 USE OF PROCEEDS

           The  Company  will  not  receive  any   proceeds   from  the  Selling
Stockholder's  sale of shares of Common Stock,  but will receive the proceeds of
the  exercise  of the  Options.  Such  proceeds  will be used by the Company for
working capital purposes.




                                       29

<PAGE>
 
<PAGE>



                               SELLING STOCKHOLDER

The Selling  Stockholder  acquired the Shares in connection  with the Consulting
Agreement.

The following table sets forth the (a) the name of the Selling Stockholder,  (b)
the  number  of  shares  of  Common  Stock  beneficially  owned  by the  Selling
Stockholder  as of March 31,  1996 and (c) the number of shares of Common  Stock
and the  percentage  of the  total  class  of  Common  Stock  outstanding  to be
beneficially owned by the Selling Stockholder following this offering,  assuming
the sale  pursuant to this  offering or  otherwise of all shares of Common Stock
that are the subject of the Registration Statement of which this Prospectus is a
part, which shares are being registered.  There is no assurance,  however,  that
the  Selling  Stockholder  will sell any or all of the  shares  of Common  Stock
offered hereunder.


<TABLE>
<CAPTION>


                                                              Number of Shares of Common
                                                              Stock Beneficially Owned
                                                              After this Offering
                                                              -----------------------------------------
Selling Stockholder     Beneficially Owned        Offered Hereby           Number               Percent
- -------------------     ------------------        --------------           ------               -------
<S>                  <C>                       <C>                      <C>                  <C>
Charles Payne           6,500                     6,500                    0                        0%
</TABLE>



                                       30

<PAGE>
 
<PAGE>



                    INDEMNIFICATION OF OFFICERS AND DIRECTORS

Reference  is  made  to  paragraph  "Twelfth"  of the  Restated  Certificate  of
Incorporation  of the Company (Exhibit  4.1.1),  which contains a provision,  as
permitted  by  Section  145  of  the  Delaware  General  Corporation  Law,  that
eliminates  the  personal   liability  of  directors  to  the  Company  and  its
stockholders  for  monetary  damages for  unintentional  breach of a  director's
fiduciary duty to the Company. This provision does not permit any limitation on,
or  elimination  of the liability of a director for disloyalty to the Company or
its stockholders,  for failing to acting good faith, for engaging in intentional
misconduct  or a knowing  violation of law, for  obtaining an improper  personal
benefit  or for paying a  dividend  or  approving  a stock  repurchase  that was
illegal under the Delaware General Corporation Law.

The Restated Certificate of Incorporation and By-Laws of the Company require the
Company  to  indemnify   directors  and  officers  against  expenses  (including
attorneys' fees), judgments,  fines and amounts paid in settlement in connection
with  specified  actions,   suits  or  proceedings,   whether  civil,  criminal,
administrative or investigative  (other than an action by or in the right of the
corporation (a "derivative  action") if they acted in good faith and in a manner
they  reasonably  believed to be in or not opposed to the best  interests of the
Company,  and,  with  respect  to any  criminal  action  or  proceeding,  had no
reasonable  cause to believe their conduct was unlawful.  A similar  standard of
care  is   applicable   in  the  case  of   derivative   actions,   except  that
indemnification only extends to expenses (including attorneys' fees) incurred in
connection with defense or settlement of such an action.  Moreover, the Delaware
General  Corporation  Law  requires  court  approval  before  there  can  be any
indemnification  where the person seeking  indemnification has been found liable
to the Company.

Insofar as indemnification  for liabilities  arising under the Securities Act of
1933 may be permitted to  directors,  officers  and  controlling  persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised  that in the opinion of the  Securities  and  Exchange  Commission  such
indemnification  is  against  public  policy  as  expressed  in the  Act and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the Company of expenses incurred or
paid  by a  director,  officer  or  controlling  person  of the  Company  in the
successful  defense of any action,  suit or proceeding)  in connection  with the
securities being registered,  the Company will, unless in the opinion of counsel
the  matter  has been  settled by  controlling  precedent,  submit to a court of
appropriate  jurisdiction  the question  whether such  indemnification  by it is
against  public policy as expressed in the Act and will be governed by the final
adjudication of such issue.


                                       31

<PAGE>
 
<PAGE>



                              PLAN OF DISTRIBUTION

The  Shares  offered  hereby  are being  sold by the  Selling  Stockholder  as a
principal  for his own account.  The  distribution  of the Shares by the Selling
Stockholder may be effected from time to time in ordinary brokerage transactions
in the  over-the-counter  market at market prices prevailing at the time of sale
or in one or more negotiated  transactions  at prices  acceptable to the Selling
Stockholder.  The  brokers or dealers  through or to whom the Shares may be sold
may be deemed  underwriters  of the Shares within the meaning of the  Securities
Act,  in  which  event  all  brokerage   commissions   or  discounts  and  other
compensation   received  by  such  brokers  or  dealers  may  be  deemed  to  be
underwriting  compensation.  The Company will bear all expenses of the offering,
except that the Selling  Stockholder  will pay any applicable  brokerage fees or
commissions  and transfer  taxes. In order to comply with the securities laws of
certain states, if applicable,  the Shares will be sold only through  registered
or licensed brokers or dealers.  In addition,  in certain states, the Shares may
not be sold unless they have been registered or qualified for sale in such state
or an exemption from such registration or qualification requirement is available
and is complied with.




                                       32

<PAGE>
 
<PAGE>



                                  LEGAL MATTERS

Certain legal  matters,  including the legality of the issuance of the shares of
Common Stock  offered by the  Company,  are being passed upon for the Company by
Gersten,  Savage,  Kaplowitz & Curtin,  LLP, 575 Lexington Avenue, New York, New
York 10022. Jay M. Kaplowitz, a member of Gersten,  Savage,  Kaplowitz & Curtin,
LLP served as a director of the Company from 1989 to April 1996.  Mr.  Kaplowitz
owns 2,000 shares of the Company's  Common Stock and options to purchase  25,000
shares.



                                       33

<PAGE>
 
<PAGE>



                                     EXPERTS

The consolidated financial statements of ACTV and its subsidiaries  incorporated
in this Prospectus by reference to the Company's  Annual Report on Form 10-K and
10K/A-1 for the year ended  December  31,  1995 have been  audited by Deloitte &
Touche  LLP,  independent   auditors,  as  stated  in  their  report,  which  is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their  authority as experts in accounting and
auditing.

                                       34

<PAGE>
 
<PAGE>





No underwriter, dealer, salesman or other person has been authorized to give any
information or to make any  representations  other than those  contained in this
Prospectus,  and, if given or made, such information or representation  must not
be relied upon as having been  authorized by the Company.  This  Prospectus does
not  constitute  an offer or  solicitation  to any person in any juris-  diction
where such offer or  solicitation  would be unlawful.  Neither  delivery of this
Prospectus nor any Common Stock sale hereunder shall,  under any  circumstances,
create  any  implication  that  there has been no change in the  affairs  of the
Company since the date hereof.




TABLE OF CONTENTS                         PAGE
- -----------------                         ----
Available Information. . . . . . . . . . .   2
Incorporation of Certain
  Documents by Reference . . . . . . . . .   3
The Company. . . . . . . . . . . . . . . .   5
Risk Factors . . . . . . . . . . . . . . .  21
Use of Proceeds. . . . . . . . . . . . . .  29
Selling Stockholder. . . . . . . . . . . .  30
Indemnification of
  Officers and Directors. . . . . . . . ..  31
Plan of Distribution . .. . . . . . . . ..  32
Legal Matters . . . . . . . . . . . . . ..  33
Experts . . . . . . . . . . . . . . . .. .  34




ACTV, INC.

6,500 shares of
Common Stock



June 20, 1996


<PAGE>
 
<PAGE>


                                     PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 3.  INCORPORATION OF DOCUMENTS BY REFERENCE

The  following   documents   filed  by  the  Company  with  the  Commission  are
incorporated herein by reference:

           (1)  The  Company's  Registration  Statement  on  Form  S-1 (File No.
                33-34618) which was declared effective on May 4, 1990.

           (2)  Annual Report on Form 10-K for the year ended December 31, 1994.

           (3)  Annual Report on Form 10-K/A-1  for  the year ended December 31,
                1994.

           (4)  Quarterly  Report on Form 10-Q for the  quarterly  period  ended
                March 31, 1995.

           (5)  Quarterly Report on Form 10-Q for  the  quarterly  period  ended
                June 30, 1995.

           (6)  Quarterly  Report on Form 10-Q for the  quarterly  period  ended
                September 30, 1995.

           (7)  Annual Report on Form 10-K for the year ended December 31, 1996.

           (8)  Annual  Report on Form  10-K/A-1 for the year ended December 31,
                1996.

           (9)  Post-Effective Amendment  No.  1 to the  Company's  Registration
                Statement  to  Form  S-1 (File No. 33-63879)  which was declared
                effective on March 20, 1996.

           (10) Quarterly  Report  on Form 10-Q for the  quarterly  period ended
                March 31, 1996.

In addition to the foregoing,  all documents  subsequently  filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the
filing  of a  post-effective  amendment  indicating  that all of the  securities
offered  hereunder have been sold or deregistering all securities then remaining
unsold shall be deemed to be incorporated by reference in this Prospectus and to
be part hereof from the date of filing of such documents.

Any statement contained in a document  incorporated or deemed to be incorporated
by reference in this Prospectus shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement  contained  herein or
in any subsequently filed document which also is or is deemed to be incorporated
by reference  herein  modifies or supersedes  such  statement.  Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to  constitute  a part of this  Prospectus.  All  information  appearing in this
Prospectus  is  qualified  in its  entirety  by the  information  and  financial
statements  (including  notes thereto)  appearing in the documents  incorporated
herein by reference, except to the extent set forth in the immediately preceding
statement.

The Company  will provide  without  charge to each person to whom a copy of this
Prospectus is delivered, upon the oral or written request of such person, a copy
of any document incorporated in this Prospectus by reference, except exhibits to
such  information,  unless such  exhibits  are also  expressly  incorporated  by
reference herein.

                                      II-1

<PAGE>
 
<PAGE>

Requests for such  information  should be directed to ACTV, Inc., 1270 Avenue of
the Americas, New York, New York 10020, Attention:  Secretary,  telephone number
(212) 262-2570.



ITEM 4.    DESCRIPTION OF SECURITIES

The Common Stock of the Company is registered under Section 12 of the Securities
Exchange Act of 1934.

ITEM 5.    INTERESTS OF NAMED EXPERTS AND COUNSEL

Certain legal  matters,  including the legality of the issuance of the shares of
Common Stock  offered by the  Company,  are being passed upon for the Company by
Gersten,  Savage,  Kaplowitz & Curtin,  LLP, 575 Lexington Avenue, New York, New
York 10022. Jay M. Kaplowitz, a member of Gersten,  Savage,  Kaplowitz & Curtin,
LLP served as a director of the Company from 1989 to 1996.  Mr.  Kaplowitz  owns
2,000  shares of the  Company's  Common  Stock and  options to  purchase  25,000
shares.

ITEM 6.    INDEMNIFICATION OF DIRECTORS OF OFFICER

Reference  is  made  to  paragraph  "Twelfth"  of the  Restated  Certificate  of
Incorporation  of the Company (Exhibit  4.1.1),  which contains a provision,  as
permitted  by  Section  145  of  the  Delaware  General  Corporation  Law,  that
eliminates  the  personal   liability  of  directors  of  the  Company  and  its
stockholders  for  monetary  damages for  unintentional  breach of a  director's
fiduciary duty to the Company. This provision does not permit any limitation on,
or  elimination  of the liability of a director for disloyalty to the Company or
its stockholders,  for failing to acting good faith, for engaging in intentional
misconduct  or a knowing  violation of law, for  obtaining an improper  personal
benefit  or for paying a  dividend  or  approving  a stock  repurchase  that was
illegal under the Delaware General Corporation Law.

The Restated Certificate of Incorporation and By-Laws of the Company require the
Company  to  indemnify   directors  and  officers  against  expenses  (including
attorneys' fees), judgments,  fines and amounts paid in settlement in connection
with  specified  actions,   suits  or  proceedings,   whether  civil,  criminal,
administrative or investigative  (other than an action by or in the right of the
corporation (a "derivative  action") if they acted in good faith and in a manner
they  reasonably  believed to be in or not opposed to the best  interests of the
Company,  and,  with  respect  to any  criminal  action  or  proceeding,  had no
reasonable  cause to believe their conduct was unlawful.  A similar  standard of
care  is   applicable   in  the  case  of   derivative   actions,   except  that
indemnification only extends to expenses (including attorneys' fees) incurred in
connection with defense or settlement of such an action.  Moreover, the Delaware
General  Corporation  Law  requires  court  approval  before  there  can  be any
indemnification  where the person seeking  indemnification has been found liable
to the Company.

Insofar as indemnification  for liabilities  arising under the Securities Act of
1933 may be permitted to  directors,  officers  and  controlling  persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised  that in the opinion of the  Securities  and  Exchange  Commission  such
indemnification  is  against  public  policy  as  expressed  in the  Act and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the Company of expenses incurred or
paid  by a  director,  officer  or  controlling  person  of the  Company  in the
successful  defense of any action,  suit or proceeding)  in connection  with the
securities being registered,  the Company will, unless in the opinion of counsel
the  matter  has been  settled by  controlling  precedent,  submit to a court of
appropriate  jurisdiction  the question  whether such  indemnification  by it is
against  public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

                                      II-2

<PAGE>
 
<PAGE>





ITEM 7.    EXEMPTION FROM REGISTRATION CLAIMED

Not Applicable.


ITEM 8.    EXHIBITS

4.1.1      Restated Certificate of Incorporation(1)

4.1.2      Amendment to Certificate of Incorporation(1)

4.2.1      By-Laws(1)

4.3        Consulting  Agreement  between  the  Company  and Charles Payne dated
           February 15, 1996.(2)

5.         Opinion of Gersten, Savage, Kaplowitz & Curtin, LLP(2)

24.1       Consent of Deloitte & Touche LLP(2)

24.2       Consent  of  Gersten,  Savage,  Kaplowitz  & Curtin, LLP (included in
           Exhibit 5)(2)


- ---------------

           (1)   Incorporated   by  reference  to  the   Company's  Registration
                 Statement  on  Form  S-1  (File  No.  33- 34618)  which  became
                 effective on May 4, 1990.

           (2)   Filed herewith.

ITEM 9.    UNDERTAKINGS

The undersigned registrant hereby undertakes:

(1)        To file, during any period in which offers or sales are being made, a
           post-effective amendment to this Registration Statement:

           (i)   To  include  any prospectus required by section 10(a)(3) of the
                 Securities Act of 1933;

           (ii)  To reflect in the  prospectus any facts or events arising after
                 the  effective  date of the  registration  statement (or in the
                 most   recent   post-effective    amendment   thereof)   which,
                 individually  or in  the  aggregate,  represent  a  fundamental
                 change  in  the  information  set  forth  in  the  registration
                 statement; and

           (iii) To include any material information with respect to the plan of
                 distribution  not  previously  disclosed  in  the  registration
                 statement or any  material  change to such  information  in the
                 registration statement.

(2)        That,  for  the  purpose  of  determining  any  liability  under  the
           Securities Act of 1933, each such post-


                                      II-3

<PAGE>
 
<PAGE>

           effective  amendment  shall  be  deemed  to  be  a  new  registration
           statement  relating  to  the  securities  offered  therein,  and  the
           offering of such  securities at  that time  shall be deemed to be the
           initial bona fide offering thereof.

(3)        To remove from  registration by means of a  post-effective  amendment
           any of the  securities  being  registered  which remain unsold at the
           termination of the Offering.

Insofar as indemnification  for liabilities  arising under the Securities Act of
1933 may be permitted to directors,  officers,  and  controlling  persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised  that in the opinion of the  Securities  and  Exchange  Commission  such
indemnification  is  against  public  policy as  expressed  in the Act,  and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the Company of expenses incurred or
paid by a  director,  officer,  or  controlling  person  of the  Company  in the
successful  defense of any  action,  suit,  or  proceeding)  is asserted by such
director, officer, or controlling person in connection with the securities being
registered,  the Company  will,  unless in the opinion of counsel the matter has
been  settled  by  controlling  precedent,  submit  to a  court  of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as  expressed in the  Securities  Act of 1933 and will be governed by the
final adjudication of such issue.


                                      II-4

<PAGE>
 
<PAGE>



                                   SIGNATURES

Pursuant to the  requirements  of the  Securities  Act of 1933,  the  registrant
certifies  that it has  reasonable  grounds to believe  that it meets all of the
requirements  for  filing on Form  S-8/S-3  has duly  caused  this  registration
statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized,  in the  City  of New  York and  State of New York on the 3rd day of
June, 1996.

                                                    ACTV, INC.

                                                    By:   WILLIAM C. SAMUELS
                                                       ------------------------
                                                    William C. Samuels
                                                    Chairman of  the Board,
                                                    Chief  Executive Officer,
                                                    President and Director


Pursuant to the  requirements  of the Securities Act of 1933,  this Form S-8/S-3
registration  statement  has  been  signed  by  the  following  persons  in  the
capacities and on the date indicated.


<TABLE>
<CAPTION>
Signature                                           Title                             Date
- ---------                                           -----                             -----
<S>                          <C>                                                   <C>
WILLIAM C. SAMUELS
- --------------------                    Chairman of the Board, Chief                  June 3, 1996
William C. Samuels                Executive Officer, President and Director

DAVID REESE
- --------------------                      Executive Vice-President,                   June 3, 1996
David Reese                   President--ACTV Entertainment, Inc. and Director

BRUCE CROWLEY
- --------------------                      Executive Vice-President,                   June 3, 1996
Bruce Crowley                  President--ACTV Interactive, Inc. and Director

RICHARD HYMAN
- --------------------                        Director                                  June 3, 1996
Richard Hyman

WILLIAM A. FRANK
- --------------------                         Director                                 June 3, 1996
William A. Frank

STEVEN W. SCHUSTER
- --------------------                         Director                                 June 3, 1996
Steven W. Schuster

CHRISTOPHER C. CLINE
- --------------------                Vice President, Chief Financial                   June 3, 1996
Christopher C. Cline                     Officer and Secretary



                            STATEMENT OF DIFFERENCES

The registered symbol shall be expressed as.........'r'


<PAGE>
 
<PAGE>



                                  EXHIBIT INDEX


4.3    Consulting Agreement between the Company and Charles Payne dated February
       15, 1996.

5.     Opinion of Gersten, Savage, Kaplowitz & Curtin, LLP

24.1   Consent of Deloitte & Touche LLP

24.2   Consent  of  Gersten,  Savage,  Kaplowitz  &  Curtin,  LLP  (included  in
       Exhibit 5)



<PAGE>
 





</TABLE>
[{"type": "S-8", "sequence": "1", "description": "ACTV, INC. FORM S-8", "secsgml_size_bytes": 126382}]
{"company-data": {"conformed-name": "ACTV INC /DE/", "cik": "0000854152", "assigned-sic": "3663", "irs-number": "942907258", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-06623", "film-number": "96584266"}, "business-address": {"street1": "1270 AVE OF THE AMERICAS", "city": "NEW YORK", "state": "NY", "zip": "10020", "phone": "2122622571"}, "mail-address": {"street1": "12270 AVE OF THE AMERICAS #2401", "street2": "12270 AVE OF THE AMERICAS #2401", "city": "NEW YORK", "state": "NY", "zip": "10020"}}
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 20, 1996

                         REGISTRATION STATEMENT NO. 33-
                         --------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                       ----------------------------------
                             WASHINGTON, D.C. 20549
                             ----------------------

                                  ------------

                                    FORM S-8

             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                                  ------------

                                   ACTV, INC.
             (Exact name of Registrant as specified in its charter)

DELAWARE                         4894                           94-2907258
- --------------------------------------------------------------------------------
(State or other            (Primary Standard                  (IRS Employer
 jurisdiction of        Industrial Classification           Identification No.)
 incorporation or                Code)
 organization)

                           1270 AVENUE OF THE AMERICAS
                            NEW YORK, NEW YORK 10020
                                 (212) 262-2570
                                 --------------
               (Address, including zip code and telephone number,
        including area code, of Registrant's principal executive offices)

                  CONSULTING AGREEMENT DATED FEBRUARY 15, 1996
                ------------------------------------------------
                            (Full Title of the Plan)

                               WILLIAM C. SAMUELS
                                    PRESIDENT
                                   ACTV, INC.
                           1270 AVENUE OF THE AMERICAS
                            NEW YORK, NEW YORK 10020
                                 (212) 262-2570
                                  ------------
            (Name, address, including zip code and telephone number,
                   including area code, of agent for service)
                                  ------------
                                   Copies To:
                             JAY M. KAPLOWITZ, ESQ.
                    GERSTEN, SAVAGE, KAPLOWITZ & CURTIN, LLP
                              575 LEXINGTON AVENUE
                            NEW YORK, NEW YORK 10022
                                 (212) 752-9700

If any of the  securities  being  registered on this Form are to be offered on a
delayed or continuous  basis  pursuant to Rule 415 under the  Securities  Act of
1933, check the following box [x]
CALCULATION OF REGISTRATION FEE
===============================================================================================================
Title of              Amount Being         Proposed Maximum           Proposed             Amount of
Securities To Be      Registered(1)        Offering Price Per         Maximum              Registration Fee
Registered                                 Security(2)                Aggregate
                                                                      Offering Price
- ---------------------------------------------------------------------------------------------------------------
Common
Stock, par value
$.10 per share
                      6,500(3)                      $4.03(4)            $26,195              $100
                                                     ----              -------

===============================================================================================================
Total
Registration
Fee                                                                                         $100
===============================================================================================================
(1)        Pursuant to Rule 416, the  Registration  Statement also relates to an
           indeterminate number of additional interests to be offered or sold to
           the employee benefit plan described herein.

(2)        The price is estimated in accordance  with Rule  457(h)(i)  under the
           Securities  Act of  1933,  as  amended,  solely  for the  purpose  of
           calculating the registration fee.

(3)        These shares were issued pursuant to a consulting  agreement  between
           the Company and Mr. Charles Payne dated February 15, 1996.

(4)        Based on the average of the closing bid and asked prices per share of
           the Common Stock as quoted by the National  Association of Securities
           Dealers Automated Quotation System on May 27, 1996.

                                      (ii)
ACTV, INC.
                                    -------

                              CROSS-REFERENCE SHEET
                   (BETWEEN ITEMS OF FORM S-3 AND PROSPECTUS)
                                    --------
FORM S-3 ITEM AND CAPTION                              PROSPECTUS CAPTIONS
- -------------------------                              --------------------
1.     Forepart of Registration                        Front Cover Page
       Statement and Cover Page
       of Prospectus

2.     Inside Front and Outside                        Inside Front and Outside Back Cover
       Back Cover Pages of Prospectus                  Page;  Additional Information,
                                                       Incorporation of Certain Documents
                                                       by Reference

3.     Summary Information and Risk                    The Company; Risk Factors
       Factors

4.     Use of Proceeds                                 Use of Proceeds

5.     Determination of Offering Price                 Inside Front Cover

6.     Dilution                                        *

7.     Selling Security Holders                        Selling Stockholder

8.     Plan of Distribution                            Plan of Distribution

9.     Description of Securities                       *
       to be Registered

10.    Interests of Named Experts                      Legal Matters, Experts
       and Counsel

11.    Material Changes                                Risk Factors

12.    Incorporation of Certain                        Incorporation of Certain Information
       Information by Reference                        by Reference

13.    Disclosure of Commission                        Indemnification of Officers
       Position on Indemnification                     and Directors
       for Securities Act Liabilities
* Not Applicable

                                      (iii)
EXPLANATORY NOTE

This Registration Statement on Form S-8/S-3 relates to the registration of 6,500
shares (the  "Shares")  of Common  Stock,  par value $.10 per share (the "Common
Stock") of ACTV, Inc., a Delaware  Corporation  ("ACTV" or the "Company") by the
Company,  on behalf of Charles  Payne (the "Selling  Stockholder").  Such Shares
were issued to the Selling  Stockholder in connection with a written  consulting
agreement  between the Selling  Stockholder and the Company,  dated February 15,
1996 (the "Consulting Agreement").  A Prospectus has been prepared in accordance
with the requirements of Form S-3 pursuant to General  Instruction C of Form S-3
relating to the Shares.

                                     PART I

              INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS

Pursuant to the Note to Part I of the Form S-8, the information required by Part
I is not required to be filed with the Securities and Exchange  Commission  (the
"Commission").

The  Company  will  provide  without  charge to each  person to whom a copy of a
Section  10(a)  Prospectus  hereunder  is  delivered,  upon the oral or  written
request of such person, a copy of any document incorporated in this Registration
Statement by reference,  except  exhibits to such  documents.  Requests for such
information should be directed to ACTV, Inc., 1270 Avenue of Americas, New York,
New York 10020, Attention: Secretary, telephone number (212) 262- 2570.

                                      (iv)
PROSPECTUS
                                   ACTV, INC.

                          6,500 SHARES OF COMMON STOCK

                            Par Value, $.10 Per Share

This Prospectus  relates to the offer and sale of 6,500 shares (the "Shares") of
Common Stock,  par value $.10 per share (the "Common  Stock"),  of ACTV, Inc., a
Delaware  corporation  ("ACTV" or the "Company"),  by the Company,  on behalf of
Charles Payne (the "Selling Stockholder"). The Shares were issued to the Selling
Stockholder  pursuant  to a written  consulting  agreement  between  the Selling
Stockholder  and  the  Company,   dated  February  15,  1996  (the   "Consulting
Agreement").  The  Company's  Common  Stock is traded on the  over-the-  counter
market on the NASDAQ Small Cap Market  ("NASDAQ")  and the Boston Stock Exchange
("BSE").  On May 27, 1996,  the closing bid and asked  quotations for the Common
Stock as reported on NASDAQ were 3 15/16 and 4 1/8 per share, respectively.

The Shares covered by this  Prospectus may be offered and sold from time to time
directly by the Selling  Stockholder or through brokers in the  over-the-counter
market or otherwise at market prices  prevailing at the time of such sales or in
one or  more  negotiated  transactions  at  prices  acceptable  to  the  Selling
Stockholder. No specified brokers or dealers have been designated by the Selling
Stockholder  and no  agreement  has been  entered  into in respect of  brokerage
commissions or for the exclusive or coordinated sale of any securities which may
be  offered  pursuant  to this  Prospectus.  The  net  proceeds  to the  Selling
Stockholder will be the proceeds received by him upon such sales, less brokerage
commissions,  if any.  The  Company  will  pay all  expenses  of  preparing  and
reproducing this Prospectus. The Company will receive proceeds from the exercise
of the Options,  but will not receive any other  proceeds  from any sales by the
Selling Stockholder.

THESE  SECURITIES  HAVE NOT BEEN APPROVED OR DISAPPROVED BY THIS  SECURITIES AND
EXCHANGE  COMMISSION (THE  "COMMISSION") OR ANY STATE SECURITIES  COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE  COMMISSION OR ANY STATE  SECURITIES  COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.  ANY  REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

NO  DEALER,  SALESMAN  OR ANY  OTHER  PERSON  HAS  BEEN  AUTHORIZED  TO GIVE ANY
INFORMATION  OR  TO  MAKE  ANY   REPRESENTATION   OTHER  THAN  AS  CONTAINED  OR
INCORPORATED  BY REFERENCED  HEREIN AND IF GIVEN OR MADE,  SUCH  INFORMATION  OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
THIS  PROSPECTUS  DOES NOT CONSTITUTE AN OFFER TO SELL OR A  SOLICITATION  OF AN
OFFER TO BUY SECURITIES BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY
NOT BE LAWFULLY BE MADE.  NEITHER THE DELIVERY OF THIS  PROSPECTUS  NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THE INFORMATION HEREIN SINCE
THE DATE HEREOF. SEE "RISK FACTORS."

                   ------------------------------------------

                   The date of this Prospectus is June , 1996
AVAILABLE INFORMATION

The  Company is  subject to the  informational  requirements  of the  Securities
Exchange Act of 1934 (the  "Exchange  Act") and in  accordance  therewith  files
reports  and  other  information  with  the  Commission.   Such  reports,  proxy
statements,  registration  statements  and  other  information  can be  examined
without charge at the public reference  section  maintained by the Commission at
450 Fifth Street,  N.W.,  Washington,  D.C.  20549 and, upon payment of the fees
prescribed by the Commission, copies may be obtained therefrom and at certain of
the Commission's Regional Offices located at 7 World Trade Center, New York, New
York 10048, 5757 Wilshire Boulevard, Los Angeles, California 90024; and 500 West
Madison  Street,  Northeastern  Atrium  Center,  Suite 1400,  Chicago,  Illinois
60661-2511.

The  Company's  Common Stock is quoted on The Nasdaq  Stock  Market  ("NASDAQ").
Reports,  proxy  statements,   information  statements,  and  other  information
concerning  the  Company  can  be  inspected  at  the  office  of  the  National
Association  of  Securities  Dealers,  Inc.,  located  at 1735 K  Street,  N.W.,
Washington, DC 20006.

This  Prospectus  is part of a  registration  statement  on  Form  S-8/S-3  (the
"Registration  Statement")  under the  Securities  Act of 1933 (the  "Securities
Act") which the Company has filed with the  Commission for the  registration  of
the securities offered by this Prospectus.  This Prospectus does not contain all
of the information set forth in the Registration  Statement and the exhibits and
schedules  thereto.  For  further  information  with  respect  to  the  Company,
reference is hereby made to such Registration Statement, exhibits and schedules,
which may be obtained  from the  Commission's  principal  office in  Washington,
D.C., upon payment of the fees prescribed by the Commission.

                                        2
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The  following   documents   filed  by  the  Company  with  the  Commission  are
incorporated herein by reference:

          (1)  The  Company's  Registration  Statement on Form S-1 (File No. 33-
               34618) which was declared effective on May 4, 1990.

          (2)  Annual Report on Form 10-K for the year ended December 31, 1994.

          (3)  Annual  Report on Form  10-K/A-1 for the year ended  December 31,
               1994.

          (4)  Quarterly  Report on  Form  10-Q for the  quarterly  period ended
               March 31, 1995.

          (5)  Quarterly Report on Form 10-Q for the quarterly period ended June
               30, 1995.

          (6)  Quarterly  Report  on Form  10-Q  for  quarterly  period  ended
               September 30, 1995.

          (7)  Annual Report on Form 10K for year ended December 31, 1995.

          (8)  Annual Report on Form 10K/A-1 for year ended December 31, 1995.

          (9)  Post-Effective Amendment  No.  1 to  The  Company's  Registration
               Statement on  Form  S-1 (File No.  33-63879)  which was  declared
               effective on March 20, 1996.

          (10) Quarterly  Report on  Form 10-Q for quarterly  period ended March
               31, 1996.

In addition to the foregoing,  all documents  subsequently  filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the
filing  of a  post-effective  amendment  indicating  that all of the  securities
offered  hereunder have been sold or deregistering all securities then remaining
unsold shall be deemed to be incorporated by reference in this Prospectus and to
be part hereof from the date of filing of such documents.

Any statement contained in a document  incorporated or deemed to be incorporated
by reference in this Prospectus shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement  contained  herein or
in any subsequently filed document which also is or is deemed to be incorporated
by reference  herein  modifies or supersedes  such  statement.  Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to  constitute  a part of this  Prospectus.  All  information  appearing in this
Prospectus  is  qualified  in its  entirety  by the  information  and  financial
statements  (including  notes thereto)  appearing in the documents  incorporated
herein by reference, except to the extent set forth in the immediately preceding
statement.

The Company  will provide  without  charge to each person to whom a copy of this
Prospectus is delivered, upon the oral or written request of such person, a copy
of any document incorporated in this Prospectus by reference, except exhibits to
such  information,  unless such  exhibits  are also  expressly  incorporated  by
reference herein. Requests for such information should be directed

                                       3
to ACTV, Inc., 1270 Avenue of the Americas, New York, New York 10020, Attention:
Secretary, telephone number (212) 262-2570.

                                        4
THE COMPANY

ACTV,  Inc.  ("ACTV" or the  "Company")  has developed  proprietary  Programming
Technologies  (the  "Programming   Technology")  that  individualize  television
programming.   ACTV's   Programming   Technology   permits   the   delivery   of
individualized television,  which, in the Company's view, significantly enhances
the  quality  of most  genres  of  television  programming.  ACTV's  Programming
Technology  provides  instant and  seamless  changes in the live or  prerecorded
video picture and/or audio and/or graphics in response to the various selections
supplied by each viewer.  A specially  prepared ACTV program (the "ACTV Program"
or "ACTV Programming") is like a linear TV program, except that it appears to be
individualized  for  each  viewer.  (Linear  programs  are  standard  television
programs  that can be viewed  only as  created  and do not offer the  viewer the
option to make  choices as to the  content  of the  program or to respond to the
contents  of the  program in an  individualized  way.)  There is no limit to the
number of viewers who can interact simultaneously with an ACTV Program.

ACTV's  individualized  programming  is  designed  to work with both  single and
multiple  channels of 6MHz band-width and with different modes of  transmission:
cable, direct broadcast satellite ("DBS"),  multi-microwave distribution systems
("MMDS"),  broadcast  systems,  distance  learning  networks and closed  circuit
televisions  systems.  It is compatible with commonly  available  one-way analog
systems as well as the newer  digital  systems  that have  recently  begun to be
deployed.

ACTV's strategy is to generate  revenues from the sale of ACTV  Programming that
it either  owns,  has licensed or that has been created by a third party under a
license from ACTV,  including fees paid by subscribers to premium cable networks
in which the Company has an  ownership  interest.  The  Company's  mission is to
improve the quality of entertainment and education television programming.

The  Company  also  believes  that the  Programming  Technology  can enhance the
quality of television  advertising  by enabling the advertiser to customize each
commercial for various audience segments.  It is the Company's objective to seek
advertiser support for its individualized home entertainment networks.

The chief  markets  presently  targeted by the Company for the ACTV  Programming
Technology are in-home  entertainment,  education  (with an emphasis on distance
learning), site-based entertainment and internet applications. The Company seeks
to  exploit  these  markets,  principally  in the U.S.,  through  licensing  the
Programming Technology,  by creating joint venture relationships,  and by direct
sales.

The  Company  has eight  subsidiaries,  which  include a national  entertainment
company, a national education company,  a  three-dimensional  company,  and five
regional  television  networks:  ACTV Entertainment Inc., a New York corporation
("ACTV Entertainment") incorporated on March 9, 1988, ACTV Interactive,  Inc., a
Delaware corporation  incorporated on July 8, 1992, 3D Virtual, Inc., a Delaware
corporation  incorporated  on July  20,  1995,  The Los  Angeles  Individualized
Television Network, Inc., a Delaware corporation  incorporated on March 7, 1995,
The  San  Francisco   Individualized   Television  Network,   Inc.,  a  Delaware
corporation  incorporated  on December  22,  1995,  The  Chicago  Individualized
Television Network,  Inc., a Delaware  corporation  incorporated on December 22,
1995,  The  New  York  Individualized   Television  Network,  Inc.,  a  Delaware
corporation incorporated on December 22, 1995, and The

                                       5
Atlanta   Individualized   Television  Network,  Inc.,  a  Delaware  corporation
incorporated on December 22, 1995. Unless otherwise indicated, all references in
this Prospectus to the Company or ACTV include ACTV and its eight subsidiaries.

ACTV was incorporated  under the laws of the State of Delaware on July 24, 1989.
The Company is the  successor,  by merger  effective  November 1, 1989, to ACTV,
Inc.,  a California  corporation,  organized  on July 11,  1983.  The  Company's
executive offices are located at 1270 Avenue of the Americas, New York, New York
10020, telephone number (212) 262-2570.

ENTERTAINMENT

The Company  anticipates  that its  individualized  programming will be launched
through    regional    premium    cable    programming    services    that   are
advertiser-supported,  with monthly subscription prices comparable to other U.S.
premium channels.

In March 1995,  the Company  formed The Los  Angeles  Individualized  Television
Network,  Inc., one of its wholly-owned operating  subsidiaries,  to operate the
Company's individualized television trial in Southern California and the planned
regional  television  network that would  roll-out to the  potential 4.8 million
sports  subscribers in the region that reaches from Los Angeles to San Diego and
Phoenix, if the trial is successful.

The trial,  which marked the  introduction of the Company's first U.S.  regional
individualized  network (the "Regional  Network"),  commenced in the Los Angeles
area in May 1995.  The  trial  involves  1,000  cable  subscribers  and will run
throughout 1996 and may extend into 1997. The Company believes that the Regional
Network is the first  programming  service in the U.S. to both enhance  existing
programming and offer new individualized content.

Programming for the Regional Network is being provided to ACTV by Prime Sports -
West, a unit of Liberty Sports,  which is a joint venture of  Telecommunication,
Inc.'s ("T.C.I.") Liberty Media and the News Corporation.  Prime Sports-West has
4.8 million  subscribers in the Southwest region of the U.S. Prime Sports - West
is providing the Company with access to all its regional  sports  programming at
no cost to the Company. Similarly, Cable News Network, Inc. ("CNN") provides, at
no cost to the Company,  access to Prime News,  Sports Tonight,  Inside Politics
and other selected shows. Similarly, the Game Show Network ("GSN"), a subsidiary
of Sony  Entertainment,  Inc.  ("Sony")  provides GSN  programming  and Viacom's
Nickelodeon  children's  programming  at no cost to the  Company  in return  for
consumer research,  pursuant to agreements entered into in November 1995 and May
1996,  respectively.  The cable  operator for the  Regional  Network is T.C.I.'s
Ventura County Cablevision.

In  all  cases,  the  Company  is  responsible  for  the  incremental   content,
transmission,  delivery and master control costs incurred in connection with the
enhancement of the Prime Sports West CNN, Sony and Nickelodeon programming.

The Company  entered into the  arrangement  with Prime Sports in February  1994,
with respect to the Regional  Network.  Assuming future  commercialization  of a
regional  network in the footprint of Prime Sports - West no later than December
31, 1996,  Prime Sports - West would  receive an exclusive in its  footprint for
sports  programming  and the companies will pursue a business  understanding  of
revenue sharing anticipated to include a license fee paid to Prime Sports - West
for each subscribing household on a monthly basis.

                                        6
The Company  entered into the agreement  with CNN in August 1995 with respect to
the Regional  Network.  Upon  commercialization,  CNN and ACTV will  negotiate a
royalty  agreement  and/or  advertising  split  for use of CNN  programming.  In
addition,  CNN shall receive protection until December 31, 1997 to become ACTV's
exclusive  provider of national and  international  news. CNN will also be given
the opportunity to be an equity investor in any new regional networks created by
ACTV.

Regional Network viewers,  in addition to sports, news game shows and children's
programming, are able to individualize education programs produced by ACTV.

The Company plans, assuming a successful test phase, to direct initial marketing
of the Regional Network toward a majority of Ventura City  Cablevision's  90,000
subscribers in the Los Angeles and Ventura County areas. In addition,  expansion
could  follow in other Prime  Sports - West  markets  and,  in stages,  in other
regional   markets  within  the  U.S.  The  Company  has  established  four  new
wholly-owned   subsidiaries   which   would   serve   as   additional   regional
individualized  networks  covering  the San  Francisco,  Chicago,  New  York and
Atlanta  regions in the event that the Company decides to expand and provide the
services  provided by the Regional  Network in other regions  across the U.S. To
date, the four new  wholly-owned  subsidiaries  have not engaged in any business
activities,  nor does the Company  have any present  intention  to launch  their
activities.  The Regional Network,  and any expansion plans related thereto,  is
part  of the  Company's  plan  to  develop  the  entertainment  division  of its
business,  which to date,  does not generate any revenue for the Company.  There
can be no  assurance  that the results  predicted  with  respect to the Regional
Network will be realized, or if realized, will generate significant revenues for
the Company.

ACTV  first   introduced  its   individualized   programming   applications  for
entertainment  outside  the  United  States  through  a  license  with Le Groupe
Videotron, Ltee. ("LGV"), the second largest Canadian cable/broadcast television
company.  The license was  modified  in June 1993  whereby  ACTV gave up all its
royalty income for Canada and Europe. See  "Reorganization of ACTV Entertainment
LGV Agreements."

EDUCATION

ACTV's principal  strategy in education is to become the leading  individualized
programming  technology in the developing field of distance  learning,  in which
ACTV Programming, both live and pre-recorded,  can be transmitted simultaneously
to multiple sites in a satellite, fiber or microwave network.

ACTV  is  currently  developing  new  two-way  analog  and  digital  programming
technologies for distance learning.  This is a  point-to-multipoint  interactive
broadcast system that can deliver  prerecorded  interactive lessons or integrate
interactive  segments into live  distance  learning  lessons.  By using a simple
remote  control,  the student is able to alter program  content to suit specific
needs and interests.  Students receive individualized  responses to their input,
and at the end of the lesson,  the classroom  teacher receives a printout of the
performance of each class member.

ACTV's new distance learning system is being  commercially  introduced,  with an
installation  in Georgia,  that the Company  believes will  represent one of the
industry's  most  advanced  distance  learning  projects.  ACTV and the State of
Georgia have entered into an agreement  through which ACTV's  distance  learning
system and software will be integrated into the Georgia

                                       7
Statewide  Academic and Medical System ("GSAMS"),  an existing fully interactive
service providing audio, video and data to classrooms.

In  addition,  127  individualized  television  titles  have been  produced  and
introduced  into the  kindergarten  to 12th grade market.  The programs focus on
reading,  math, and vocational  education.  To date,  programs have been sold to
approximately  300  different  schools  across  the  U.S.,  along  with  an ACTV
classroom  system -- a terminal with compatible ACTV  Programming  functionality
that  currently  permits up to 24 students in a classroom to view single channel
ACTV Programs  simultaneously.  Education products are marketed through a direct
and distributor sales force.

Individualized  programming is produced jointly through license  agreements with
educational publishers,  including Turner Educational Services, Inc. ("Turner"),
Phoenix, Bergwall, AIT, AIMS, Hasty Pudding and TakeOff.

In 1995,  the Company  also signed a distance  learning  agreement  with General
Instrument  Corporation  ("GI").  ACTV's  Programming  Technology  for  distance
learning  will be integrated  with GI's  DigiCipher'r'  system.  The new digital
system will be called "DigiCipher/ACTV  Distance Learning System" and will allow
programming  networks to develop  individualized  programming  and distribute it
digitally to their customers.

The  Company  markets its  products  through its wholly  owned  subsidiary  ACTV
Interactive,  Inc., which was formed in 1992. Originally a joint venture general
partnership  with the  Washington  Post  Company  (the  "Post  Company")  , ACTV
Interactive became a wholly owned subsidiary of the Company in March 1994.

SITE-BASED ENTERTAINMENT AND INTERNET APPLICATIONS

In  January  1995,  the  Company  granted  an  exclusive  license  to  Greenwich
Entertainment  Group  ("The  Greenwich  Group")  for the use of its  Programming
Technology in the theater  environment,  specifically in shopping malls, museums
and entertainment  centers.  In April, 1996, the Company invested  approximately
$250,000 in the Greenwich Group.

The  Company  will  receive  an 8% to 10%  royalty  of annual  ticket  sales per
theater,  dependent  upon each  theater's  volume.  The Company  will  receive a
minimum  royalty of $200,000  in 1996,  $500,000  in 1997,  $1,000,000  in 1998,
$1,250,000  in 1999 and  $1,500,000  in the year  2000  and  thereafter.  If the
minimum  is not paid,  the  Company  has the right to cancel  its  license as to
future theaters.

The first  theater  opened in the Mall of America in  Minneapolis,  Minnesota on
November 18, 1995.  Recently,  the  Greenwich  Group  reached an agreement  with
United Artists  Theatre Circuit ("UA") to build one to five theaters within UA's
entertainment  complexes. The first theater will be built in the Meadows Mall in
Denver,  Colorado.  The Greenwich Group will need to raise additional capital in
order to complete this project.

In July 1995, the Company established a new wholly-owned subsidiary, 3D Virtual,
Inc., to explore the commercial  possibilities of integrating  three-dimensional
("3D") technology and the Company's Programming Technology, using new technology
for which a patent is  currently  pending.  Initial  business  activity  for the
development of a prototype has just commenced.

                                        8
In December  1995,  the Company  entered  into a joint  venture  agreement  with
EarthWeb,  LLC, a developer of internet  technologies  and a pioneer in JAVA(TM)
language applications, to develop new joint internet software applications.  The
first program being  developed,  Hyper TV, will enable  television  producers to
launch  web pages that  directly  correspond  to their  video  content  during a
broadcast.

ACTV PROGRAMMING TECHNOLOGY

The ACTV  Programming  Technology  provides  instant and seamless changes in the
live or prerecorded  video picture and/or audio and/or graphics based on various
selections made by viewers.  The program appears to be a standard TV program, as
if it were individualized for each viewer.  Viewer selections are made through a
four button remote control, thereby limiting the viewer's number of choices when
inputting each response to four answers previously  anticipated by the program's
creators.

ACTV's process of creating individualized television programming involves viewer
selection from a multiple number of frame-synchronized  video, graphics,  and/or
audio  signals  delivered at one time.  The viewer sees and/or hears only one of
the signals at a given moment; the other signals are transparent. Using a remote
control,  the viewer  interacts  with the  television  by making  selections  or
decisions  called for by the  specially  prepared  programming.  In  response to
viewer's inputs, the ACTV Programming  Technology,  which uses a microprocessor,
automatically  switches at pre-determined  intervals between various segments of
the multiple signals. In one-way analog transmission,  this switching will occur
in the  viewer's  cable  box,  such  as  LGV's  Videoway,  while  with  two  way
transmission, it may occur at the source of the transmission.  The viewer cannot
detect when such a switch takes place because it occurs instantly and with frame
accuracy.

The results appear seamless and  uninterrupted -- for the viewer the programming
is  completely  individualized.  Although  an  individualized  program  and  its
associated  branches are taped in a normal  linear  fashion,  the program,  when
shown, has thousands of possible  permutations  and  combinations  available for
each viewer to experience. The particular version seen is based on each viewer's
individually selected preferences and inputs. An unlimited number of independent
viewers can interact with an ACTV Program simultaneously.

The ACTV  microprocessor  receives digital  information from codes embedded into
the video program  material.  It thus maintains  "memory" on the progress of the
viewer  and  provides  automatic  branching.  At  appropriate  times  during the
program, the microprocessor  circuitry will make branch switches  automatically,
accumulate  data,  recall  information,   create  graphics  and/or  implement  a
pre-programmed set of instructions.

In single channel analog (6MHz of band-width)  applications,  ACTV's Programming
Technology can individualize  audio and/or graphics,  based on multiple signals.
When  additional  analog  channels of  band-width  are  available,  video can be
individualized  as well. In digital systems  multiple video,  audio and graphics
can be individualized in 6MHz of band-width.

To develop individualized  programming the Company generally seeks to form joint
ventures or licensing agreements with producers of standard linear shows or with
networks that have rights to such shows.  ACTV  Programming  can be created in a
number  of ways:  enhancing  existing  programs  that have  been  produced  in a
standard  linear format,  adding  "piggy-back"  branch  alternatives  during the
shooting of ongoing shows, or creating entirely original productions that

                                       9
are solely for ACTV's purposes.

The cost of ACTV  original  productions  has been on average  approximately  20%
higher than a linear version of the same program of comparative length. However,
production costs are  significantly  lower than regular linear  television shows
when existing material can be enhanced,  or when productions are "piggy-backed."
Production  costs  vary  significantly   based  upon  the  nature  and  type  of
programming to be produced.  An advantage of  individualized  programming is its
higher   repeatability,   as  compared  to   standard   programming,   since  an
individualized  program's  cost  can be  amortized  over  a  greater  number  of
showings.

The types of  entertainment  programs  that the Company  plans to emphasize  are
sports, news, education,  game shows, children's programs and music. The Company
envisions  that  its  in-home  services  will  be  supported  by  individualized
advertising. The programming focus for education is reading, math and vocational
education. Examples of ACTV Programming are:

1) Sports.  Sporting events in the ACTV individualized  format allow each viewer
in essence to become the  director of the program by selecting  close-ups,  wide
angle shots, replays, statistics, player interviews and other features as may be
provided.  ACTV's  Programming  Technology  also allows the viewer to respond to
questions posed throughout the game. The system's memory records these responses
and  winners  may be  offered  promotional  premiums,  such as tickets to future
games.

2) News.  In the first  segment of a news  program,  viewers can choose  between
in-depth  follow-ups  of headline  stories.  Later in the  program,  viewers can
choose  segments on  different  categories  of news  (international,  financial,
entertainment, politics, etc.).

3)  Children's  Programs.  ACTV's  Programming  Technology  allows  children  to
participate in television programs by answering questions from the characters on
screen,  giving the characters  advice -- even changing the plot of the program.
In addition to this dialogue children can have with the characters, children can
also be asked to predict the outcome of events, or as with sports,  see an event
from different angles.

4) Music.  Viewers are able to select a particular music video they want to see,
or the order they want to see them. Viewers may also choose to see the lyrics of
a music video,  or access other  information  about the musicians.  In addition,
with live or  prerecorded  concert  performances,  viewers can select from up to
four camera angles in a manner similar to live sports broadcasting.

5) Game Shows. The Programming  Technology  allows game show viewers to actively
participate in the game.  They can decide which celebrity team to play on, enter
their  answers  and  receive  individualized  responses  to their  choices.  The
system's  memory  ability keeps the viewers  informed of their  performance  and
provides final results at the conclusion of the show. This provides  advertisers
and sponsors with the opportunity to offer promotional  premiums to viewers with
the best scores.

6) Advertising.  ACTV's  Programming  Technology offers  television  advertisers
unique  opportunities  to target  their  message.  Commercials  can be  targeted
demographically:  Men, women,  boys and girls can all see different  commercials
during the same  commercial  break.  By asking the viewer basic questions at the
beginning  of the  program,  the ACTV  Programming  Technology  can recall  this
information during a commercial break and based upon such

                                       10
information  send the viewer the appropriate  advertisement.  A second advantage
for  advertisers  is the concept of  individualized  commercials.  For  example,
before a commercial  break in a sporting event,  viewers are asked which type of
car they would like to hear about:  sedan, truck, sport utility or luxury sedan.
ACTV's Programming  Technology  records this choice,  then sends the appropriate
commercial  to  each  viewer.  This  same  choice  can be  recalled  at a  later
commercial break to provide additional information.

7) Live Distance Learning. Distance learning ("DL") networks typically involve a
teacher  broadcasting  a lesson to dozens or even  hundreds of remote  classroom
sites.  ACTV's  Programming  Technology  for DL allows  the DL teacher to create
questions or offer choices relating to the lesson and pre-record  individualized
responses.  At selected  points in the lesson,  the DL teacher can  initiate the
questions  and  interactions,  with each  student  across the network  receiving
individualized responses. In addition, the ACTV Programming Technology gives the
teacher immediate feedback on the students'  responses,  allowing the teacher to
pace the lesson  accordingly.  The  system's  memory  component  can recall each
student's  performance  throughout  the entire  semester,  giving the  teacher a
detailed accounting of their progress.

8) Educational  Programming.  Younger classroom students learn basic reading and
math  skills,  and  older  students  learn  vocational  and  career  skills,  in
pre-recorded  individualized  television  programs  using  the ACTV  Programming
Technology.  Just as in the  case  of the DL  programming,  as the  pre-recorded
television program progresses, a teacher appears on screen and asks the students
questions about the material presented.  Students respond to the questions, then
receive  individualized  feedback  based  on  their  answers.  At the end of the
lesson,  the classroom  teacher  receives a report  detailing the results of the
performance of the entire class,  as well as the  performance of each individual
student.

RESEARCH AND DEVELOPMENT

The Company is engaged in a field  characterized  by extensive  research efforts
and rapid, significant  technological change. During 1993, the Company began its
current research and development projects, relating primarily to the development
of a new  analog/digital  two-way  distance  learning  system.  There  can be no
assurance that research or development by others will not render the Programming
Technology  obsolete  or that the  research  and  development  performed  by the
Company and/or its licensees and joint venture partners will continue or will be
successful.  The Company entered into a collaborative  agreement in August, 1995
with  The  David  Sarnoff   Research  Center   ("Sarnoff")  to  investigate  and
potentially  develop  digital   applications  of  the  Programming   Technology.
Currently,  the Company,  Sarnoff, and General Instrument Corporation ("GI") are
working  together to  incorporate  ACTV's  programming  technology  into GIs new
MPEG-2 digital terminal.

The Company expended approximately $250,000 in the first quarter of 1996 related
to these research and development  projects and may spend an additional $500,000
during the remainder of 1996.

GOVERNMENT REGULATION

The  Company  believes,  on the basis of its review of current  legislation  and
regulations that neither its present nor any proposed commercial  implementation
of the ACTV Programming Technology on distance learning networks, closed circuit
television  systems,  cable,  DBS or MMDS will require  governmental  license or
approval. Certain broadcast applications and

                                     11
copper pairs with ADSL may require  governmental  approval.  No assurance can be
given that applicable  laws will not change.  In the event such approval were to
be required,  there can be no assurance that the Company would be able to obtain
such  approval or the licenses  required for the further  implementation  of the
ACTV Programming Technology.

MARKETING AND PROGRAM PRODUCTION

The primary markets targeted by the Company for the ACTV Programming  Technology
are in-home  entertainment,  education (with an emphasis on distance  learning),
and  site-based  entertainment.  The  Company  seeks to  exploit  these  markets
principally in the US through licensing the Programming Technology,  by creating
joint venture relationships, and by direct sales. To date, the Company's capital
requirements to develop the Programming  Technology,  produce ACTV  Programming,
develop  marketing  approaches  and strategic  alliances,  and to cover costs of
sales and general and administrative expenses, have been significant,  resulting
in an accumulated deficit as of March 31, 1996 of approximately $32.9 million.

The Company will  continue to implement a marketing  program  consisting  of the
employment  of  sales  and  marketing  personnel,  contracting  with  sales  and
marketing  consultants,  and the use of promotional  efforts,  including product
demonstrations  and  participation in trade shows and  conferences.  The Company
currently has two  entertainment  marketing  executives,  four educational sales
people and fifteen educational distributors.

In entertainment, the Company has licensed the Programming Technology to LGV and
The  Greenwich  Group and  continues to seek other  licensees  and joint venture
partners both in and outside the United States. The Company is and will continue
to be dependent  upon the ability of  licensees  and joint  venture  partners to
offer  products  and  services  that are  commercially  viable,  and to actively
promote and distribute the Programming Technology.

Since 1993, ACTV has not been active with LGV in Canada and Europe and no longer
receives any royalty income from the license. Focus group testing in Los Angeles
that preceded the Prime Sports - West and CNN agreements  indicated  interest in
ACTV  sports,   news,  game  shows,   and  in  its  educational  and  children's
programming.

The  Greenwich  Group has licensed  the  Programming  Technology  for use in the
theater environment, principally in shopping malls. The first children's theater
opened in the Mall of America in Minneapolis, Minnesota, on November 18, 1995.

In March 1995,  the Company  formed The Los  Angeles  Individualized  Television
Network,  Inc., one of its wholly-owned operating  subsidiaries,  to operate the
Company's individualized television trial in Southern California and the planned
regional  television  network that would  roll-out to the  potential 4.8 million
sports  subscribers in the region that reaches from Los Angeles to San Diego and
Phoenix, if the trial is successful.

The trial,  which marked the  introduction of the Company's first U.S.  regional
individualized  network (the "Regional  Network"),  commenced in the Los Angeles
area in May 1995.  The  trial  involves  1,000  cable  subscribers  and will run
throughout 1996 and may extend into 1997. The Company believes that the Regional
Network is the first  programming  service in the U.S. to both enhance  existing
programming and offer new individualized content.

Programming for the Regional Network is being provided to ACTV by Prime Sports -
West,

                                       12
a unit of Liberty Sports, which is a joint venture of Liberty Media and the News
Corporation.  Prime Sports - West has approximately  4.8 million  subscribers in
the Southwest region of the U.S., CNN, GSN and  Nickelodeon.  The cable operator
is  Ventura   County   Cablevision,   a  subsidiary  of  TCI.  See  "BUSINESS  -
Entertainment."

The Company has established four new wholly-owned subsidiaries which would serve
as  additional  regional  individualized  networks  covering the San  Francisco,
Chicago,  New York and Atlanta  regions in the event that the Company decides to
expand and  provide  the  services  provided  by the  Regional  Network in other
regions across the U.S. To date, the four new wholly-owned subsidiaries have not
engaged  in any  business  activities,  nor does the  Company  have any  present
intention to launch their activities. There can be no assurance that the results
predicted with respect to the Regional Network will be realized, or if realized,
will generate significant revenues for the Company.

The Company, its licensees or joint venture partners must produce and/or provide
individualized  programming for the Company to continue commercial entertainment
operations in the U.S. For the most part,  the Company,  its licensees and joint
venture  partners  are  dependent  upon third  parties as sources for the linear
programming that is to be enhanced into ACTV Programming.  For the entertainment
market,  all  programming to date has been produced either through LGV or by the
Company itself.

With respect to the  education  market,  the Company has executed  non-exclusive
agreements with seven entities to obtain linear  programming that it can enhance
to create ACTV Programs.  Linear programs are standard  television programs that
can be viewed  only as  created  and do not offer the  viewer the option to make
choices  as to the  content of the  program  or to respond to the  program in an
individualized way.

The Company has entered into agreements with Turner Educational Services,  Inc.,
Phoenix  Learning Group,  Bergwall  Productions,  Inc., The Hasty Pudding Puppet
Co., AIMS Media,  Agency for Instructional  Technology ("AIT") and Takeoff/Video
Educational Excellence. Each of these agreements gives ACTV worldwide, perpetual
marketing  rights (except for the AIT  agreement,  which limits the rights to 15
years) to the  programming  produced.  The  companies  are to receive  quarterly
royalties, based on the number of units of ACTV Programs sold.

There can be no  assurance  that the  Company  will be  successful  in  reaching
agreements  with  licensees  and  joint  venture  partners,  that the  Company's
strategy of marketing the Programming Technology through its licensees and joint
venture partners will be successful,  or that the methods that its licensees and
joint  venture  partners  choose to market the  Programming  Technology  will be
successful.  Further, the Company may be adversely affected by the financial and
business  considerations  of its licensees and joint  venture  partners.  Future
joint  venture and license  agreements  may provide that the licensees and joint
venture  partners  will  receive  equity  interest  in the  Company  and/or  its
subsidiaries.

SET-TOP CONVERTERS, TERMINALS, AND OTHER INTERACTIVE DEVICES

The Company does not intend to manufacture set-top converters,  terminals, video
servers, or other interactive devices.

In  the  entertainment  market,  ACTV  signed,  on  June  8,  1993,  a  20-year,
non-exclusive,   royalty-free  manufacturing  license  with  LGV.  The  Videoway
terminal manufactured through

                                       13
LGV is an  analog  ACTV-compatible  set-top  converter  available  to  potential
distributors of ACTV  Programming.  In April 1996,  ACTV and General  Instrument
Corporation  ("GI")  signed a  non-exclusive  manufacturing  agreement  for GI's
MPEG-2  digital  terminal.  The digital  terminals are scheduled for delivery in
late 1996 or early 1997. The Company intends to grant  licensees  similar to the
one granted to LGV and GI to other manufacturers that are selected by the future
distributors of ACTV Programming.

ACTV's  Programming  Technology  can work with different  modes of  transmission
(cable,  DBS,  broadcast,  and MMDS), and is compatible with commonly  available
one-way,  analog systems.  In addition,  it is compatible with the newer digital
systems that are just starting to be deployed. Therefore, there are many ways to
design  a  distribution  system  that  is  compatible  with  ACTV's  Programming
functionality.  The Company  believes that the  incremental  cost of adding ACTV
Programming functionality will not be significant in digital systems.

There can be no assurance  that the Company  will be  successful  in  developing
additional manufacturing licenses.

In the education market,  the Company entered into an arrangement in March 1995,
with General Instrument  Corporation ("GI") pursuant to which ACTV's Programming
Technology for distance learning will be integrated with GI's DigiCipher system.
The DigiCipher is a digital decoder used by many distance learning networks that
distribute  their  television  signal  digitally  and require that the signal be
decoded  at  their  downlink  sites.  The new  digital  system  will  be  called
"DigiCipher/ACTV  Distance Learning System," and will allow programming networks
to develop  individualized  programming  and  distribute  it  digitally to their
customers. Under the arrangement, the companies will cooperate technically, each
paying their own costs,  and GI would  receive any revenues  generated  from the
DigiCipher  decoder while the Company would receive any revenues  generated from
the digital learning unit. At present,  the Company and GI's concerted  research
and technical  work toward the  development  of the new digital system is in its
initial stage and will take most of the remainder 1996 to complete. There can be
no assurance  that the new digital  system will be  developed,  or if developed,
that it will generate significant revenues for the Company.

The Company  executed a non-exclusive  agreement in June 1992 with KDI Precision
Products,  Inc. ("KDI") to manufacture  ACTV's  classroom and distance  learning
systems, with compatible ACTV Programming  functionality.  KDI sells the systems
to ACTV at prices and in accordance  with a delivery  schedule  agreed upon from
time to  time.  KDI  also is a  distributor  of  components  such as  television
monitors, VCRs, remote controls,  printers and cabinets used in conjunction with
the  systems.  The  agreement  is subject to  automatic  renewal for  additional
one-year terms unless terminated by either party on six-months' written notice.

KDI is currently the only  manufacturer  of the classroom and distance  learning
systems.  The Company believes that KDI can produce  sufficient  systems to meet
the anticipated  needs of ACTV in the education  marketplace.  In the event that
KDI were  unable to supply  the  systems,  there  can be no  assurance  that the
Company  could  produce  sufficient  systems or obtain  sufficient  systems from
another  manufacturer  at an acceptable  price.  The inability of ACTV to obtain
systems would have a material adverse affect on the business of the Company.

                                       14
CONSOLIDATION OF EDUCATIONAL PARTNERSHIP INTO ACTV

On July 14, 1992, ACTV  Interactive,  Inc. entered into a partnership  agreement
with  Post-Newsweek  Education,  Inc.,  a  wholly-owned  subsidiary  of the Post
Company,  pursuant to which ACTV  Interactive  was formed as a Delaware  general
partnership,  for the purpose of selling products and services incorporating the
ACTV Programming Technology to the education market. The Post Company received a
51%  interest  in ACTV  Interactive;  ACTV  Interactive,  Inc.,  a  wholly-owned
subsidiary of the Company, received a 49% interest in ACTV Interactive.

In connection with the formation of the partnership,  the Company entered into a
license agreement (the "License  Agreement") with ACTV Interactive.  Pursuant to
the License Agreement, ACTV Interactive was given licenses to exploit certain of
the Company's patents and related technology (collectively the "Patents") in the
creation and  distribution  of educational  programming.  The License  Agreement
provided that the Company receive five percent (5%) of all revenues generated by
ACTV Interactive.

On March 11, 1994, the Company purchased the Post Company's full 51% interest in
ACTV Interactive for  consideration of $4.5 million,  consisting of $2.5 million
in cash at closing and a $2 million  promissory  note. The note was paid in full
in October 1995.  The  consideration  paid by the Company for the Post Company's
full  51%  interest  in  ACTV  Interactive  was  determined  after   arms-length
negotiations between the parties. The Company and the Post Company agreed to the
amount of such consideration  without receiving a valuation from a disinterested
third party.

REORGANIZATION OF ACTV ENTERTAINMENT AND THE LGV AGREEMENTS

In March 1988, the Company formed ACTV  Entertainment as equal stockholders with
a subsidiary of LGV,  Videotron  Technologies  Ltd. The Company  granted to ACTV
Entertainment the exclusive right to use the Company's Programming Technology in
the United States DBS, cable and broadcast television markets.

On June 8, 1993, LGV withdrew from its ownership in ACTV Entertainment,  and the
Company became the sole shareholder in ACTV Entertainment  under the terms of an
agreement with the subsidiary of LGV,  thereby  settling all  outstanding  legal
disputes between the companies.

While ACTV  gained  full  ownership  and  control of ACTV  Entertainment  in the
settlement, it did agree to give up the royalty income it was receiving from its
Videoway  terminal  license  with LGV for Canada and Europe  ($3.00 per user per
year).  Simultaneously  with  the  June 8,  1993  change  in  ownership  of ACTV
Entertainment, the 1987 LGV exclusive foreign license for Canada, Europe and the
Soviet  Union was  renegotiated.  The new license  provides  LGV with a 20-year,
non-exclusive,  royalty-free  license to manufacture its Videoway  terminal with
compatible ACTV Programming functionality. Videoway is an analog cable converter
box  capable of  providing a variety of advanced  services,  including  standard
cable tuning and decoding capabilities, access to videotext,  closed-captioning,
data banks,  video games,  software  downloading and electronic mail. LGV is not
currently  producing  ACTV  programming  in  Montreal  and is in the  process of
selling its London, England cable systems.

Under the  modified  license,  LGV has a  20-year,  non-exclusive,  royalty-free
license to manufacture  Videoway  terminals that incorporate  ACTV's Programming
Technology. The agreement also allows LGV to produce ACTV Programming itself for
a certain number of

                                       15
potential Videoway subscribers in Canada (1,300,000),  Europe (500,000), and the
United States  (500,000).  The license is subject to the condition  that neither
LGV nor its sub-licensees receive any royalty or other fees with respect to ACTV
Programming,  except for promotion and direct  production  expenses paid by LGV.
Any royalties from third parties will be paid exclusively to ACTV.

The Company and LGV entered into their original  agreement during the infancy of
the  development  of interactive  television.  LGV had developed its Videoway TV
set-top  converter,  which,  among  other  things,  enabled  it to  provide  its
subscribers with interactive capacity. The arrangement provided the Company with
an outlet for its ACTV Programming while providing LGV with interactive  product
for its Videoway converter. As both companies developed, however, their missions
began to  diverge:  LGV wanted to market its  Videoway  converter  in the United
States,  and was less interested in the actual  production of ACTV  Programming,
while the Company was  interested in expanding its  programming  capacity and in
making  its  ACTV  Programming   available  for  use  with  set-top   converters
manufactured  and distributed by others.  The  restructuring of the relationship
with LGV enabled both companies to focus on their respective  goals, in that LGV
now has the non-exclusive  right to market the Videoway  converter in the United
States,  and the  Company  has  control  of ACTV  Programming  development.  See
"Reorganization of ACTV Entertainment and the LGV Agreements."

PATENTS, APPLICATIONS, AND PROPRIETARY TECHNOLOGY

The Company has sought to protect the  proprietary  features of the  Programming
Technology it employs through patents,  copyrights,  confidentiality agreements,
and trade  secrets  both in the United  States and  overseas.  As of the present
time,  the United States  Patent and  Trademark  Office has issued nine patents,
with five additional  patents pending,  three of which name Dr. Michael Freeman,
the Company's Advanced Product Development  Liaison, as an inventor thereof, and
two of which name Dr. Freeman and Gregory Harper, former President -- Technology
Consulting Group, and one of which named Richard Bennett,  who is not affiliated
with the Company, as inventors thereof.  The patents,  which deal with different
aspects of the ACTV Programming Technology, expire at various dates from 1998 to
2009.

Corresponding  patents for some of the above U.S.  patents  have been granted or
are pending in Canada,  Japan,  Australia and the European Patent Office. When a
patent  is  granted  by the  European  Patent  Office,  and upon the  filing  of
appropriate  translations,  protection  will  be  available  in  the  designated
European  countries.  The Company  believes  such  patents will  strengthen  its
competitive position in the aforementioned countries.

Dr. Freeman,  Mr. Harper and Mr. Bennett have assigned to the Company all right,
title, and interest in and to the above US patents and any corresponding foreign
patents or applications  based thereon.  In addition,  Dr. Freeman has agreed to
assign to the  Company  the rights and title in and to all  future  patents  and
applications,  and any corresponding  foreign patents or application relating to
the ACTV Programming Technology.

There can be no assurance that the patents held by the Company are  enforceable,
particularly in view of the high cost of patent litigation, nor can there be any
assurance that the Company will derive any competitive advantages therefrom.  To
the extent that patents are not issued for any other  products  developed by the
Company,  the  Company  would be subject to more  competition.  The  issuance of
patents may be insufficient to prevent competitors from essentially  duplicating
the Company's  products by designing around the patented  aspects.  In addition,
there

                                       16
can be no assurance  that the  Company's  products  will not infringe on patents
owned by others, licenses to which may not be available to the Company, nor that
competitors  will  not  develop   functionally   similar  products  outside  the
protection of any patents the Company has or may obtain.

The Company requires each of its employees,  consultants and advisors to execute
a  confidentiality  and  assignment of  proprietary  rights  agreement  upon the
commencement of employment or a consulting  relationship with the Company. These
arrangements generally provide that all inventions, ideas, and improvements made
or conceived  by the  individual  arising out of the  employment  or  consulting
relationship  shall be the exclusive  property of the Company.  This information
shall be kept confidential and not disclosed to third parties, except by consent
of the Company or in other specified  circumstances.  There can be no assurance,
however,  that  these  agreements  will  provide  effective  protection  for the
Company's proprietary information in the event of unauthorized use or disclosure
of such information.

COMPETITION

The development of interactive  television  applications is highly  competitive.
The Company competes within the television industry with many other applications
which may be considered  interactive.  Moreover,  the Company also competes with
other forms of entertainment and educational programming, many of which are much
more  established,  including  standard  television  programming and the rapidly
growing  CD-ROM  market.  Among the  Company's  competitors  in both the area of
interactive  television  and in other  media are  companies  that  have  greater
financial, technical and marketing resources than the Company.

At the present  time,  there are a number of  different  interactive  television
applications  that have been developed or are under  development by others which
might be considered to be competitive with the Company's Programming Technology.
These  other  interactive  applications  in  general  are  delivered  via  cable
television,  or through  play-along devices that are attached to the television.
To the best of the Company's knowledge, none of the point to multi-point systems
based on these  technologies  allow the  viewer  to  affect  what is seen on the
television  in  the  same  manner  or to the  extent  of  the  ACTV  Programming
Technology.

The new  interactive  television  applications  principally  fit in six  primary
categories:  (1)  information  and channel  guide  services,  (2)  transactional
services,  (3)  quantity/video-on-demand,  (4) separate device  play-along,  (5)
video games and (6) individualized TV.

ACTV fits in the  individualized  TV category.  Only  individualized  television
allows every  television  viewer to interact  personally  with and change the TV
program itself. Within the limits of the programmed choices, each sports fan can
watch the action the way he or she chooses,  and each child receives  individual
instructions  based  on his or  her  own  response  to  the  on-screen  teacher.
Individualized   television   technology  is  the  only   technology  that  uses
traditional filmed entertainment where the program itself is interactive.

ACTV's process of creating individualized television programming involves viewer
selection from a multiple number of frame-synchronized  video, graphics,  and/or
audio  signals  delivered at one time.  The viewer sees and/or hears only one of
the signals at a given moment; the other signals are transparent. Using a remote
control,  the viewer  interacts  with the  television  by making  selections  or
decisions called for by the specially-prepared  programming. Based on a viewer's
inputs, the ACTV Programming Technology, which uses a microprocessor,

                                       17
automatically  switches at pre-determined  intervals between various segments of
the multiple  signals.  The viewer  cannot detect when such a switch takes place
because it occurs instantly and with frame accuracy.

The results appear seamless and  uninterrupted -- for the viewer the programming
is  completely  individualized.  Although  an  individualized  program  and  its
associated  branches are taped in a normal  linear  fashion,  the program,  when
shown, has thousands of possible segment combinations  available for each viewer
to experience. The particular version one sees is based on individually selected
preferences and inputs. An unlimited number of independent  viewers can interact
with an ACTV Program simultaneously. See "ACTV Programming Technology."

A summary of each of the other interactive application follows:

1) Information and Channel Guide Services This form of interactivity enables the
television to serve as a tool for information  accessibility and retrieval.  The
most immediate application is for channel guide services, which allow viewers to
easily  determine  the  locations of programs in an expanded  channel  universe.
Information   services  include  access  to  large  external  text  and  graphic
information databases, such as those provided by America On-Line and Prodigy.

2)  Transactional  Services This  application  allows the  television  viewer to
purchase  merchandise  displayed  on-screen  by  pressing a button on his or her
remote control.  Transactional  services could be in the form of a home shopping
program or an addendum to a commercial.  Through their television sets,  viewers
may receive video, still pictures, text or audio about the selected products.

3) Quantity/Video on Demand Cable, DBS and MMDS systems that incorporate digital
television delivery will be able to offer substantially more channels than their
analog  predecessors.  Programs  transmitted  digitally can be randomly accessed
through  menu  selection  items.  Extensive  pay-per-view  movies  could be made
available,  popular shows might be aired at many different  starting times,  and
the viewer could purchase,  on an a la carte basis,  television  shows following
their initial air date on broadcast or cable TV.

4) Separate Device Play-Along This application allows viewers to play along with
television  programs  such as game shows or  sporting  events.  The viewer has a
separate  controller that receives  information about the show in progress,  and
either displays it on the controller  itself,  or overlays  television  pictures
with text and/or  graphics.  Players can compete with the on-screen  contestants
for prizes.  Although the TV  programming  itself is unchanged,  game players at
home see their results displayed on the play-along device's screen.

5) Video  Games  Interactive  television  services  will allow a user to call up
video games, like those now marketed by Nintendo and Sega,  through the cable TV
box.  Historically,  video games have been delivered on cartridges inserted into
special-purpose terminals attached to a television set.

Since the Company's  business  strategy  depends in large part on its ability to
attract joint venture partners and/or licensees, the Programming Technology must
be more  appealing to potential  joint venture  partners or licensees than other
technologies  which  currently  exist  or are now  under  development  or may be
developed in the future.

                                       18
EMPLOYEES

At March 31,  1996,  the Company  employed 25 full-time  employees.  The Company
believes that its relationships with its employees are generally satisfactory.

PROPERTY

The Company and its subsidiaries  maintain their principal and executive offices
at Rockefeller  Center,  1270 Avenue of the Americas,  New York, New York, where
they lease  approximately  6,300 square feet at a rent of approximately  $17,400
per  month  pursuant  to a lease  that  expire  January  2001.  The lease may be
terminated by the Company beginning in May 1999, but if it is so terminated, the
Company must pay an early termination fee to the landlord. the Company maintains
an engineering staff and an editing studio at 1600 Broadway, New York, New York,
where it leases  approximately  2,500 square feet at a rent of $3,450 per month,
pursuant to a lease that expires in December 1999. The lease agreement  provides
for  cancellation  by  either  party  with no  penalty  at the end of  1996.  In
addition,  the Company  maintains  offices at 9454 Wilshire  Boulevard,  Beverly
Hills, California,  which are leased on a month-to-month basis for approximately
$1,350 per month by The Los Angeles Individualized  Television Network, Inc. The
Company believes its current facilities are suitable and adequate, and that they
provide the productive  capacity necessary for the performance of the operations
of the  Company.  None of the  Company's  properties  is leased from  affiliated
persons.

LEGAL PROCEEDINGS

In March 1988, LGV and the Company formed ACTV Entertainment, in which they were
to be equal  stockholders,  each owning 50 shares of Common  Stock.  The parties
also  entered  into a license  agreement  regarding  the use of the  Programming
Technology by LGV in Canada,  Europe and the Soviet Union.  LGV had pledged 28.5
of its shares to secure  two  $4,000,000  payments  it was to have made upon the
occurrence of certain  conditions.  The parties had a dispute as to whether such
conditions had been met, the payments were not made, and ACTV  foreclosed on the
28.5 shares.  An  arbitration  was commenced and  subsequently  stayed,  pending
settlement discussions between the parties. On June 8, 1993, the parties reached
a  settlement  pursuant  to  which  ACTV  became  the sole  stockholder  of ACTV
Entertainment and the license  agreement  between the parties was modified.  See
"-- Reorganization of ACTV Entertainment and the LGV Agreements."

In August,  1993, a lawsuit was commenced  against the Company by Nolan Bushnell
in the United  States  District  Court for the  Southern  District  of New York,
seeking  damages in the amount of  $290,872,  plus  interest on such amount from
April 1986,  arising out of an alleged  payment by plaintiff of a guaranty of an
equipment  lease of the  Company.  On April 25, 1994 the Company  entered into a
Settlement  Agreement  with Nolan  Bushnell  and Catalyst  Technologies,  a sole
proprietorship  owned  by Mr.  Bushnell,  pursuant  to  which  (a)  the  lawsuit
commenced by Mr.  Bushnell in connection with his guaranty of an equipment lease
($290,872)  was  withdrawn,  and  (b) Mr.  Bushnell  and  Catalyst  Technologies
relinquished  any and all right to receive  payments  from the  Company out of a
repayment  pool  established  pursuant  to the  terms of a 1985  agreement.  The
obligation to Mr.  Bushnell and Catalyst under the 1985 agreement were reflected
on the  Company's  books,  as of December  31, 1993 at  $121,333,  plus  accrued
interest thereon.

Pursuant to the terms of the Settlement Agreement,  the Company paid $100,000 to
Mr. Bushnell

                                       19
and  issued a  promissory  note in the  principal  amount of  $190,000,  payable
$100,000  on June  30,  1995 and  $90,000  on June 30,  1996.  Of the  aggregate
settlement  amount,  $255,000  was  paid by the  Company  in  settlement  of Mr.
Bushnell's  claims in the  lawsuit  relating to his  guaranty  of the  Company's
equipment  lease,  and the balance of $35,000 is in full and final settlement of
the claims of Mr.  Bushnell and  Catalyst  Technologies  for  payments  from the
repayment  pool. In January 1995, the Company  prepaid the $190,000 Note in full
for a discounted amount of $100,000 in full satisfaction of this obligation.

There are no other pending material legal  proceedings to which the Company is a
party.

                                       20
RISK FACTORS

The  purchase  of the  securities  being  offered  hereby  involves  a number of
significant  risks that  include,  but may not be limited  to,  those  described
below.  Each prospective  investor should carefully  consider the following risk
factors  inherent in and affecting the business of the Company and this Offering
before making an investment decision.

1. OPERATING LOSSES TO DATE. The Company has operated at a loss through the date
of this  Prospectus.  The  Company's net losses for the three months ended March
31,  1996 and 1995  (the  "March  1996  period"  and the  "March  1995  period,"
respectively)  were  $2,560,883  and  $1,952,836,  respectively.  The March 1995
Period includes an extraordinary gain of $94,117.  The Company had net losses of
$6,826,789  in  the  fiscal  year  ended  December  31,  1995  ("Fiscal  1995"),
$4,465,240  in the fiscal year ended  December  31, 1994  ("Fiscal  1994"),  and
$4,465,240 in the fiscal year ended December 31, 1993 ("Fiscal  1993").  Through
March 31, 1996, the Company had an accumulated  deficit of  approximately  $32.9
million.  To date, the Company has had limited revenues,  including  revenues of
$350,674 in the March 1996 period, $1,311,860 in Fiscal 1995, $938,416 in Fiscal
1994, and $164,602 in Fiscal 1993.

The  increase  in  revenues  in  Fiscal  1994 was  partially  the  result of the
Company's  including  for the period  March 11 to December 31 of Fiscal 1994 all
education  sales,  which were  reported for Fiscal 1993 by ACTV  Interactive,  a
partnership  in which ACTV held a 49%  interest  from July 14, 1992 to March 11,
1994. ACTV Interactive's gross sales were $839,165 in Fiscal 1993, compared with
$348,473 for the period from July 14, 1992, the  partnership  formation date, to
December 31, 1992.  ACTV  Interactive's  results  were  accounted  for under the
equity method of accounting.

There can be no assurance that the Company will generate significant revenues or
achieve profitability in the future.

2. UNPROVEN  BUSINESS  STRATEGY.  Other than the activities of ACTV Interactive,
the Company's prior  activities in the education market and the arrangement with
LGV in the  entertainment  market,  the Company has not had significant sales of
the Programming  Technology.  While ACTV has recently consummated its first sale
of the new distance  learning  technology,  there can be no  assurance  that the
results of this project will support the  continuation of the project or lead to
other sales. Also, while the Company has recently entered into agreements with a
large regional cable sports network, a national news service, other programmers,
and a cable  operator  to  create  a trial  for  Los  Angeles-based  programming
service,  which was launched in mid-1995,  there can be no assurance  that these
agreements  will  result  in  the  development  of  a  commercially   successful
programming  service.  In addition,  the Company is dependent on  co-ventures or
licenses  with third  parties to produce  ACTV  Programs and the Company will be
required to  demonstrate a market for such  programs.  There can be no assurance
that  co-venturers  or  licensees,  or ACTV's direct sales force will succeed in
marketing the ACTV Programs. See "BUSINESS - Entertainment."

Furthermore,  the likelihood of the success of the Company must be considered in
light of the problems,  costs, difficulties and delays encountered in connection
with the  operation  of a  business,  the  operations  of which  consist  of the
development  and  commercialization  of new and unproven  technologies,  and the
competitive environment in which the Company operates. Accordingly, there can be
no assurance that the Company will successfully market the

                                       21
Programming Technology or operate on a profitable basis. See "BUSINESS."

3. POSSIBLE  NEED FOR  ADDITIONAL  FINANCING.  To date,  the  Company's  capital
requirements to develop the Programming  Technology,  produce ACTV  Programming,
develop  marketing  approaches  and strategic  alliances,  and to cover costs of
selling  and  general  and  administrative   expenses,  have  been  significant,
resulting in an accumulated  deficit as of March 31, 1996 of approximately $32.9
million.

The Company's continued marketing of all of its products and services on planned
levels and timetables is dependent  upon the Company's  obtaining the additional
capital  necessary to support the Company's  future  operations at these levels.
Management is continuing its efforts to obtain such additional financing. If the
Company is not successful in obtaining  such  additional  financing,  management
believes  that the Company can fund its  operations  at least through the end of
March  1997.  To fund its  operations  at least  through  the end of March 1997,
without  additional  financing,  the Company will be required to reduce  certain
planned  expenditures in certain of the markets it is attempting to develop.  If
management's  assumptions  regarding future events prove incorrect,  the Company
may be unable to fund its operations,  even at a reduced level,  through the end
of March 1997.

4.  PATENTS  AND  PROPRIETARY  INFORMATION.  The Company  has  obtained  patents
covering  certain aspects of the Programming  Technology and has patents pending
with respect to other developments or enhancements thereof.  However,  there can
be no  assurance  (i) that  patents  applied for will be granted,  (ii) that the
patents the Company  owns or has rights to or that may be granted or obtained by
the Company in the future will be  enforceable  or will provide the Company with
meaningful protection from competition, (iii) that any products developed by the
Company  will not  infringe  any  patent or rights of  others,  or (iv) that the
Company will  possess the  financial  resources  necessary to enforce any patent
rights which it holds.  See "BUSINESS -- Patents,  Applications  and Proprietary
Information."

The Company requires each of its employees,  consultants and advisors to execute
a  confidentiality  and  assignment of  proprietary  rights  agreement  upon the
commencement of employment or a consulting  relationship with the Company. These
arrangements generally provide that all inventions,  ideas and improvements made
or conceived  by the  individual  arising out of the  employment  or  consulting
relationship  shall be the exclusive  property of the Company.  This information
shall be kept  confidential and not disclosed to third parties except by consent
of the Company or in other specified  circumstances.  There can be no assurance,
however,  that these  arrangements  will  provide  effective  protection  of the
Company's proprietary information in the event of unauthorized use or disclosure
of such information.

5. TECHNOLOGICAL OBSOLESCENCE;  RESEARCH AND DEVELOPMENT. The Company is engaged
in a field  characterized by extensive  research efforts and rapid,  significant
technological  change. There can be no assurance that research or development by
others will not render the Programming  Technology  obsolete or that the limited
research  and  development  performed  by the Company  will  continue or will be
successful. In 1995, outside research and development costs totaled $476,155 and
were primarily related to development of a new  analog/digital  two-way distance
learning  system.  The  Company  believes  that  it may be  required  to  expend
approximately  $200,000  during 1996 to  facilitate  the  completion  of current
research  and  development  projects.  There  can be no  assurance  that the new
distance  learning  system  can be  deployed  on a timely  basis,  or that  once
deployed,  it will  function  satisfactorily.  If the  Company  determines  that
additional research and development is required,  there can be no assurance that

                                       22
the Company will have sufficient  funds or access to additional  funds to engage
in substantial  additional  research and development.  See "BUSINESS -- Research
and Development."

6. POSSIBLE SHORTAGE OF AVAILABLE  CHANNELS FOR IN-HOME CABLE  APPLICATIONS.  In
order for the ACTV Programming  Technology to be delivered over cable,  MMDS and
DBS systems for the in-home market,  it must compete for channel space on cable,
MMDS and DBS systems,  many of which have limited  available  channel  capacity.
Although a simpler form of  individualization  can be achieved by the  Company's
using one channel of band-width,  the more  sophisticated  applications  of ACTV
Programming currently require three to four channels of analog band-width. There
is no  assurance  that cable,  MMDS and DBS  operators  will devote a sufficient
number of channels of  band-width to the  Programming  Technology in the future.
Nor is there any  assurance  that the  Company  will be able to  expand,  unless
cable,  MMDS,  or DBS operators  continue to upgrade and increase  their channel
capacity  by  using  some  form  of   "compression   technology,"   whereby  the
digitalization  of the  information  required  to produce a  television  picture
reduces the channel  capacity  required for programming  that  incorporates  the
Programming Technology. The compression technologies recently deployed and those
currently  under  development  could  enable the Company to use the more complex
applications  of the  Programming  Technology on one channel of band-width.  The
Company believes,  although there can be no assurance,  that the cable, MMDS and
DBS  industry is, in general,  moving in the  direction  of  increasing  channel
capacity.  The costs associated with such  compression  technology may result in
substantial  additional  costs to cable,  MMDS and DBS operators.  However,  the
Company's  management cannot currently quantify such additional costs, which may
adversely affect the Company's future operations. See "BUSINESS."

7. DEPENDENCE UPON LICENSEES AND JOINT  VENTURERS.  The Company has adopted as a
business  strategy  the  exploitation  of  the  Programming  Technology  through
licensing,  the  arrangement  of joint  ventures  and by means of a direct sales
force.  While the Company has established a direct sales force of four employees
and fifteen  distributors,  and intends to increase its direct sales forces, the
Company will continue to be, in substantial part,  dependent upon the ability of
its  licensees and  prospective  joint  venture  partners to offer  products and
services that are commercially  viable. In addition,  the Company, its licensees
or joint venture  partners will need to provide  individualized  programming  to
continue commercial cable operations,  and they are dependent upon third parties
for such programming.  The Company will be dependent upon its ability,  and that
of its licensees and joint venture partners,  to actively promote and distribute
the  Programming  Technology  and the products.  There is no assurance  that the
Company's  marketing  strategy will be successful.  Further,  the Company may be
adversely affected by the financial and business considerations of its licensees
and joint venture partners.

The  Company  is  engaged  in  an  ongoing  program  designed  to  evaluate  the
Programming Technology as applied to the cable television market. The results of
such  programs  cannot yet be  determined.  No  assurance  can be given that the
results of the  evaluation  will be  positive or that one or more of the markets
which the  Company  is  evaluating  may prove to be viable  for the  Programming
Technology.

There is a  possibility  that in the  structuring  of future joint  ventures and
license  agreements that the licensees and joint venture partners may be granted
interests in the Company, and or any of its subsidiaries,  in the form of equity
securities or options to acquire equity  securities.  See "BUSINESS -- Marketing
and Program Production."

8. DEPENDENCE  UPON SUPPLIERS OF PROGRAMMING.  The Company is dependent upon the

                                       23
producers  of linear  programming  that can be  enhanced  using the  Programming
Technology to create  individualized  ACTV  Programs.  To date,  the Company has
entered into agreements with eight such producers, but there can be no assurance
that such  agreements  will  provide the  Company  with  sufficient  programming
appropriate for enhancement, that the Company will be able to develop additional
sources  of  programming,  or that the  enhanced  programs  can be  successfully
marketed in an  individualized  format.  See  "BUSINESS - Marketing  and Program
Production."

9. GOVERNMENT REGULATION.  The Company believes that neither its present nor any
proposed commercial  implementation of the ACTV Programming Technology on cable,
DBS or MMDS will require  governmental  license or approval.  Certain  broadcast
application  and copper pairs with ADSL may require  governmental  approval.  No
assurance can be given that applicable  laws will not change.  In the event such
approval were to be required,  there can be no assurance  that the Company would
be able to  obtain  such  approval  or the  licenses  required  for the  further
implementation  of the ACTV Programming  Technology.  See "BUSINESS - Government
Regulation."

10.  DEPENDENCE UPON KEY PERSONNEL.  The Company has been largely dependent upon
the  efforts  of  William  C.  Samuels  in his roles as  Chairman  of the Board,
President,  Chief Executive Officer and Director of the Company,  David Reese as
Executive Vice President,  President of ACTV Entertainment and a Director of the
Company,  and  Bruce  Crowley,  Executive  Vice-President,   President  of  ACTV
Interactive,  Inc. and a Director of the  Company.  The Company has entered into
five-year  employment  agreements  with Mr.  Samuels and Mr. Reese.  The Company
currently  does not maintain  "key  employee"  insurance on the lives of Messrs.
Samuels,  Reese or Crowley  and there can be no  assurance  that such  insurance
would be  available  at an  acceptable  cost to the  Company,  should it seek to
acquire  such  insurance  in  the  future.  See  "MANAGEMENT  -  Employment  and
Consulting Agreements."

In order to  compete  in a  marketplace  with  rapidly  changing  and  expanding
technology,  the Company requires  employees not only with extensive  management
experience,  but also with certain  technical  abilities to direct the Company's
continuing research and development efforts.  While the Company believes that it
currently  employs such  personnel,  and that other persons could be retained in
such capacities,  there can be no assurance that if the Company were required to
replace such personnel,  it could readily do so, or that, even if such qualified
replacements were retained,  the development of the Company's business would not
be delayed. See "BUSINESS -- Research and Development."

11.  COMPETITION.  The Programming  Technology competes with many other forms of
entertainment,  education  and  information  dissemination,  many of  which  are
significantly more established,  including the standard television industry, the
movie  industry,  cable  television,  programming  services  and other  forms of
entertainment.   There  can  be  no   assurance   that   products  and  services
incorporating  the  Programming  Technology  will  ever  be  established  in the
marketplace in a significant enough manner to make the Company profitable.

In addition,  the  Programming  Technology  may compete with other  technologies
described as interactive television,  some of which may be developed or promoted
by  companies  with  resources  significantly  greater than the  Company's.  See
"BUSINESS -- Competition."

12.  DEPENDENCE  ON EQUIPMENT  SUPPLIERS.  The Company does not intend itself to
manufacture set-top converters,  terminals,  video servers, or other interactive
devices. Currently,

                                       24
in the entertainment  market, the Videoway terminal  manufactured through LGV is
the only ACTV compatible set-top converter  available to potential  distributors
of ACTV  Programming.  The Company intends to grant licenses  similar to the one
granted  to  LGV  to  other  manufacturers  that  are  selected  by  the  future
distributors  of  ACTV  Programming.  All of the  ACTV  classroom  and  distance
learning  systems which  incorporate the Programming  Technology and are sold by
ACTV in the education  market are manufactured by KDI Precision  Products,  Inc.
("KDI").  While the Company believes that KDI can produce  sufficient systems to
meet the anticipated  needs of ACTV in the education  marketplace,  in the event
that KDI were unable to supply the systems,  there can be no assurance  that the
Company  could  produce  sufficient  systems or obtain  sufficient  systems from
another  manufacturer  at an acceptable  price.  The inability of ACTV to obtain
systems  would have a material  adverse  effect on the  business of the Company.
There  is no  assurance  that  the  Company  will be  successful  in  developing
additional  manufacturing  licenses for the entertainment and education markets;
the failure of the Company to do so would have a material  adverse effect on the
business of the Company. See "BUSINESS - Set Top Converters, Terminals and Other
Interactive Devices."

13. NO ASSURANCE OF PUBLIC MARKET FOR SECURITIES.  Although the Company's Common
Stock is quoted on NASDAQ and listed on the Boston Stock Exchange,  there can be
no  assurance  that the  Company  will be able to  maintain  such  quotation  or
listing, or that, if maintained,  a significant public market will be sustained.
For continued  listing on NASDAQ,  the Company is required to maintain a minimum
stockholders'  equity of $1,000,000 and assets of  $2,000,000.  The Boston Stock
Exchange's  maintenance  criteria require the Company to have total assets of at
least $1,000,000 and total stockholders'  equity of at least $500,000.  At March
31,  1996,  the Company had  stockholders'  equity of  $6,336,221  and assets of
$8,614,395.  The Company has  continued to operate at a loss through the date of
this Prospectus.

In the event the Common Stock were delisted from NASDAQ,  trading, if any, would
be conducted on the Boston Stock Exchange and in the over-the-counter  market on
the NASD's  electronic  bulletin board, in what are commonly  referred to as the
"pink  sheets." As a result,  an investor may find it more  difficult to dispose
of,  or to  obtain  accurate  quotations  as to  the  price  of,  the  Company's
securities.  In addition,  the Common Stock would be subject to Rules  15g1-15g6
promulgated under the Securities  Exchange Act of 1934 (the "Exchange Act") that
impose additional sales practice  requirements on  broker-dealers  who sell such
securities to persons other than established  customers and accredited investors
(generally,  a person  with  assets  in excess of  $1,000,000  or annual  income
exceeding   $200,000  or  $300,000  together  with  his  or  her  spouse).   For
transactions  covered  by these  rules,  the  broker-dealer  must make a special
suitability  determination  for the purchaser and have received the  purchaser's
written consent to the transaction prior to sale. Consequently,  these rules may
affect the ability of  broker-dealers  to sell the Company's  securities and may
affect the ability of purchasers in the Offering to sell their securities in the
secondary market.

The Commission has also recently adopted regulations that define a "penny stock"
to be any equity  security  that has a market  price (as  defined)  of less than
$5.00 per share or an  exercise  price of less than $5.00 per share,  subject to
certain exceptions.  For any transaction involving a penny stock, unless exempt,
the regulations require the delivery, prior to the transaction,  of a disclosure
schedule  prepared by the  Commission  relating to the penny stock  market.  The
broker-dealer   must  also  disclose  the   commissions   payable  to  both  the
broker-dealer  and the  registered  representative,  current  quotations for the
securities and, if the broker-dealer is the sole market-maker, the broker-dealer
must  disclose  this  fact and the  broker-dealer's  presumed  control  over the
market.  Finally,  monthly  statements  must be  sent  disclosing  recent  price
information

                                       25
for the penny stock held in the account and information on the limited market in
penny stocks.

While many  NASDAQ-listed  securities  are  covered by the  definition  of penny
stock, transactions in a NASDAQ-listed security are exempt from all but the sole
market-maker  provision for (i) issuers who have  $2,000,000 in tangible  assets
($5,000,000 if the issuer has not been in continuous operation for three years),
(ii) transactions in which the customer is an institutional accredited investor,
or  (iii)  transactions  that  are  not  recommended  by the  broker-dealer.  In
addition,  transactions in a NASDAQ security directly with a NASDAQ market-maker
for such security are subject only to the sole market-maker disclosure,  and the
disclosure with respect to commissions to be paid to the  broker-dealer  and the
registered representative.

Finally,  all  NASDAQ  securities  would be  exempt  from  the  recently-adopted
regulations  regarding  penny  stocks  if NASDAQ  raised  its  requirements  for
continued  listing so that any issuer with less than  $2,000,000 in net tangible
assets or stockholders' equity would be subject to delisting. These criteria are
more stringent than the current NASDAQ maintenance requirements.

14. NO  DIVIDENDS.  The  Company has not paid any cash  dividends  on its Common
Stock since  inception  and does not intend to pay cash  dividends on its Common
Stock for the  foreseeable  future.  Although there are no  restrictions  on the
Company's  ability to pay dividends,  the Company  intends to follow a policy of
retaining  earnings,  if any, to finance the  development  and  expansion of its
business.

15.  PREFERRED  STOCK  AUTHORIZED.  The  Company's  Board of  Directors  has the
authority,  without  further  action  of the  stockholders,  to issue  shares of
preferred stock which have conversion,  dividend,  liquidation and voting rights
that could adversely affect holders of Common Stock or could be used to restrict
the Company's ability to merge with or sell its assets to a third party, thereby
preserving  control of the Company by its present  owners.  Although the Company
has no present intention to issue any shares of preferred stock, there can be no
assurance that the Company will not do so in the future.

16.  RULE 144  SALES.  Of the shares of the  Company's  Common  Stock  presently
outstanding,  approximately 3.0 million are "restricted securities" as that term
is defined by Rule 144  promulgated  under the  Securities Act and in the future
may be sold only in compliance with Rule 144 or pursuant to  registration  under
the Securities Act or pursuant to another  exemption  therefrom.  For so long as
the  Registration  Statement  of which the  Concurrent  Prospectus  is a part is
current and effective,  the shares owned by the Selling  Stockholder  thereunder
and  offered   thereby  (6,500)  may  be  sold  without  regard  to  the  volume
limitations,  described below, set forth in Rule 144. Generally, under Rule 144,
each person  having held  restricted  securities  for a period of two years may,
every three months, sell in ordinary brokerage  transactions an amount of shares
which does not exceed the  greater of one  percent  (1%) of the  Company's  then
outstanding  shares of Common Stock,  or the average weekly volume of trading of
such  shares of Common  Stock as reported  during the  preceding  four  calendar
weeks.  A person who has not been an  affiliate  of the Company for at least the
three months  immediately  proceeding  the sale and who has  beneficially  owned
shares of the Common  Stock for at least  three  years is  entitled to sell such
shares under Rule 144 without regard to any of the limitations  described above.
Of the restricted  shares, a substantial number have been held by non-affiliates
of the Company for more than three years or have been held by  affiliates of the
Company for more than two years.  Actual sales,  or the prospect of sales by the
present  stockholders  of  the  Company  or  by  future  holders  of  restricted
securities under Rule 144, or otherwise, may, in the future, have a

                                       26
depressive  effect upon the price of the Company's shares of Common Stock in any
market that may develop  therefor,  and also could render difficult sales of the
Company's securities purchased by investors herein.

17.  CONTROL BY OFFICERS,  DIRECTORS AND PRINCIPAL  STOCKHOLDERS.  The Company's
officers and directors own, of record,  2,613,263  outstanding  shares of Common
Stock. In addition,  William C. Samuels,  Chairman,  President,  Chief Executive
Officer  and a director of the  Company,  pursuant  to a voting  agreement,  has
voting  control of the  2,341,334  shares of Common Stock owned of record by the
Post Company. In addition,  pursuant to a separate voting agreement, Mr. Samuels
has voting control of the shares owned by Dr. Freeman. Consequently, Mr. Samuels
has voting control over 3,321,917 shares of Common Stock, or approximately 26.7%
of the outstanding  shares of Common Stock,  assuming issuance of 533,035 shares
of Common Stock upon exercise of options.  Accordingly,  Mr.  Samuels could have
substantial influence over the affairs of the Company, including the election of
directors.

18.  POSSIBLE  ACQUISITION  OF CONTROL BY THE WASHINGTON  POST COMPANY.  Through
March 17, 1997 (subject to extension in certain circumstances), the Post Company
shall have the right to purchase from the Company,  at a price which has not yet
been  determined,  the amount of shares of Common  Stock  necessary to bring its
percentage  ownership  of the total then  outstanding  shares of Common Stock to
51%. If the Post Company should choose to exercise its right, the purchase price
would be established after arms-length  negotiations between the parties. In the
event that the parties fail to agree on a purchase price, the parties would seek
an outside  appraisal.  At  present,  the Company  does not have  enough  shares
authorized  to  accommodate  the Post Company  should it choose to exercise such
right. If the Post Company decides to exercise its right,  the Company will seek
to take the  necessary  action to  fulfill  its  obligations.  If such  right is
exercised, the ability, pursuant to agreement, of William C. Samuels,  Chairman,
President and Chief Executive  Officer of the Company,  to vote the shares owned
of record by the Post Company will terminate,  and the Post Company will be able
to control the affairs of the Company.

19.  OUTSTANDING  OPTIONS AND WARRANTS.  As of the date of this Prospectus,  the
Company had granted  options and  warrants to purchase an aggregate of 2,707,582
shares of Common  Stock  that had not been  exercised.  Of the  shares of Common
Stock subject to these unexercised options and warrants, 10,000 may be purchased
for less than $1.00;  12,000 may be  purchased  for between  $1.00 and $1.99 per
share; 694,082 may be purchased for between $2.00 and $2.99 per share; 1,521,500
may be purchased for between $3.00 and $3.99 per share; 367,500 may be purchased
for between $4.00 and $4.99 per share;  and 102,500 may be purchased for between
$5.00 to $5.99 per share. To the extent that the  outstanding  stock options and
warrants are exercised,  dilution to the interests of the Company's stockholders
will occur.  Moreover,  the terms upon which the Company  will be able to obtain
additional  equity capital may be affected  adversely,  since the holders of the
outstanding options and warrants can be expected to exercise them at a time when
the Company would,  in all  likelihood,  be able to obtain any needed capital on
terms more  favorable  to the Company  than those  provided  in the  outstanding
options and warrants.

20. POSSIBLE  VOLATILITY OF SECURITIES PRICES. The market price of the Company's
securities may be highly  volatile,  as has been the case with the securities of
other companies  engaged in high technology  research and  development.  Factors
such as announcements by the Company or its competitors concerning technological
innovations,   new  commercial  products  or  procedures,   proposed  government
regulations and developments or disputes relating to patents

                                       27
or proprietary  rights may have a significant  impact on the market price of the
Company's securities.

                                       28
USE OF PROCEEDS

           The  Company  will  not  receive  any   proceeds   from  the  Selling
Stockholder's  sale of shares of Common Stock,  but will receive the proceeds of
the  exercise  of the  Options.  Such  proceeds  will be used by the Company for
working capital purposes.

                                       29
SELLING STOCKHOLDER

The Selling  Stockholder  acquired the Shares in connection  with the Consulting
Agreement.

The following table sets forth the (a) the name of the Selling Stockholder,  (b)
the  number  of  shares  of  Common  Stock  beneficially  owned  by the  Selling
Stockholder  as of March 31,  1996 and (c) the number of shares of Common  Stock
and the  percentage  of the  total  class  of  Common  Stock  outstanding  to be
beneficially owned by the Selling Stockholder following this offering,  assuming
the sale  pursuant to this  offering or  otherwise of all shares of Common Stock
that are the subject of the Registration Statement of which this Prospectus is a
part, which shares are being registered.  There is no assurance,  however,  that
the  Selling  Stockholder  will sell any or all of the  shares  of Common  Stock
offered hereunder.
Number of Shares of Common
                                                              Stock Beneficially Owned
                                                              After this Offering
                                                              -----------------------------------------
Selling Stockholder     Beneficially Owned        Offered Hereby           Number               Percent
- -------------------     ------------------        --------------           ------               -------
Charles Payne           6,500                     6,500                    0                        0%
30
INDEMNIFICATION OF OFFICERS AND DIRECTORS

Reference  is  made  to  paragraph  "Twelfth"  of the  Restated  Certificate  of
Incorporation  of the Company (Exhibit  4.1.1),  which contains a provision,  as
permitted  by  Section  145  of  the  Delaware  General  Corporation  Law,  that
eliminates  the  personal   liability  of  directors  to  the  Company  and  its
stockholders  for  monetary  damages for  unintentional  breach of a  director's
fiduciary duty to the Company. This provision does not permit any limitation on,
or  elimination  of the liability of a director for disloyalty to the Company or
its stockholders,  for failing to acting good faith, for engaging in intentional
misconduct  or a knowing  violation of law, for  obtaining an improper  personal
benefit  or for paying a  dividend  or  approving  a stock  repurchase  that was
illegal under the Delaware General Corporation Law.

The Restated Certificate of Incorporation and By-Laws of the Company require the
Company  to  indemnify   directors  and  officers  against  expenses  (including
attorneys' fees), judgments,  fines and amounts paid in settlement in connection
with  specified  actions,   suits  or  proceedings,   whether  civil,  criminal,
administrative or investigative  (other than an action by or in the right of the
corporation (a "derivative  action") if they acted in good faith and in a manner
they  reasonably  believed to be in or not opposed to the best  interests of the
Company,  and,  with  respect  to any  criminal  action  or  proceeding,  had no
reasonable  cause to believe their conduct was unlawful.  A similar  standard of
care  is   applicable   in  the  case  of   derivative   actions,   except  that
indemnification only extends to expenses (including attorneys' fees) incurred in
connection with defense or settlement of such an action.  Moreover, the Delaware
General  Corporation  Law  requires  court  approval  before  there  can  be any
indemnification  where the person seeking  indemnification has been found liable
to the Company.

Insofar as indemnification  for liabilities  arising under the Securities Act of
1933 may be permitted to  directors,  officers  and  controlling  persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised  that in the opinion of the  Securities  and  Exchange  Commission  such
indemnification  is  against  public  policy  as  expressed  in the  Act and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the Company of expenses incurred or
paid  by a  director,  officer  or  controlling  person  of the  Company  in the
successful  defense of any action,  suit or proceeding)  in connection  with the
securities being registered,  the Company will, unless in the opinion of counsel
the  matter  has been  settled by  controlling  precedent,  submit to a court of
appropriate  jurisdiction  the question  whether such  indemnification  by it is
against  public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

                                       31
PLAN OF DISTRIBUTION

The  Shares  offered  hereby  are being  sold by the  Selling  Stockholder  as a
principal  for his own account.  The  distribution  of the Shares by the Selling
Stockholder may be effected from time to time in ordinary brokerage transactions
in the  over-the-counter  market at market prices prevailing at the time of sale
or in one or more negotiated  transactions  at prices  acceptable to the Selling
Stockholder.  The  brokers or dealers  through or to whom the Shares may be sold
may be deemed  underwriters  of the Shares within the meaning of the  Securities
Act,  in  which  event  all  brokerage   commissions   or  discounts  and  other
compensation   received  by  such  brokers  or  dealers  may  be  deemed  to  be
underwriting  compensation.  The Company will bear all expenses of the offering,
except that the Selling  Stockholder  will pay any applicable  brokerage fees or
commissions  and transfer  taxes. In order to comply with the securities laws of
certain states, if applicable,  the Shares will be sold only through  registered
or licensed brokers or dealers.  In addition,  in certain states, the Shares may
not be sold unless they have been registered or qualified for sale in such state
or an exemption from such registration or qualification requirement is available
and is complied with.

                                       32
LEGAL MATTERS

Certain legal  matters,  including the legality of the issuance of the shares of
Common Stock  offered by the  Company,  are being passed upon for the Company by
Gersten,  Savage,  Kaplowitz & Curtin,  LLP, 575 Lexington Avenue, New York, New
York 10022. Jay M. Kaplowitz, a member of Gersten,  Savage,  Kaplowitz & Curtin,
LLP served as a director of the Company from 1989 to April 1996.  Mr.  Kaplowitz
owns 2,000 shares of the Company's  Common Stock and options to purchase  25,000
shares.

                                       33
EXPERTS

The consolidated financial statements of ACTV and its subsidiaries  incorporated
in this Prospectus by reference to the Company's  Annual Report on Form 10-K and
10K/A-1 for the year ended  December  31,  1995 have been  audited by Deloitte &
Touche  LLP,  independent   auditors,  as  stated  in  their  report,  which  is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their  authority as experts in accounting and
auditing.

                                       34
No underwriter, dealer, salesman or other person has been authorized to give any
information or to make any  representations  other than those  contained in this
Prospectus,  and, if given or made, such information or representation  must not
be relied upon as having been  authorized by the Company.  This  Prospectus does
not  constitute  an offer or  solicitation  to any person in any juris-  diction
where such offer or  solicitation  would be unlawful.  Neither  delivery of this
Prospectus nor any Common Stock sale hereunder shall,  under any  circumstances,
create  any  implication  that  there has been no change in the  affairs  of the
Company since the date hereof.

TABLE OF CONTENTS                         PAGE
- -----------------                         ----
Available Information. . . . . . . . . . .   2
Incorporation of Certain
  Documents by Reference . . . . . . . . .   3
The Company. . . . . . . . . . . . . . . .   5
Risk Factors . . . . . . . . . . . . . . .  21
Use of Proceeds. . . . . . . . . . . . . .  29
Selling Stockholder. . . . . . . . . . . .  30
Indemnification of
  Officers and Directors. . . . . . . . ..  31
Plan of Distribution . .. . . . . . . . ..  32
Legal Matters . . . . . . . . . . . . . ..  33
Experts . . . . . . . . . . . . . . . .. .  34

ACTV, INC.

6,500 shares of
Common Stock

June 20, 1996
PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 3.  INCORPORATION OF DOCUMENTS BY REFERENCE

The  following   documents   filed  by  the  Company  with  the  Commission  are
incorporated herein by reference:

           (1)  The  Company's  Registration  Statement  on  Form  S-1 (File No.
                33-34618) which was declared effective on May 4, 1990.

           (2)  Annual Report on Form 10-K for the year ended December 31, 1994.

           (3)  Annual Report on Form 10-K/A-1  for  the year ended December 31,
                1994.

           (4)  Quarterly  Report on Form 10-Q for the  quarterly  period  ended
                March 31, 1995.

           (5)  Quarterly Report on Form 10-Q for  the  quarterly  period  ended
                June 30, 1995.

           (6)  Quarterly  Report on Form 10-Q for the  quarterly  period  ended
                September 30, 1995.

           (7)  Annual Report on Form 10-K for the year ended December 31, 1996.

           (8)  Annual  Report on Form  10-K/A-1 for the year ended December 31,
                1996.

           (9)  Post-Effective Amendment  No.  1 to the  Company's  Registration
                Statement  to  Form  S-1 (File No. 33-63879)  which was declared
                effective on March 20, 1996.

           (10) Quarterly  Report  on Form 10-Q for the  quarterly  period ended
                March 31, 1996.

In addition to the foregoing,  all documents  subsequently  filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the
filing  of a  post-effective  amendment  indicating  that all of the  securities
offered  hereunder have been sold or deregistering all securities then remaining
unsold shall be deemed to be incorporated by reference in this Prospectus and to
be part hereof from the date of filing of such documents.

Any statement contained in a document  incorporated or deemed to be incorporated
by reference in this Prospectus shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement  contained  herein or
in any subsequently filed document which also is or is deemed to be incorporated
by reference  herein  modifies or supersedes  such  statement.  Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to  constitute  a part of this  Prospectus.  All  information  appearing in this
Prospectus  is  qualified  in its  entirety  by the  information  and  financial
statements  (including  notes thereto)  appearing in the documents  incorporated
herein by reference, except to the extent set forth in the immediately preceding
statement.

The Company  will provide  without  charge to each person to whom a copy of this
Prospectus is delivered, upon the oral or written request of such person, a copy
of any document incorporated in this Prospectus by reference, except exhibits to
such  information,  unless such  exhibits  are also  expressly  incorporated  by
reference herein.

                                      II-1
Requests for such  information  should be directed to ACTV, Inc., 1270 Avenue of
the Americas, New York, New York 10020, Attention:  Secretary,  telephone number
(212) 262-2570.

ITEM 4.    DESCRIPTION OF SECURITIES

The Common Stock of the Company is registered under Section 12 of the Securities
Exchange Act of 1934.

ITEM 5.    INTERESTS OF NAMED EXPERTS AND COUNSEL

Certain legal  matters,  including the legality of the issuance of the shares of
Common Stock  offered by the  Company,  are being passed upon for the Company by
Gersten,  Savage,  Kaplowitz & Curtin,  LLP, 575 Lexington Avenue, New York, New
York 10022. Jay M. Kaplowitz, a member of Gersten,  Savage,  Kaplowitz & Curtin,
LLP served as a director of the Company from 1989 to 1996.  Mr.  Kaplowitz  owns
2,000  shares of the  Company's  Common  Stock and  options to  purchase  25,000
shares.

ITEM 6.    INDEMNIFICATION OF DIRECTORS OF OFFICER

Reference  is  made  to  paragraph  "Twelfth"  of the  Restated  Certificate  of
Incorporation  of the Company (Exhibit  4.1.1),  which contains a provision,  as
permitted  by  Section  145  of  the  Delaware  General  Corporation  Law,  that
eliminates  the  personal   liability  of  directors  of  the  Company  and  its
stockholders  for  monetary  damages for  unintentional  breach of a  director's
fiduciary duty to the Company. This provision does not permit any limitation on,
or  elimination  of the liability of a director for disloyalty to the Company or
its stockholders,  for failing to acting good faith, for engaging in intentional
misconduct  or a knowing  violation of law, for  obtaining an improper  personal
benefit  or for paying a  dividend  or  approving  a stock  repurchase  that was
illegal under the Delaware General Corporation Law.

The Restated Certificate of Incorporation and By-Laws of the Company require the
Company  to  indemnify   directors  and  officers  against  expenses  (including
attorneys' fees), judgments,  fines and amounts paid in settlement in connection
with  specified  actions,   suits  or  proceedings,   whether  civil,  criminal,
administrative or investigative  (other than an action by or in the right of the
corporation (a "derivative  action") if they acted in good faith and in a manner
they  reasonably  believed to be in or not opposed to the best  interests of the
Company,  and,  with  respect  to any  criminal  action  or  proceeding,  had no
reasonable  cause to believe their conduct was unlawful.  A similar  standard of
care  is   applicable   in  the  case  of   derivative   actions,   except  that
indemnification only extends to expenses (including attorneys' fees) incurred in
connection with defense or settlement of such an action.  Moreover, the Delaware
General  Corporation  Law  requires  court  approval  before  there  can  be any
indemnification  where the person seeking  indemnification has been found liable
to the Company.

Insofar as indemnification  for liabilities  arising under the Securities Act of
1933 may be permitted to  directors,  officers  and  controlling  persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised  that in the opinion of the  Securities  and  Exchange  Commission  such
indemnification  is  against  public  policy  as  expressed  in the  Act and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the Company of expenses incurred or
paid  by a  director,  officer  or  controlling  person  of the  Company  in the
successful  defense of any action,  suit or proceeding)  in connection  with the
securities being registered,  the Company will, unless in the opinion of counsel
the  matter  has been  settled by  controlling  precedent,  submit to a court of
appropriate  jurisdiction  the question  whether such  indemnification  by it is
against  public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

                                      II-2
ITEM 7.    EXEMPTION FROM REGISTRATION CLAIMED

Not Applicable.

ITEM 8.    EXHIBITS

4.1.1      Restated Certificate of Incorporation(1)

4.1.2      Amendment to Certificate of Incorporation(1)

4.2.1      By-Laws(1)

4.3        Consulting  Agreement  between  the  Company  and Charles Payne dated
           February 15, 1996.(2)

5.         Opinion of Gersten, Savage, Kaplowitz & Curtin, LLP(2)

24.1       Consent of Deloitte & Touche LLP(2)

24.2       Consent  of  Gersten,  Savage,  Kaplowitz  & Curtin, LLP (included in
           Exhibit 5)(2)

- ---------------

           (1)   Incorporated   by  reference  to  the   Company's  Registration
                 Statement  on  Form  S-1  (File  No.  33- 34618)  which  became
                 effective on May 4, 1990.

           (2)   Filed herewith.

ITEM 9.    UNDERTAKINGS

The undersigned registrant hereby undertakes:

(1)        To file, during any period in which offers or sales are being made, a
           post-effective amendment to this Registration Statement:

           (i)   To  include  any prospectus required by section 10(a)(3) of the
                 Securities Act of 1933;

           (ii)  To reflect in the  prospectus any facts or events arising after
                 the  effective  date of the  registration  statement (or in the
                 most   recent   post-effective    amendment   thereof)   which,
                 individually  or in  the  aggregate,  represent  a  fundamental
                 change  in  the  information  set  forth  in  the  registration
                 statement; and

           (iii) To include any material information with respect to the plan of
                 distribution  not  previously  disclosed  in  the  registration
                 statement or any  material  change to such  information  in the
                 registration statement.

(2)        That,  for  the  purpose  of  determining  any  liability  under  the
           Securities Act of 1933, each such post-

                                      II-3
effective  amendment  shall  be  deemed  to  be  a  new  registration
           statement  relating  to  the  securities  offered  therein,  and  the
           offering of such  securities at  that time  shall be deemed to be the
           initial bona fide offering thereof.

(3)        To remove from  registration by means of a  post-effective  amendment
           any of the  securities  being  registered  which remain unsold at the
           termination of the Offering.

Insofar as indemnification  for liabilities  arising under the Securities Act of
1933 may be permitted to directors,  officers,  and  controlling  persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised  that in the opinion of the  Securities  and  Exchange  Commission  such
indemnification  is  against  public  policy as  expressed  in the Act,  and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the Company of expenses incurred or
paid by a  director,  officer,  or  controlling  person  of the  Company  in the
successful  defense of any  action,  suit,  or  proceeding)  is asserted by such
director, officer, or controlling person in connection with the securities being
registered,  the Company  will,  unless in the opinion of counsel the matter has
been  settled  by  controlling  precedent,  submit  to a  court  of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as  expressed in the  Securities  Act of 1933 and will be governed by the
final adjudication of such issue.

                                      II-4
SIGNATURES

Pursuant to the  requirements  of the  Securities  Act of 1933,  the  registrant
certifies  that it has  reasonable  grounds to believe  that it meets all of the
requirements  for  filing on Form  S-8/S-3  has duly  caused  this  registration
statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized,  in the  City  of New  York and  State of New York on the 3rd day of
June, 1996.

                                                    ACTV, INC.

                                                    By:   WILLIAM C. SAMUELS
                                                       ------------------------
                                                    William C. Samuels
                                                    Chairman of  the Board,
                                                    Chief  Executive Officer,
                                                    President and Director

Pursuant to the  requirements  of the Securities Act of 1933,  this Form S-8/S-3
registration  statement  has  been  signed  by  the  following  persons  in  the
capacities and on the date indicated.
Signature                                           Title                             Date
- ---------                                           -----                             -----
WILLIAM C. SAMUELS
- --------------------                    Chairman of the Board, Chief                  June 3, 1996
William C. Samuels                Executive Officer, President and Director

DAVID REESE
- --------------------                      Executive Vice-President,                   June 3, 1996
David Reese                   President--ACTV Entertainment, Inc. and Director

BRUCE CROWLEY
- --------------------                      Executive Vice-President,                   June 3, 1996
Bruce Crowley                  President--ACTV Interactive, Inc. and Director

RICHARD HYMAN
- --------------------                        Director                                  June 3, 1996
Richard Hyman

WILLIAM A. FRANK
- --------------------                         Director                                 June 3, 1996
William A. Frank

STEVEN W. SCHUSTER
- --------------------                         Director                                 June 3, 1996
Steven W. Schuster

CHRISTOPHER C. CLINE
- --------------------                Vice President, Chief Financial                   June 3, 1996
Christopher C. Cline                     Officer and Secretary

                            STATEMENT OF DIFFERENCES

The registered symbol shall be expressed as.........'r'
EXHIBIT INDEX

4.3    Consulting Agreement between the Company and Charles Payne dated February
       15, 1996.

5.     Opinion of Gersten, Savage, Kaplowitz & Curtin, LLP

24.1   Consent of Deloitte & Touche LLP

24.2   Consent  of  Gersten,  Savage,  Kaplowitz  &  Curtin,  LLP  (included  in
       Exhibit 5)