ACTIVE IQ TECHNOLOGIES INC - 10-Q Quarterly Report

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U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003

OR

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

FOR THE TRANSITION PERIOD FROM _______ TO _______

COMMISSION FILE NUMBER 1-12401

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

ACTIVE IQ TECHNOLOGIES, INC.
(Exact Name of Registrant as specified in Its Charter)

MINNESOTA 41-2004369
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)

800 NICOLLET MALL, SUITE 2690, MINNEAPOLIS, MN 55402
(Address of Principal Executive Offices)

612.664.0570
(Issuer's Telephone Number, Including Area Code)

5720 SMETANA DRIVE, SUITE 101, MINNETONKA, MN 55343
(Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report)

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]

Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
Yes [ ] No [X]

As of May 9, 2003, there were 13,057,181 shares of common stock, $.01 par value,
outstanding.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-Q contains forward-looking statements (as such term is defined in
Section 27A of the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended) and information relating to us that
is based on the current beliefs of our management as well as assumptions made by
and information currently available to management, including statements related
to the markets for our products, general trends in our operations or financial
results, plans, expectations, estimates and beliefs. In addition, when used in
this Form 10-Q, the words "may," "could," "should," "anticipate," "believe,"
"estimate," "expect," "intend," "plan," "predict" and similar expressions and
their variants, as they relate to us or our management, may identify
forward-looking statements. These statements reflect our judgment as of the date
of this Form 10-Q with respect to future events, the outcome of which is subject
to risks, which may have a significant impact on our business, operating results
or financial condition. Readers are cautioned that these forward-looking
statements are inherently uncertain. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results or outcomes may vary materially from those described herein. We
undertake no obligation to update forward-looking statements. The risks
identified in the section of Item 2 entitled "RISK FACTORS," among others, may
impact forward-looking statements contained in this Form 10-Q.

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ACTIVE IQ TECHNOLOGIES, INC.
FORM 10-Q INDEX
MARCH 31, 2003

3

ACTIVE IQ TECHNOLOGIES, INC. AND SUBSIDIARIES

PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS

See accompanying notes to condensed consolidated financial statements

4

ACTIVE IQ TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

See accompanying notes to condensed consolidated financial statements

5

ACTIVE IQ TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

See accompanying notes to condensed consolidated financial statements

6

ACTIVE IQ TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003
(UNAUDITED)

NOTE 1 - NATURE OF BUSINESS

Active IQ Technologies, Inc. ("we," "us," "our" or the "Company") provided
industry-specific solutions for managing, sharing and collaborating on business
information via the Web though our Hosted Solutions Business until March 2003,
and accounting software through our Accounting Software Business. In December
2002, our Board of Directors authorized a plan to sell the Accounting Software
Business and as a result of the formal plan, the results of operations have been
reported as discontinued operations (the "Discontinued Operations") and
previously reported condensed consolidated financial statements have been
restated for the quarter ended March 31, 2002. See Notes No. 4 and 6 for further
discussions regarding the Discontinued Operations of Accounting Software
Business.

During the first quarter of 2003, we came to the conclusion that due to current
market conditions for capital funding, it would be extremely unlikely for us to
secure the financing necessary to fund our Hosted Solutions Business beyond the
near term and thereby provide assurance to future customers of our long-term
viability. On March 14, 2003, we sold all of our assets related to the Hosted
Solutions Business. See Note No. 3 for a further discussion regarding the Hosted
Solutions Business.

We were originally incorporated under Colorado law in December 1992 under the
name Meteor Industries, Inc. In April 2001, in conjunction with our merger with
activeIQ Technologies, Inc., we reincorporated under Minnesota law.

Our principal office is located at 800 Nicollet Mall, Suite 2690, Minneapolis,
Minnesota 55402. Our telephone number is (612) 664-0570 and our Internet address
is www.activeiq.com.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Financial Statement Presentation

The accompanying unaudited condensed consolidated financial statements have been
prepared by us in accordance with accounting principles generally accepted in
the United States of America ("US GAAP"), for interim financial information
pursuant to the rules and regulations of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and footnotes required
by US GAAP for complete financial statements. The unaudited condensed
consolidated financial statements should be read in conjunction with the audited
financial statements and notes thereto included in our Form 10-K filed March 31,
2003. In the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have been
included. Operating results for the three months ended March 31, 2003 are not
necessarily indicative of the results that may be expected for the year as a
whole.

Revenue Recognition and Deferred Revenue

The Company did derive revenues from customers of the online document management
service for monthly access to the service and initial service
configuration/implementation. Customers were invoiced at the beginning of each
month for access service and revenue was recognized when invoiced.
Configuration/implementation revenue was invoiced the month after the services
were performed and recognized in the month invoiced.

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The Company recognizes the revenues derived from the accounting software
business sales after all of the following criteria have been met: there is an
executed license agreement, software has been delivered to the customer, the
license fee is fixed and payable within twelve months, collection is deemed
probable and product returns are reasonably estimable. Revenues related to
multiple element arrangements are allocated to each element of the arrangement
based on the fair values of elements such as license fees, maintenance, and
professional services. Fair value is determined based on vendor specific
objective evidence. Service revenue is recognized ratably over the term of the
agreement, which is typically one year. All service revenue invoiced in excess
of revenue recognized is recorded as deferred revenue. At March 31, 2003 and
2002, deferred revenue was $1,702,923 and $1,774,491, respectively. See Note 4 -
Discontinued Operations of Accounting Software Business.

Net Loss per Common Share

Basic and diluted net loss per common share is computed by dividing the net loss
by the weighted average number of common shares outstanding during the periods
presented. The impact of common stock equivalents has been excluded from the
computation of weighted average common shares outstanding, as the net effect
would be antidilutive.

Use of Estimates

Preparing financial statements in conformity with US GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Income Taxes

We account for income taxes using the liability method to recognize deferred
income tax assets and liabilities. Deferred income taxes are provided for
differences between the financial reporting and tax bases of our assets and
liabilities at currently enacted tax rates.

We have recorded a full valuation allowance against the net deferred tax asset
due to the uncertainty of realizing the related benefits.

Software Development Costs

Effective January 1, 1999, we implemented Statement of Position ("SOP") 98-1,
Accounting for the Costs of Computer Software Developed or Obtained for Internal
Use. Pursuant to SOP 98-1, expenditures for internal use software are expensed
during the preliminary project stage.

Stock Based Compensation

In accordance with Accounting Principles Board ("APB") Opinion No. 25, the
Company uses the intrinsic value-based method for measuring stock-based
compensation cost which measures compensation cost as the excess, if any, of the
quoted market price of the Company's common stock at the grant date over the
amount the employee must pay for the stock. The Company's general policy is to
grant stock options and warrants at fair value at the date of grant.

The Company has adopted the disclosure only provisions of Statement of Financial
Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation." The Company recorded compensation expense pursuant to APB Opinion
No. 25 and related interpretations on options granted and due to modifications
of options of $161,537 and $31,929, for the quarters ended March 31, 2003 and
2002, respectively. The Company recorded expense related to stock based
compensation issued to non-employees in accordance with SFAS No. 123. Had
compensation costs for employees been recognized based upon the fair value of
options at the grant date consistent with the provisions of SFAS No. 123, the
Company's results would have been as follows for the quarters ended March 31:

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In determining the compensation cost of the options granted during the quarters
ended March 31, 2003 and 2002, as specified by SFAS No. 123, the fair value of
each option grant has been estimated on the date of grant using the
Black-Scholes option pricing model and the weighted average assumptions used in
these calculations are summarized below for the quarters ended March 31:

NOTE 3 - HOSTED BUSINESS SOLUTIONS AND PREPAID ROYALTIES

In 2001, through a licensing agreement, we acquired the rights to develop and
market, on a hosted basis, the online document management solutions of Stellent,
Inc. This application service provider (ASP) software license agreement was the
basis for our Hosted Solutions Business model ("HSB"), in which we were required
to make advanced royalty payments and certain minimum royalty fee payments to
Stellent. The balance of our prepaid royalties at December 31, 2002 was
$975,000. During the quarter ended March 31, 2003, we recorded $54,776 against
the prepaid.

On March 14, 2003, we sold all of the assets relating to our HSB to Stellent,
Inc. for $650,000 cash plus the reimbursement of transaction-related expenses
incurred by us in the amount of $150,000 and the assumption of certain
obligations, liabilities and employees of the Company. The transaction was not
subject to shareholder approval. With the completion of this sale, the Company
no longer operates in the online document management business and will seek
alternative business opportunities. During the quarter ended March 31, 2003, our
HSB generated revenue of $132,455. During the same quarter of 2002, our revenues
were derived from our E-commerce business model.

The remaining balance of the prepaid royalties was expensed and netted together
with the assets and liabilities of the HSB sold in the transaction.

NOTE 4 - DISCONTINUED OPERATIONS

In December 2002, the Company's Board of Directors authorized a plan to sell the
Company's Accounting Software Business ("ASB") to key employees of that
division. The ASB publishes traditional accounting and financial management
software for small and medium sized businesses, farms and ranches throughout
North America. The

9

Company formed (through three mergers/acquisitions) the ASB during the year
ended December 31, 2001 for the purpose of utilizing the businesses' customer
base to market other of the Company's E-commerce products and services. The ASB
consists of two accounting software applications companies: Red Wing Business
Systems, Inc. and Champion Business Systems, Inc., collectively referred to as
Red Wing. Also during 2002, the Company determined to abandon its E-commerce
business after acquiring the rights to develop and market hosted online document
solution products. Therefore, since the Company abandoned the E-commerce
business model to focus on the hosted solutions business, the accounting
software business no longer fit within the Company's business plan. In February
2003, the Company entered into a definitive purchase agreement to sell
substantially all the assets of the ASB. See Note No. 6 for a further discussion
regarding the sale of the ASB, which was completed April 30, 2003.

The following are condensed consolidated statements of discontinued operations
for the quarters ended March 31,

Assets and liabilities of the ASB consisted of the following at:

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NOTE 5 - SHAREHOLDERS' EQUITY

Stock Subscription Receivable

On January 6, 2003 the Company entered into a severance agreement with D. Bradly
Olah, its Chief Executive Officer, effective December 31, 2002. In addition, the
Company exercised its right to a non-cash repurchase of 500,000 shares of common
shares issued to Mr. Olah on January 7, 2002 in exchange for the cancellation of
his stock subscription receivable to the Company.

Deferred Compensation

In conjunction with the severance agreement discussed above, we recognized the
remaining amount associated with options granted to Mr. Olah, due to his
resignation in January 2003.

NOTE 6 - SUBSEQUENT EVENTS

On April 30, 2003, we completed the sale of substantially all of the assets of
the ASB to key employees of that division (the "Purchaser"). The ASB consists of
two accounting software applications companies: Red Wing Business Systems, Inc.
and Champion Business Systems, Inc., collectively referred to as Red Wing. The
assets sold consisted primarily of all intellectual property rights, cash,
accounts receivable, inventories, property and equipment, and customer
contracts. The Purchaser assumed substantially all the liabilities of the ASB
incurred in the ordinary course of the business consisting of trade payables,
accrued expenses, debt and liabilities arising from contractual obligations
related to the ongoing operations. In addition, the Purchaser paid the Company
cash sufficient to discharge outstanding debt that was incurred during 2001 to
acquire the ASB. The shareholders of Active IQ approved the sale at a special
meeting on April 29, 2003.

With the completion of this sale, we have no operating business assets, no debt
and net assets of approximately $450,000. The Company is actively reviewing
business opportunities for acquisition.

Recently, we received a letter from an attorney representing Jack A. Johnson,
who served as our President and CEO until leaving the Company to accept
employment from Stellent, Inc. following our sale of the hosted solutions
business. Notwithstanding that he accepted a full-time employment position with
Stellent, Mr. Johnson claims to be entitled to a lump sum severance payment from
us in an amount exceeding $200,000 (including a $25,000 bonus) pursuant to the
terms of an alleged employment agreement with the Company. As we have informed
Mr. Johnson, it is our position that he does not have an enforceable employment
agreement with us (other than an October 23, 2002 letter agreement) and that he
is not entitled to any severance or other payments from us, except for the
$25,000 bonus payment.

By letter dated May 5, 2003, we were given notice of a claim on behalf of
Carroll Oil Company and Mr. Timothy L. White that we are obligated to pay
$98,776 pursuant to an April 1999 agreement entered into with Meteor Industries,
Inc., our predecessor. We are investigating this matter and do not currently
have sufficient information to determine whether we are subject to liability to
Carroll Oil Company or Mr. White.

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ACTIVE IQ TECHNOLOGIES, INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following management's discussion and analysis of financial condition and
results of operations should be read in connection with the accompanying
unaudited condensed consolidated financial statements and related notes thereto
included elsewhere in this report and the audited consolidated financial
statements and notes thereto included in the Company's Form 10-K for the fiscal
year ended December 31, 2002.

OVERVIEW

Active IQ Technologies, Inc. ("we," "us," "our" or the "Company") provided
industry-specific solutions for managing, sharing and collaborating on business
information via the Web though our Hosted Solutions Business ("HSB") until March
2003, and accounting software through our Accounting Software Business ("ASB").
In 2002, through a licensing agreement, we acquired the rights to develop and
market, on a hosted basis, the online document management solutions of Stellent,
Inc. This application service provider software license agreement was the basis
for our HSB model. The ASB publishes traditional accounting and financial
management software for small and medium sized businesses, farms and ranches
throughout North America. The Company formed (through three
mergers/acquisitions) the ASB during the year ended December 31, 2001 for the
purpose of utilizing the businesses' customer base to market other of the
Company's E-commerce products and services. The ASB consists of two accounting
software applications companies: Red Wing Business Systems, Inc. and Champion
Business Systems, Inc., collectively referred to as Red Wing.

In December 2002, our Board of Directors authorized a plan to sell the ASB and
as a result of the formal plan, the results of operations have been reported as
discontinued operations (the "Discontinued Operations") and previously reported
condensed consolidated financial statements have been restated for the quarter
ended March 31, 2002. See Notes 4 and 6, included elsewhere in this quarterly
report, for details of said financial statements.

During the first quarter of 2003, we came to the conclusion that due to current
market conditions for capital funding, it would be extremely unlikely for us to
secure the financing necessary to fund our HSB beyond the near term and thereby
provide assurance to future customers of our long-term viability. On March 14,
2003, we sold all of our assets related to the HSB. See Note No. 3 for a further
discussion regarding the sale of our HSB.

We were originally incorporated under Colorado law in December 1992 under the
name Meteor Industries, Inc. In April 2001, in conjunction with our merger with
activeIQ Technologies, Inc., we reincorporated under Minnesota law.

Our principal office is located at 800 Nicollet Mall, Suite 2690, Minneapolis,
Minnesota 55402. Our telephone number is (612) 664-0570 and our Internet address
is www.activeiq.com.

RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 2003 COMPARED TO
MARCH 31, 2002.

Revenues

Revenues for the quarter ended March 31, 2003 were $132,455 compared to $103,788
for the same period in 2002. The revenues we reported for 2003 were generated
through our HSB and the revenues for 2002 were generated through our E-commerce
business model. We sold our rights to the E-commerce model in 2002.

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With the subsequent sale of our ASB in April 2003, we have no operating business
assets in which we can generate revenue. Our ability to continue is predicated
on our ability to acquire new businesses or technologies, successfully implement
the new business model and secure additional financing.

Operating Expenses

Cost of goods sold for the quarter ended March 31, 2003 were $35,354 compared to
$78,015 for the same period in 2002. These costs include hosting fees and
royalty payments due under our license agreement of the HSB.

Selling, general and administrative expenses for the quarter ended March 31,
2003 were $330,183 compared to $822,930 for the same period in 2002. The
$492,747 decrease is primarily due to the reduction of employee head count
within each department of the Company.

Depreciation expense for the quarter ended March 31, 2003 was $8,719 compared to
depreciation and amortization expense of $338,701 for the same period in 2002.
Depreciation and amortization expense of property, equipment and other
intangibles was $44,045 and other acquisition related intangible amortization
expense was $294,656 for the quarter ended March 31, 2002. The intangible
amortization expense is related to the acquisition of our E-commerce business
model.

For the quarter ended March 31, 2003, we had a gain of $749 on the exchange of
assets for services rendered. During the quarter ended March 31, 2002, we closed
our E-commerce business office located in Las Vegas, Nevada. With this closure,
we recorded a loss on disposal of assets located within this leased facility of
$24,879.

Other Income and Expenses

Our other income and expense consists of interest and dividend income, other
income and other expense. Interest income for the quarter ended March 31, 2003
was $23,544 compared to $41,313 for the same period in 2002. The interest income
we reported for 2003 was earned from a Federal Income Tax refund filed with the
IRS. The interest and dividend income we reported for 2002 was related equally
to portfolio interest and the interest accrued on stock subscription
receivables.

For the quarter ended March 31, 2003, we recorded $150,000 of other income for
referral fees for our sales efforts in connection with customers that were not
candidates for our online document management hosted solution. We recorded
$20,000 of other income for the quarter ended March 31, 2002, when we granted
the non-exclusive rights to use and distribute our E-commerce business to an
unrelated third party.

For the quarter ended March 31, 2003, we recorded $434,895 of other expense
related to the sale of our HSB to Stellent, Inc. in March 2003. The remaining
balance of the prepaid royalties ($920,224) was expensed and netted together
with the assets and liabilities of the HSB sold in the transaction.

Discontinued Operations

As a result of the discontinuation of the ASB, we recorded income from
discontinued operations of $140,890 for the quarter ended March 31, 2003 as
compared to a loss from discontinued operations of $238,801 for the same period
in 2002.

Liquidity and Capital Resources

We have funded our operations and satisfied our capital requirements primarily
through the sale of our business assets. Net cash provided by operating
activities was $263,485 for the quarter ended March 31, 2003, compared to net
cash used by operating activities of $745,992 for the same period in 2002.

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We had working capital of $442,690 at March 31, 2003, compared to working
capital deficit of $509,372 at December 31, 2002. Cash and equivalents were
$738,929 at March 31, 2003, representing an increase of $725,718 from the cash
and equivalents of $13,211 at December 31, 2002.

On March 14, 2003, we sold all of the assets relating to our HSB to Stellent,
Inc. for $650,000 cash plus the reimbursement of transaction-related expenses
incurred by us in the amount of $150,000 and the assumption of certain
obligations, liabilities and employees of the Company. The transaction was not
subject to shareholder approval. With the completion of this sale, the Company
no longer operates in the online document management business and will seek
alternative business opportunities.

We anticipate that the existing sources of liquidity will not provide cash to
fund operations for the next twelve months. We will continue our attempt to
raise additional capital. Some of the possibilities available to us are through
private equity transactions, to develop a credit facility with a lender or the
exercise of options and warrants. There can be no assurance that additional
capital will be available on terms acceptable to us or on any terms whatsoever.
In the event that we are unable to obtain additional capital, we would be forced
to reduce operating expenditures and/or cease operations altogether.

RISKS FACTORS

OUR COMMON STOCK HAS BEEN DELISTED FROM THE NASDAQ SMALL CAP MARKET.

One of Nasdaq's continued listing rules required us to maintain a minimum
closing bid price of $1 for our common stock. We were notified in August 2002
that, since the minimum bid price of our common stock was less than $1, we had
until February 10, 2003 in order to achieve compliance. On March 18, 2003, we
received further notification from Nasdaq on this matter.

Nasdaq has informed us that since we had not regained compliance with the
minimum $1 closing bid price per common share and we also were not eligible for
an additional 180 calendar day grace period since we did not meet the initial
inclusion requirements as specified by The Nasdaq SmallCap Market under
Marketplace Rule 4310(c)(2)(A) (the "Rule"), our common stock was delisted
effective with the opening of business on March 27, 2003. Specifically, for
initial inclusion, the Rule requires meeting one of following requirements: a
$5,000,000 shareholders' equity; a $50,000,000 market value of our listed
securities; or $750,000 net income from continuing operations for certain fiscal
years. We did not meet any of these requirements.

Since our common stock has been delisted from the Nasdaq SmallCap Market,
trading, if any, in our common stock will be conducted in the over-the-counter
markets in the so-called "pink sheets" or the "OTC Bulletin Board."
Consequently, the liquidity of our common stock is impaired, not only in the
number of shares which could be bought and sold, but also through delays in the
timing of the transactions, reduction in the coverage of our securities by
security analysts and the news media, and lower prices for our securities than
might otherwise prevail. In addition, our common stock has become subject to
certain rules of the Securities and Exchange Commission relating to "penny
stocks." These rules require broker-dealers to make special suitability
determinations for purchasers other than established customers and certain
institutional investors and to receive the purchasers' prior written consent for
a purchase transaction prior to sale. Consequently, these "penny stock rules"
may adversely affect the ability of broker-dealers to sell our common stock and
may adversely affect your ability to sell shares of our common stock in the
secondary market.

WE HAVE SOLD OUR ONLY CONTINUING OPERATIONS REVENUE SOURCE AND SUBSTANTIALLY ALL
OF OUR ASSETS

On March 14, 2003, we executed a definitive purchase agreement with Stellent,
Inc. and completed the sale of the Hosted Solutions Business, which was our only
continuing operations revenue source. We received $650,000 in cash

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for the assets used in the Hosted Solutions Business, plus we were reimbursed
$150,000 for expenses we incurred as a result of the transaction.

On April 30, 2003, we completed the sale of substantially all of the assets of
the Accounting Software Business to key employees of that division. Our original
reason for acquiring these companies was to be able to utilize the businesses'
customer base in order to market to those customers our E-commerce products and
services. We concluded that these customers would not be prospects for any type
of Web-based, hosted solution products or services. Therefore, since we had
already sold the E-commerce to focus on the Hosted Solutions Business, the
Accounting Software Business no longer fit our business plan. Furthermore, the
results of operations have been reported as discontinued operations, providing
no future benefit to our ongoing business plan.

Accordingly, we no longer have any ongoing business operations and no
significant means of generating any revenue.

WE ANTICIPATE INCURRING LOSSES FOR THE FORESEEABLE FUTURE.

For the quarter ended March 31, 2003, we had a net loss of $361,513, and since
our inception as activeIQ Technologies, Inc., in April 1996 through March 31,
2003, we have incurred an aggregate net loss of $22,942,507. As of March 31,
2003, we had total assets of $823,686. We expect operating losses to continue
for the foreseeable future and there can be no assurance that we will ever be
able to operate profitably.

WE WILL REQUIRE FUTURE FINANCING.

Further financing will be needed in order to potentially acquire other
businesses or technologies. And there is no precise way to predict when further
financing will be needed or how much will be needed. Moreover, we cannot
guarantee that the additional financing will be available when needed. If it is
not available, your investment in our securities may be lost. If the financing
is available only at a low valuation of our Company, your investment may be
substantially diluted.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk Sensitivity

We do not enter into contracts for speculative purposes, nor are we a party to
any leveraged instruments. There has been no material change in our market risks
associated with debt obligations during the quarter ended March 31, 2003.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures.

Pursuant to Rule 13a-14(c) of the Securities Exchange Act of 1934, within 90
days prior to the filing date of this quarterly report (the "Evaluation Date"),
the Company carried out an evaluation of the effectiveness of the design and
operation of the Company's disclosure controls and procedures. This evaluation
was carried out under the supervision and with the participation of the
Company's management, including the Company's Chief Executive

15

Officer and Chief Financial Officer. Based upon that evaluation, the Company's
Chief Executive Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective. Disclosure controls and
procedures are controls and other procedures of the Company that are designed to
ensure that information required to be disclosed in the reports that the Company
files or submits to the SEC is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms. Disclosure
controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by the Company in
the reports that it files to the SEC is accumulated and communicated to the
Company's management, including the Company's Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions regarding required
disclosures.

(b) Changes in internal controls.

There were no significant changes in the Company's internal controls or in other
factors that could significantly affect the Company's internal controls
subsequent to the Evaluation Date, including any corrective actions with regard
to significant deficiencies and material weaknesses.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Recently, we received a letter from an attorney representing Jack A. Johnson,
who served as our President and CEO until leaving the Company to accept
employment from Stellent, Inc. following our sale of the hosted solutions
business. Notwithstanding that he accepted a full-time employment position with
Stellent, Mr. Johnson claims to be entitled to a lump sum severance payment from
us in an amount exceeding $200,000 (including a $25,000 bonus) pursuant to the
terms of an alleged employment agreement with the Company. As we have informed
Mr. Johnson, it is our position that he does not have an enforceable employment
agreement with us (other than an October 23, 2002 letter agreement) and that he
is not entitled to any severance or other payments from us, except for the
$25,000 bonus payment.

By letter dated May 5, 2003, we were given notice of a claim on behalf of
Carroll Oil Company and Mr. Timothy L. White that we are obligated to pay
$98,776 pursuant to an April 1999 agreement entered into with Meteor Industries,
Inc., our predecessor. We are investigating this matter and do not currently
have sufficient information to determine whether we are subject to liability to
Carroll Oil Company or Mr. White.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

99.1 Certification Pursuant to 18 U.S.C. Section 1350 as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.2 Certification Pursuant to 18 U.S.C. Section 1350 as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K

On February 25, 2003, the Company filed a Current Report on Form 8-K dated
February 24, 2003, under item 5 to disclose that the Company had entered into an
asset purchase agreement to sell all or substantially all of the assets relating
to our Accounting Software business.

On March 21, 2003, the Company filed a Current Report on Form 8-K dated March
14, 2003, under items 2, 5 and 7 to disclose: (1) that on March 14, 2003, the
Company sold all or substantially all of the assets relating to our Hosted
Solutions Business to Stellent, Inc. for $650,000 in cash, plus the
reimbursement of $150,000 of expenses; (2) that following the sale of Hosted
Solutions Business, the Company agreed to terms with Jeffery M. Traynor
regarding his separation from the Company as its Chief Financial Officer and
Secretary; (3) the resignation of a member of our board of directors; and (4)
that pro forma financial information concerning the sale of our Hosted Solutions
Business will be filed by amendment on or before May 28, 2003.

17

SIGNATURES

In accordance with the requirements of the Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

ACTIVE IQ TECHNOLOGIES, INC.

By: /s/ Kenneth W. Brimmer
Kenneth W. Brimmer
Chief Executive Officer

By: /s/ Mark D. Dacko
Mark D. Dacko
Chief Financial Officer

Date: May 9, 2003

18

CERTIFICATIONS

I, Kenneth W. Brimmer, Chairman and Chief Executive Officer of Active IQ
Technologies, Inc. (the "Registrant"), certify that:

1. I have reviewed this quarterly report on Form 10-Q of the Registrant;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in this quarterly report;

4. The Registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and have:

a) Designed such disclosure controls and procedures to ensure that material
information relating to the Registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) Evaluated the effectiveness of the Registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) Presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The Registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the Registrant's auditors and the audit committee of
the Registrant's board of directors:

a) All significant deficiencies in the design or operation of internal controls
which could adversely affect the Registrant's ability to record, process,
summarize and report financial data and have identified for the Registrant's
auditors any material weaknesses in internal controls; and

b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal controls; and

6. The Registrant's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Active IQ Technologies, Inc.

Dated: May 9, 2003 By /s/ Kenneth W. Brimmer
----------------------
Kenneth W. Brimmer
Chairman and Chief Executive Officer

19

CERTIFICATIONS

I, Mark D. Dacko, Chief Financial Officer of Active IQ Technologies, Inc. (the
"Registrant"), certify that:

1. I have reviewed this quarterly report on Form 10-Q of the Registrant;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in this quarterly report;

4. The Registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and have:

a) Designed such disclosure controls and procedures to ensure that material
information relating to the Registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) Evaluated the effectiveness of the Registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) Presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The Registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the Registrant's auditors and the audit committee of
the Registrant's board of directors:

a) All significant deficiencies in the design or operation of internal controls
which could adversely affect the Registrant's ability to record, process,
summarize and report financial data and have identified for the Registrant's
auditors any material weaknesses in internal controls; and

b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal controls; and

6. The Registrant's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Active IQ Technologies, Inc.

Dated: May 9, 2003 By /s/ Mark D. Dacko
-----------------
Mark D. Dacko
Chief Financial Officer

20