Jeffrey B. Davis, President of SmallCaps stated, "We are excited to be launching coverage of ACTV, as we believe it fits well with our profile of undervalued, under-followed companies. ACTV has developed enabling software technology for the converging Internet and digital cable TV media, and is positioned strategically with leading programming and distribution entities. We believe investors will be rewarded by looking beyond the pure-play Internet companies to companies like ACTV that provide content and technology for the Internet and digital cable TV infrastructure." SmallCaps Online has a 12-month price target of $7 to $9 per share for ACTV common stock, and recommends purchase by investors tolerant of the risks associated with small-cap equity investments.

Excerpts from the report on ACTV follow:

ACTV, Inc.
ACTV is both developing innovative, proprietary software technology, and managing relationships with leading programming and distribution entities, that we feel position the Company to capitalize on the opportunities arising from the convergence of the Internet and digital cable TV ­ the broadband cable infrastructure. Looking ahead a couple of years, we believe the commercially interesting impact of broadband digital cable is not going to be driven by higher-definition TVs (bigger, pretty pictures) or multi-casting (500 new channels to surf). It is going to be about delivering a host of enhanced video, telephony and data services into the home that will enrich the home entertainment, computing and communications experience ­ such as interactivity with the television, high-speed data and voice telephony, combining video and internet information, viewer-defined programming and advertising, and virtual environments for learning, shopping, gaming, etc. As the cable operators deploy digital technology and digital cable boxes throughout their networks, ACTV stands ready with innovative software content, programming and authoring tools to capitalize on the additional bandwidth in this broadband cable infrastructure.

ACTV is developing innovative, patented technologies it calls Individualized Television and HyperTV that create state-of-the-art programming for the emerging digital TV and Internet platforms. The first application of Individualized Television is the sports entertainment market, and the first application of HyperTV is the on-line education market. As the cable operators deploy the next generation of digital cable boxes throughout their networks, the Internet and broadband cable infrastructures will converge, as will the potential applications of ACTV's technologies. We believe the potential applications for Individualized Television and HyperTV are very broad, and include interactive advertising, sports, music, electronic commerce and a host of enhanced, interactive entertainment programming.