<PAGE>

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

                                   (Mark One)

[X]      Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

                For the quarterly period ended September 30, 2001

                                       OR

[ ]      Transition Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

      For the transition period from ________________ to __________________
                        Commission file number 000-21295

                              THINKING TOOLS, INC.

        (Exact Name of Small Business Issuer as Specified In Its Charter)



          Delaware                                       77-0436410
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
Incorporation or Organization)

200 Park Avenue, Suite 3900
New York,  New York                                       10166
(Address of principal executive offices)                (Zip Code)


         Issuer's Telephone Number, Including Area Code: (212) 808-7474

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:
                    Common Stock, par value $.001 per share

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

At November 17, 2001, the number of shares outstanding of the Issuer's Common
Stock par value $.001 per share, was 10,204,637 shares.


<PAGE>


                              THINKING TOOLS, INC.
                      10-QSB FOR THE QUARTERLY PERIOD ENDED
                               September 30, 2001



                                      INDEX


Part I - FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS

         Consolidated Balance Sheet as of September 30, 2001  .............. 1

         Consolidated Statements of Operations for the three and nine month
         periods ended September 30, 2001 and 2000.......................... 2

         Consolidated Statements of Cash Flows for the nine month
         periods ended September 30, 2001 and 2000.......................... 3

         Notes to Consolidated Financial Statements......................... 4


Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS.......................................... 5

Part II - OTHER INFORMATION

Item 6.  EXHIBITS AND REPORTS ON FORM 8 K................................... 8

         Signatures......................................................... 8


<PAGE>


                         PART 1 - FINANCIAL INFORMATION

                          Item 1. FINANCIAL STATEMENTS

                              THINKING TOOLS, INC.
                                  BALANCE SHEET
                               September 30, 2001
                                   (Unaudited)

(IN THOUSANDS, except per share amounts)

<TABLE>
<S>                                                                         <C>
ASSETS
CURRENT ASSETS
  Cash                                                                      $          0

PROPERTY AND EQUIPMENT, Net                                                           --

OTHER ASSETS                                                                          --
                                                                            ------------

TOTAL ASSETS                                                                $          0
                                                                            ============

CURRENT LIABILITIES:
  Note payable                                                              $        993
  Accounts payable                                                                 1,173
  Accrued expenses                                                                   208
                                                                            ------------

    Total current liabilities                                                      2,374
                                                                            ------------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' DEFICIENCY
  Preferred stock, Series A $.001 par value; 3,000,000 shares authorized;
    1,148,799 shares issued and outstanding                                            1
  Preferred stock, Series B $.001 par value, 200 shares authorized,
    200 shares issued and outstanding                                                 --
  Preferred stock, Series C $.001 par value, 400,000 shares authorized,
    none issued or outstanding                                                        --
  Common stock, $.001 par value: 20,000,000 shares authorized; 10,204,637
    shares issued and outstanding                                                     10
  Additional paid-in capital                                                      20,778
  Accumulated deficit                                                            (23,163)
                                                                            ------------

    Total shareholders' deficiency                                                (2,374)
                                                                            ------------

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY                              $          0
                                                                            ============
</TABLE>


                        See Notes to Financial Statements


                                       1
<PAGE>



                              THINKING TOOLS, INC.
                            STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                         Three Months Ended                   Nine Months Ended
                                                             September 30,                       September 30,
                                                      ----------------------------      -------------------------------
                                                          2001             2000             2001               2000
                                                      ------------    ------------      -------------     -------------
<S>                                                      <C>             <C>             <C>                 <C>
REVENUES                                                 $   --          $   --          $   --                  --
                                                         --------        --------        --------            --------

OPERATING EXPENSES
  Selling, general and administrative                          38             324             132               1,130
                                                         --------        --------        --------            --------


LOSS FROM OPERATIONS                                          (38)           (324)           (132)             (1,130)
                                                         --------        --------        --------            --------

OTHER EXPENSE
  Interest                                                     23             151             194                 151
                                                         --------        --------        --------            --------

LOSS FROM CONTINUING OPERATIONS                               (61)           (475)           (327)             (1,281)
                                                         --------        --------        --------            --------
DISCONTINUED OPERATIONS
  Loss from operations
  of abandoned Subsidiary including
  provision for Operating loses of $561 prior to
  the phase-out period                                       --              --              --                (2,260)
  Loss on abandonment of subsidiary
  Including provision of $63 for
  Shutdown costs in 2000 during
  Phase-out period                                           --              --              --                (3,040)
                                                         --------        --------        --------            --------

    Total discontinued operations                            --              --              --                (5,300)
                                                         --------        --------        --------            --------

NET LOSS                                                 $    (61)       $   (475)       $   (327)           $ (6,581)
                                                         ========        ========        ========            ========

BASIC AND DILUTED NET LOSS PER SHARE
  Loss from continuing operations                        $  (0.01)       $  (.05)        $  (0.03)           $  ( .13)
  Loss from operations of abandoned subsidiary               --              --              --                 (0.23)
  Loss on abandonment of subsidiary                          --              --              --                 (0.32)
                                                         --------        --------        --------            --------

BASIC AND DILUTED NET LOSS PER SHARE                     $  (0.01)       $  (0.10)       $  (0.03)           $  (0.68)
                                                         ========        ========        ========            ========

SHARES USED IN CALCULATION OF NET LOSS
  PER SHARE                                                10,205           9,173          10,205               9,704
                                                         ========        ========        ========            ========
</TABLE>



                        See Notes to Financial Statements


                                       2
<PAGE>



THINKING TOOLS, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                               (Unaudited)
                                                                                      Nine Months Ended September 30,
                                                                                           2001              2000
                                                                                       ------------      ------------
<S>                                                                                    <C>               <C>
CASH FLOWS FROM (USED) IN OPERATING ACTIVITIES

  Net Loss                                                                             $       (327)     $     (6,581)
  Adjustments to reconcile net loss to net cash used in operating
    activities
    Provision for operating losses of abandoned subsidiary
      prior to phase-out period                                                                --                 561
    Loss on abandonment of subsidiary                                                          --               3,040
    Stock Compensation Expense                                                                 --                 657
    Interest expense and accretion of interest expense attributable to notes
      payable with beneficial conversion feature and to warrants issued                         194               142
  Changes in assets and liabilities:
    Accounts Receivable                                                                        --                 (36)
    Prepaid expenses and other assets                                                          --                  65
    Accounts payable                                                                             94               813
    Accrued Expenses                                                                             (5)              473
                                                                                       ------------      ------------
Net cash used by operating activities                                                           (44)             (866)
                                                                                       ------------      ------------
CASH FLOWS FROM (USED) IN INVESTING ACTIVITIES

  Purchases of property and equipment                                                          --                 (24)
  Direct costs of acquisition                                                                  --                (207)
                                                                                       ------------      ------------
Net cash used by investing activities                                                          --                (231)
                                                                                       ------------      ------------
CASH FLOWS FROM (USED) IN FINANCING ACTIVITIES
  Proceeds from financing activities                                                             41               426
  Proceeds from issuance of common stock                                                       --                 560
                                                                                       ------------      ------------
Net cash provided by financing activities                                                        41               986
                                                                                       ------------      ------------
Net Increase (Decrease) in cash                                                                  (3)             (111)

CASH AND EQUIVALENTS, beginning of year                                                           3               112
                                                                                       ------------      ------------
CASH AND EQUIVALENTS, end of period                                                    $          0      $          1
                                                                                       ============      ============
SUPPLEMENTAL SCHEDULE OF NONCASH OPERATING,
  INVESTING AND FINANCING ACTIVITIES:
    Conversion of investor advances to common stock                                    $       --        $        600
                                                                                       ============      ============
In March 2000, the Company acquired substantially all the assets and assumed
   specific liabilities of Tritium Network, Inc. (Tritium). The specified
   liabilities included the $500,000 investor bridge note to Tritium. The
   consideration for the acquisition was paid by the Company through the
   issuance of 1,148,798.5 shares of Series A preferred convertible stock as
   follows:

      Fair value of assets acquired                                                    $       --        $      3,150
      Liabilities assumed                                                                      --                (552)
                                                                                       ------------      ------------
      Series A preferred convertible stock issued                                      $       --        $      2,598
                                                                                       ============      ============
    Warrants given for prepaid advertising                                             $       --        $        391
                                                                                       ============      ============
</TABLE>


                        See Notes to Financial Statements



                                       3
<PAGE>



                              THINKING TOOLS, INC.
                          NOTES TO FINANCIAL STATEMENTS

1. Basis of Presentation

These Financial Statements should be read in conjunction with the Company's
Annual Report on Form 10-KSB for the fiscal year ended December 31, 2000.

The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information.
Interim results are not necessarily indicative of results for a full year. In
the opinion of management, all adjustments considered necessary for a fair
presentation of the financial position and the results of operations and cash
flows for the interim periods have been included.

The accompanying consolidated financial statements include the accounts of
Thinking Tools, Inc and its wholly owned subsidiary, StartFree.com, Inc.
("StartFree"). Intercompany transactions and balances have been eliminated in
consolidation.

The financial statements have been prepared under the assumption that the
Company will continue as a going concern. However, from inception, the Company
has experienced continuing losses, which total approximately $23,163,000 through
September 30, 2001.

The Company intends to continue to locate and enter into transactions with
existing, public or privately held companies which, in Management's view, have
growth potential (a "Target Business"). To that end, the Company is currently
engaged in negotiations with a few candidates. In connection with any such
potential transaction, it is expected that the Company would obtain financing,
although there can be no assurance in this regard. The Company's continued
existence is dependent on its ability to negotiate an acquisition, to raise
additional financing and to develop successful future operations. Management
believes that the actions presently being taken to revise the Company's
operating and financial requirements will provide the opportunity for the
Company to continue as a going concern. Therefore, the financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.

In December 2000, the Company discontinued and abandoned the operations of
StartFree. For the three and nine month periods ended September 30, 2001 and
2000, the Company has retroactively restated its results from operations and
cash flows to give effect to the operations of StartFree which have been
discontinued and abandoned. For the nine months ended September 30, 2000,
StartFree earned revenues approximating $46,000, incurred operating expenses
approximating $1,746,000 and recorded a provision for operating losses incurred
prior to discontinuing operations approximating $561,000. Assets that were
abandoned were property and equipment approximating $39,000, prepaid advertising
approximating $326,000 and goodwill approximating $2,939,000. The Company has
recorded shutdown costs approximating $63,000, which have been included as loss
on abandonment of subsidiary. Included in accounts payable and accrued expenses
at September 30, 2001 is approximately $916,000 related to the remaining
obligations and the shutdown costs of StartFree.

In July 2000 the Company approved bridge financing from Thinking Technologies
L.P. ("Technologies") under which the Company would receive an aggregate sum of
up to $500,000 in exchange for (i) a demand note convertible commencing February
2001 into shares of the Company's common stock at $0.375 per share and (ii) a
five year warrant to purchase 200,000 shares of the Company's common stock at a
price of $0.50 per share commencing February 2001. In November 2000 the Board
approved an increase in the bridge financing from Technologies to $1,000,000,
and the warrant was revised to provide the right to purchase 425,066 shares of
common stock for up to five years at $0.375 per share. In February 2001, the
conversion price was modified for both the note and the warrant to $0.12 per
share. Both the note and the warrants are subject to anti-dilution adjustments.
The note is secured by all of the Company's property. Interest accumulates at
10% per annum. At September 30, 2000 Technologies had advanced the company
principal approximating $417,000. For the nine months ended September 30, 2000,
the Company recorded non cash interest expense approximating $142,000 in
connection with the beneficial conversion feature of the note and warrant and
approximately $9,000 in connection with accumulated interest on the note. For
the three and nine month periods ended September 30, 2000, the Company has
restated its results from operations and cash flows to give effect to Emerging
Issues Task Force's Issue No. 00-27, Application of Issue No. 98-05 to Certain
Convertible Instruments. This restatement was derived from the December 31, 2000
audited financial statements and resulted in a decrease in interest expense of
approximately $732,000 and a decrease in additional paid in capital of
approximately $577,000.

                                       4
<PAGE>

Item 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Statements contained in this Quarterly Report on Form 10-QSB, other than the
historical financial information, constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. All such
forward-looking statements involve known and unknown risks, uncertainties or
other factors which may cause actual results, performance or achievement of the
Company to be materially different from any future results, performance or
achievement expressed or implied by such forward-looking statements. Factors
that might cause such a difference include, but are not limited to, risks and
uncertainties related to the substantial capital requirements, development of
effective internal processes and systems, the ability to attract and retain high
quality employees, changing overall economy and other risks described herein and
in the Company's 2000 Annual Report on Form 10-KSB.

The following discussion should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this Quarterly Report on
Form 10-QSB.

                                    Overview.

From our inception through April 1999, we engaged in research and development
activities including the development of our initial products (developing and
marketing simulation software), recruiting personnel, establishing marketing and
manufacturing capabilities and raising capital.

During 1998, we focused primarily on the commercial introduction of Think 2000,
a Year 2000 risk simulation software program, which was introduced in September
1997. We made a significant investment in the development and commercialization
of Think 2000. However, changes in market conditions resulted in a lack of
interest in Y2K products and thus culminated in the failure to successfully
commercialize Think 2000.

In March 1999, in light of the changes in market conditions and our failure to
commercialize Think 2000, we eliminated substantially all of our operations and
terminated all personnel other than those required to perform certain executive
and administrative functions.

During the second half of 1999, we focused on locating and entering into
transactions with existing, public or privately-held companies which, in our
view, had growth potential, and in March 2000, through a newly-formed and
wholly-owned subsidiary, StartFree.com, Inc. ("StartFree"), we completed the
acquisition of the business and substantially all of the assets, and we assumed
certain liabilities of Tritium Network, Inc. ("Tritium").

In December 2000, due to the adverse changes in the Internet environment and
especially in the area of Internet service providers, and in light of the fact
that StartFree was not able to generate sufficient revenues to support current
operations, we discontinued the operations of StartFree.

To date, we have not generated substantial revenues from the sale of our
products.

We intend to continue to locate and enter into one or more transactions with
existing public or privately held businesses, which in Management's view, have
growth potential (Target Businesses). To that end, we are currently engaged in
negotiations with a few candidates. A combination may be structured as a merger,
consolidation, exchange of our Common Stock for stock or assets or any other
form which will result in the combined enterprise remaining a publicly-held
corporation. We anticipate that our expenses will increase as we continue to
locate and enter into transactions with Target Businesses, and we expect to
continue to incur losses for the foreseeable future. There can be no assurance
that any such transaction will be consummated.


                                       5
<PAGE>


Results of Operations

Comparison of the three month periods ended September 30, 2001 and 2000:

Revenues. After adjusting for discontinued operations, we had no revenues for
the three month periods ended September 30, 2001 and September 30, 2000.
Revenues generated by StartFree of approximately $9,000 during the quarter ended
September 30, 2000 have been classified under Discontinued Operations since
StartFree ceased operations in December 2000.

Selling, General and Administrative Expenses. After adjusting for discontinued
operations, selling, general and administrative expenses for the quarter ended
September 30, 2001 decreased by approximately $286,000 to $38,000 from $324,000
for the quarter ended September 30, 2000. Selling, general and administrative
expenses during the quarter ended September 30, 2001 were primarily related to
legal and accounting costs.

Interest Expense. Interest expense for the quarter ended September 30, 2001 was
approximately $23,000. Interest expense for the quarter ended September 30, 2000
was approximately $151,000. Interest expense for 2001 consisted of approximately
$23,000 of interest accumulated on advances under a demand convertible grid note
issued by the Company. Interest expense for 2000 consisted of approximately
$9,000 of interest accumulated on advances under a demand convertible grid note
by the company and approximately $142,000 relating to the beneficial conversion
feature of such note and the warrant issued with such note.

Loss From Continuing Operations. Net loss for the quarter ended September 30,
2001 decreased by approximately $414,000 to $61,000 from approximately $475,000
for the quarter ended September 30, 2000.

Comparison of nine months ended September 30, 2001 and 2000:

Revenues. After adjusting for discontinued operations, we had no revenues for
the nine month periods ended September 30, 2001 and September 30, 2000. Revenues
generated by StartFree of approximately $46,000 during the nine months ended
September 30, 2000 have been classified under Discontinued Operations since
StartFree ceased operations in December 2000.

Selling, General and Administrative Expenses. After adjusting for discontinued
operations, selling, general and administrative expenses for the nine months
ended September 30, 2001 decreased by approximately $998,000 to $132,000 from
approximately $1,130,000 for the nine months ended September 30, 2000. Selling,
general and administrative expenses during the nine months ended September 30,
2001 were primarily related to legal and accounting costs. Selling, general and
administrative expenses during the nine months ended September 30, 2000 were
related to: approximately $350,000 attributed to legal and accounting, $654,000
attributed to deferred compensation, and approximately $103,000 relating to
outside consulting expense.

Interest Expense. Interest expense for the nine months ended September 30, 2001
was approximately $194,000. Interest expense for the nine months ended June 30,
2000 was approximately $151,000. Interest expense for the nine months ended
September 30, 2001 consisted of approximately (i) $66,000 of interest
accumulated on advances under a demand convertible grid note issued by the
Company and (ii) additional interest expense of approximately $128,000 under
such note and warrant issued in connection therewith representing imbedded
interest on such note and warrant due to the below market conversion price of
such note and exercise price of such warrant. Interest expense for the nine
months ended September 30, 2000 consisted of approximately (i) $9,000
accumulated on advances under a demand convertible grid note issued by the
Company and (ii) $142,000 in connection with the beneficial conversion feature
of the note and warrant.

Loss From Continuing Operations. Loss from continuing operations for the nine
months ended September 30, 2001 decreased by approximately $954,000 to
approximately $327,000 from $1,281,000 for the nine months ended September 30,
2000.

Loss From Discontinued Operations. There was no loss from discontinued
operations for the nine months ended September 30, 2001. Loss attributable to
the operations of StartFree, which were discontinued in December 2000, were
approximately $2,260,000 for the nine months ended September 30, 2000. This loss
reported for the nine months ended September 30, 2000 has been retroactively
restated as loss from discontinued operations and to include a provision of
approximately $561,000 of losses incurred by StartFree from October 2000 until
it discontinued operations in December 2000.


                                       6
<PAGE>

Discontinued Operations, Abandonment. Discontinued operations, abandonment
expenses for the nine months ended September 30, 2000 were approximately
$3,040,000. We had no such expenses for the nine months ended September 30,
2001. These expenses relate to the calendar year ended December 31, 2000 and are
retroactively restated to disclose the information related to the abandonment of
StartFree.

Net Loss. Net loss for the nine months ended September 30, 2001 decreased by
$6,254,000 to $327,000 from $6,581,000 for the nine months ended September 30,
2000.

Liquidity and Capital Resources. Since our inception and through September 30,
2001, we incurred cumulative losses aggregating approximately $23,163,000 and
have not experienced any quarter of profitable operations. We expect to continue
to incur operating losses for the foreseeable future, principally as a result of
our efforts towards locating and funding acquisitions of Target Businesses.
During the past two fiscal years, we have satisfied our cash requirements
principally from advances from stockholders and private sales of equity
securities.

At September 30, 2001, we had approximately $200 in cash or cash equivalents,
and a shareholders' deficiency of approximately $2,374,000. At June 30, 2001, we
had no long-term liabilities.

Our operating activities used cash of approximately $44,000 and $866,000 for the
nine months ended September 30, 2001 and 2000, respectively. The funds were used
to fulfill general operating expenses.

Our financing activities generated cash of $41,000 for the nine months ended
September 30, 2001 and generated cash of approximately $986,000 for the nine
months ended September 30, 2000.

Our continued existence is dependent on our ability to negotiate additional
acquisitions, to raise additional financing and to develop successful
operations. The Report of Independent Accountants for the year ended December
31, 2000 includes an explanatory paragraph indicating that there is substantial
doubt as to our ability to continue as a going concern.


                                       7
<PAGE>

                           PART II - OTHER INFORMATION

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:  None

(b) Reports on Form 8-K:  None


                                   SIGNATURES

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

Date: November 20, 2001

                                                          THINKING TOOLS, INC.

                                                          By: /s/ Moshe Zarmi
                                                              ----------------
                                                          Name:   Moshe Zarmi
                                                          Title:  President


                                       8