<PAGE>

================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                  FORM 10-QSB/A

                                 Amendment No. 1

(MARK ONE)

   [X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
           EXCHANGE ACT OF 1934

                 For the quarterly period ended: March 31, 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: 0000796655

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

                               ANTS SOFTWARE INC.
             (Exact name of registrant as specified in its charter)

                 Delaware                                     13-3054685
     (State or other jurisdiction of                        (IRS Employer
      Incorporation or Organization)                    Identification Number)

  801 Mahler Rd, Suite G, Burlingame, CA                        94010
 (Address of principal executive offices)                     (Zip Code)

                                 (650) 692-0240
              (Registrant's Telephone Number, including area code)

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

     Indicate by check mark whether the registrant (1) has 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
registrant was required to file reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

     Indicate the number of shares outstanding of each of the issuer's classes
of Common stock, as of the latest practicable date:

             14,631,888 shares of common stock as of March 31, 2001

     Transitional Small Business Disclosure Format: Yes [ ] No [X]

================================================================================

<PAGE>

                                EXPLANATORY NOTE

     On January 11, 2001, the Company entered into an agreement with a former
officer in connection with which the Company agreed to pay such former officer
the sum of $300,000, payable $75,000 per year for four (4) years on August 4 of
each year (the "Agreement"). The Form 10-QSB filed by the Company on May 15,
2001 did not reflect such Agreement. Therefore, the Company files this amendment
on Form 10-QSB/A to reflect the Company's obligation to pay the former officer
the sum of $300,000.

     To more clearly reflect the operation of the business, we have reclassified
as research and development expenses, certain expenses originally classified as
general and administrative. Note that while the subtotals have changed, total
expenses have not. The Company files this amendment on Form 10-QSB/A to reflect
these reclassifications.



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

                                TABLE OF CONTENTS


                          PART I. Financial Information

Item 1.  Financial Statements  ......................................   3-7
Item 2.  Management's Plan of Operation  ............................   8-9

                           PART II. Other Information


Item 1.  Legal Proceedings  .........................................     9
Item 2.  Changes in Securities  .....................................    10
Item 3.  Defaults Upon Senior Securities.............................    10
Item 4.  Submission of Matters to a Vote of Security Holders.........    10
Item 5.  Other Matters ..............................................    10
Item 6.  Exhibits and Reports on Form 8-K ...........................    10
Risk Factors......................................................... 10-12
Signatures  .........................................................    13




                                       2
<PAGE>


                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                               ANTs software inc.
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                      March 31, 2001           December 31, 2000
                                                                        (Unaudited)                 (Audited)
                                                                     ------------------       -------------------
<S>                                                                  <C>                      <C>
ASSETS
CURRENT ASSETS:
   Cash and cash equivalents                                         $        1,422,324       $         2,609,084
   Interest receivable                                                            4,860                     4,860
   Prepaid expenses                                                              52,456                   102,947
                                                                     ------------------       -------------------
     Total current assets                                                     1,479,640                 2,716,891
                                                                     ------------------       -------------------

PROPERTY AND EQUIPMENT:
   Computers and software                                                       566,160                   565,110
   Office furniture and fixtures                                                 26,372                    26,372
   Less accumulated depreciation                                                (94,272)                  (65,278)
                                                                     ------------------       -------------------
     Property and equipment, net                                               498,260                   526,204
                                                                     ------------------       -------------------

OTHER ASSETS                                                                      3,700                     3,700
                                                                     ------------------       -------------------
     Total assets                                                    $        1,981,600       $         3,246,795
                                                                     ==================       ===================


LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable and accrued expenses                             $          201,199       $           261,033
   Accrued legal fees                                                            29,073                   258,742
   Notes payable - former officer, current portion                               75,000                      --
                                                                     ------------------       -------------------
     Total current liabilities                                                  305,272                   519,775
                                                                     ------------------       -------------------
   Notes payable - former officer, net of current portion                       225,000                      --
                                                                     ------------------       -------------------
     Total Liabilities                                                          530,272                   519,775
                                                                     ------------------       -------------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
   Common stock, $.0001 par value; 100,000,000
   authorized; 14,631,888 shares issued and outstanding                           1,463                    13,082
   Common stock subscribed                                                         --                   1,815,000
   Treasury Stock, 10,436 shares at cost                                       (121,078)                 (121,078)
   Notes receivable from officers for stock purchases                          (180,000)                 (180,000)
   Additional paid-in capital                                                21,255,054                18,804,974
   Accumulated deficit                                                      (19,504,111)              (17,604,958)
                                                                     ------------------       -------------------
     Total stockholders' equity                                               1,451,328                 2,727,020
                                                                     ------------------       -------------------
     Total liabilities and stockholders' equity                      $        1,981,600       $         3,246,795
                                                                     ==================       ===================
</TABLE>

The accompanying notes are an integral part of these financial statements.


                                       3
<PAGE>

                               ANTs software inc.
                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                        Three months ended March 31,
                                                         2001                 2000
                                                      (Unaudited)          (Unaudited)
                                                   -----------------    -----------------
<S>                                                <C>                  <C>
REVENUES                                           $            --      $            --

OPERATING EXPENSES:
   General and administrative expenses                     1,561,954              750,171
   Research and development expenses                         359,459               15,271
                                                   -----------------    -----------------
     Loss from operations                                 (1,921,413)            (765,442)
                                                   -----------------    -----------------

OTHER INCOME:
   Interest Income                                            23,745               50,514
   Other Expense                                              (1,485)                --
                                                   -----------------    -----------------
     Other income, net                                        22,260               50,514
                                                   -----------------    -----------------
     NET LOSS                                      $      (1,899,153)   $        (714,928)
                                                   =================    =================

BASIC AND DILUTED LOSS PER COMMON SHARE            $           (0.14)   $           (0.06)
                                                   =================    =================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                13,890,296           12,540,665
                                                   =================    =================
</TABLE>

The accompanying notes are an integral part of these financial statements.


                                       4
<PAGE>

                               ANTs software inc.
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                         Three months ended March 31,
                                                                                          2001                2000
CASH FLOWS FROM OPERATING ACTIVITIES:                                                  (Unaudited)         (Unaudited)
                                                                                     ----------------    ----------------
<S>                                                                                  <C>                 <C>
     Net Loss                                                                        $     (1,899,153)   $       (714,928)
     Adjustments to reconcile net loss
     to net cash used by operating activities:
        Depreciation                                                                           29,733                 558
        Stock Issued for Lawsuit Settlement                                                   137,195                --
        Loss on sale of fixed assets                                                            2,985                --
        Compensation expense recognized in form of notes payable to former officer            300,000                --
     Changes in operating assets and liabilities:
        Prepaid expenses                                                                       50,491                --
        Accounts payable & Accrued expenses                                                   (59,834)            (55,958)
        Security Deposits                                                                        --                (8,665)
        Accrued Legal Fees                                                                    (70,403)               --
                                                                                     ----------------    ----------------

          Net cash used in operating activities                                            (1,508,986)           (778,993)
                                                                                     ----------------    ----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchases of property and equipment, net                                                  (4,774)            (91,371)
                                                                                     ----------------    ----------------


CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from private placement                                                          227,000                --
     Proceeds from exercise of warrants                                                       100,000                --
                                                                                     ----------------    ----------------
         Net cash provided by financing activities                                            327,000                --

NET DECREASE IN CASH                                                                       (1,186,760)           (870,364)

CASH, BEGINNING OF PERIOD                                                                   2,609,084           4,882,212
                                                                                     ----------------    ----------------

CASH, END OF PERIOD                                                                  $      1,422,324    $      4,011,847
                                                                                     ================    ================
</TABLE>

NON-CASH FINANCING ACTIVITY:
On February 23, 2001, the Company issued 400,000 shares of stock as settlement
of a lawsuit claim. See Note 4.

The accompanying notes are an integral part of these financial statements.


                                       5
<PAGE>

                               ANTs software inc.
                          NOTES TO FINANCIAL STATEMENTS

1.   BASIS OF PRESENTATION

     The accompanying unaudited financial statements are presented in accordance
     with the requirements for Form 10-QSB and Item 310(b) of Regulation S-B.
     Accordingly, they do not include all the disclosures normally required by
     generally accepted accounting principles. Reference should be made to the
     ANTs software inc. (the "Company") Form 10-KSB for the eight months ended
     December 31, 2000, for additional disclosures including a summary of the
     Company's accounting policies, which have not significantly changed.

     The information furnished reflects all adjustments (all of which were of a
     normal recurring nature) which, in the opinion of management, are necessary
     to fairly present the financial position, results of operations, and cash
     flows on a consistent basis. Operating results for the three months ended
     March 31, 2001, are not necessarily indicative of the results that may be
     expected in the future.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basic Net Loss Per Share - Basic net loss per share is calculated using the
     weighted-average number of common shares outstanding during the period.
     Diluted net loss per share is computed using the weighted-average number of
     common and dilutive common equivalent shares outstanding during the period.
     There were no dilutive common equivalent shares outstanding during the
     periods indicated.

     The following table presents the calculation of basic and diluted net loss
     per share:


                                                Three Months Ended March 31,
                                                ----------------------------
                                                    2001              2000
                                                ----------------------------
     Net loss                                   $ (1,899,153)   $   (714,928)
     Weighted average shares of common stock
     outstanding - basic and dilutive             13,890,296      12,540,665
                                                ----------------------------
     Basic and diluted net loss per share       $      (0.14)   $      (0.06)


     At March 31, 2001, outstanding options and warrants for the purchase of
     6,930,688 shares of common stock at prices ranging from $0.25 to $11.63
     were anti-dilutive, and therefore, not included in the computation of
     diluted loss per share.

3.   STOCKHOLDERS' EQUITY

     In the three month period ended March 31, 2001, there were 100,000 warrants
     exercised for $100,000, 400,000 shares issued for a legal settlement with
     Hughes Hubbard & Reed LLP (See Note 4), and we completed the sale, through
     a private offering, of 113,500 units at a price of $2 per unit, each unit
     consisting of (i) One (1) share of Common Stock of the Company, (ii) a
     warrant to purchase up to One (1) share of Common Stock of the Company at a
     per share price of Three Dollars ($3.00), exercisable until April 30, 2001,
     and (iii) a warrant to purchase up to One (1) share of Common Stock of the
     Company at a per share price of Four Dollars ($4.00), exercisable until
     August 31, 2001, an additional 11,350 shares were issued in exchange for
     services provided in relation to the private offering (See Page 9).

     In December 2000 the Company re-incorporated from Nevada to Delaware and
     changed its name from ANTs software.com to ANTs software inc. As part of
     the re-incorporation the Company's common stock par value was changed from
     $0.001 to $0.0001 and the authorized common stock was increased from
     20,000,000 to 100,000,000 shares.

                                       6
<PAGE>

4.   LEGAL SETTLEMENT

     The Company entered into a Settlement Agreement effective as of February
     23, 2001 with the law firm Hughes Hubbard & Reed LLP ("HHR") pursuant to
     which the Company agreed to issue 400,000 shares of common stock, for which
     the Company recognized an expense of $137,195. In addition, the settlement
     satisfied accrued legal expenses of $159,267, which had been recorded in
     prior periods. HHR had filed suit against the Company in the California
     Superior Court claiming that the Company breached a June 1988 contract by
     failing to deliver certificates representing shares earned as a premium for
     legal work performed between 1993 and 1996.


5.   SETTLEMENT WITH FORMER OFFICER

     The Company entered into an agreement (the "Agreement") with a former
     officer, effective as of January 11, 2001, in connection with which the
     Company agreed that a note receivable from the former officer would be
     forgiven in four increments of $45,000 plus all accrued interest, starting
     on August 4, 2001 and on each year anniversary thereafter. The aggregate
     amount receivable at March 31, 2001 is $180,000.

     The Company also agreed, pursuant to the Agreement, to pay the former
     officer the sum of $300,000, payable in four $75,000 installments starting
     on August 4, 2001 and on each year anniversary thereafter, without
     interest. The aggregate amount payable at March 31, 2001 is $300,000.




                                       7
<PAGE>

ITEM 2. MANAGEMENT'S PLAN OF OPERATION

     Certain statements contained in this Form 10-QSB constitute forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements herein are based on current expectations that involve
a number of risks and uncertainties. Such forward-looking statements are based
on assumptions that the Company will have adequate financial resources to fund
the development and operation of its business, and there will be no material
adverse change in the Company's operations or business. The foregoing
assumptions are based on judgments with respect to, among other things,
information available to the Company, future economic, competitive and market
conditions and future business decisions. All are difficult or impossible to
predict accurately and many of which are beyond the Company's control.
Accordingly, although the Company believes that the assumptions underlying the
forward-looking statements are reasonable, any such assumption could prove to be
inaccurate and therefore there can be no assurance that the results contemplated
in the forward-looking statements will be realized. There are a number of risks
presented by the Company's business and operations which could cause the
Company's financial performance to vary markedly from prior results or results
contemplated by the forward-looking statements. Such risks include failure of
the ANTs technology to work properly, failure to develop commercially viable
products or services from the ANTs technology, delays of failure in fundraising
efforts, delays in or lack of market acceptance, failures to recruit adequate
personnel, and problems with protection of intellectual property, among others.
Management decisions, including budgeting, are subjective in many respects and
periodic revisions must be made to reflect actual conditions and business
developments, the impact of which may cause the Company to alter its capital
investment and other expenditures, which may also adversely affect the Company's
results of operations. In light of significant uncertainties inherent in
forward-looking information included in this quarterly Report on Form 10-QSB,
the inclusion of such information should not be regarded as a representation by
the Company that the Company's objectives or plans will be achieved.

Overview

     We are engaged in the development and marketing of a proprietary, software
technology that is intended to significantly improve the speed at which
computers can process database transactions. Our operations currently consist of
research and development of our asynchronous non-pre-emptive tasking software
technology ("ANTs technology"), marketing our technology to potential customers
and partners, personnel recruiting, and capital raising. We have not realized
any revenues to date.

Plan of Operation

     Our operations over the next six months will primarily consist of continued
research and development of our proprietary software technologies. Research and
development will be focused initially upon developing a prototype system
utilizing and demonstrating the capabilities of our technology. We anticipate
this prototype system to be completed during the third quarter of calendar 2001.
Thereafter, research and development will be directed towards developing initial
customer applications utilizing our technology. General commercial applications
utilizing our technology are expected to be available by the end of calendar
2001.

     The majority of our operating expenses and costs over the next three to six
months are expected to be for and in connection with existing and additional
personnel. We currently have fifteen employees and two consultants, and we are
recruiting additional personnel. We view the recruitment of additional qualified
technical personnel as essential to the further development and
commercialization of our proprietary technologies. Should we be successful in
our recruitment efforts, we expect that our personnel and other operating costs
will increase significantly over current levels.

     We believe that additional sources of financing can be secured to enable us
to complete the development and commercialization of our proprietary
technologies, although there is no assurance of our ability to do so.

General and Administrative

     General and administrative expenses increased from $750,171 during the
three months ended March 31, 2000 to $1,561,954 for the three months ended March
31, 2001. We expect that our general and administrative expenses will continue
to increase as additional staff is recruited. We intend to continue to focus
significant resources on recruiting additional personnel for engineering,
technical development, marketing and administrative

                                       8
<PAGE>

roles. There can be no assurances that we will be able to recruit the
appropriate personnel necessary for the development of our products.

Research and Development

     Research and Development expenses increased from $15,271 during the three
months ended March 31, 2000 to $359,459 during the three months ended March 31,
2001. These expenses are related to the research, testing and product
development of our proprietary software.

Capital and Liquidity Resources

     We anticipate significantly increasing expenditures over the coming months
as we continue to develop our technology. We do not expect to realize any
revenues through calendar year 2001. Our cash balance as of March 31, 2001 was
approximately $1.4 million, which we believe will be adequate to fund our
activities through August 2001 at our current rate of spending. There can be no
assurance that our continued product development and infrastructure development
will not require a much higher rate of spending. There can also be no assurance
that we will be able to obtain additional capital on acceptable terms.

     The Company entered into an agreement, effective January 11, 2001 to
forgive a loan to a former officer made in August 1999 in the amount of
$225,000. The loan will be reduced in four increments of $45,000 plus all
accrued interest, starting on August 4, 2001 and on each year anniversary
thereafter. The aggregate amount currently due and receivable is $180,000. In
the January 11, 2001 agreement, the Company also agreed to pay the former
officer the sum of $300,000, payable in four $75,000 installments, starting on
August 4, 2001 and on each year anniversary thereafter, without interest.

                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     We entered into a Settlement Agreement effective as of February 23, 2001
with the law firm Hughes Hubbard & Reed LLP ("HHR") pursuant to which we agreed
to issue 400,000 shares or our stock. HHR had filed suit against us in the
California Superior Court claiming that we breached a June 1988 contract by
failing to deliver certificates representing shares earned as a premium for
legal work performed between 1993 and 1996.

     We were a defendant in a case entitled Hubert P. Lauffs v. Mosaic Multisoft
Corporation, in which the plaintiff asserted a cause of action against us for
breach of fiduciary duty. The plaintiff purported to base his cause of action on
allegations that we and others caused the shareholders of Mosaic Multisoft
Corporation ("Mosaic") to elect outside directors to its board of directors who
subsequently voted to remove Mosaic's president from office, thus interfering
with Mosaic's ability to raise capital and causing Mosaic to be unable to repay
its debt to the plaintiff. In March 2000, we won this case on summary judgment.
In April 2000, the plaintiff filed an appeal of the summary judgment ruling. We
believe the appeal to be without merit, but there can be no assurance that the
appellate court will not reverse the lower court's ruling and require a trial.
We have filed an action for malicious prosecution against the lawyer and the
plaintiff in this case. Since May 4, 2000, the malicious prosecution action has
been stayed pending resolution of the appeal. With respect to the appeal, the
plaintiff filed an opening brief on December 19, 2000, and we filed a responsive
brief on April 4, 2001. The plaintiff has until May 24, 2001 to file his reply
brief. Following completion of the briefing, the court of appeal will schedule
the matter for oral argument.

     On or about January 31, 2001, the British Columbia Securities Commission
("B.C. Commission") requested that the Company provide information regarding the
distribution of securities to British Columbia residents to ensure that such
distributions were made in compliance with the British Columbia Securities Act.
We are working with the B.C. Commission to provide the requested information.

ITEM 2. CHANGES IN SECURITIES

     Since January 2001, we completed the sale, through a private offering, of
113,500 units at a price of $2 per unit, each unit consisting of (i) One (1)
share of Common Stock of the Company, (ii) a warrant to purchase up to One (1)
share of Common Stock of the Company at a per share price of Three Dollars
($3.00), exercisable until April 30, 2001, and (iii) a warrant to purchase up to
One (1) share of Common Stock of the Company at a per share

                                       9
<PAGE>

price of Four Dollars ($4.00), exercisable until August 31, 2001. The gross
proceeds of the offering were $227,000. The related offering expenses were
satisfied with an additional 11,350 shares of common stock. The proceeds will be
used for general working capital purposes.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     No changes during the period covered by this report.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No changes during the period covered by this report.

ITEM 5.  OTHER MATTERS

Resignation and Appointment of Officer

     Mr. Francis K. Ruotolo resigned as acting Chief Financial Officer as of May
7, 2001. Mr. Michael W. O'Connor was appointed as interim Chief Financial
Officer by unanimous written consent of the Board of Directors on May 7, 2001.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits

         3.1   Amended and Restated Certificate of Incorporation of the Company
               as listed in Exhibit 3.1 to the Company's 10-KSB filed on March
               22, 2001, is hereby incorporated by reference.

         3.2   Amended and Restated Bylaws of the Company, as listed in Exhibit
               3.2 to the Company's 10-KSB filed on March 22, 2001, are hereby
               incorporated by reference.

     (b) Reports on Form 8-K

         On January 24, 2001, we filed a report on Form 8-K to disclose that we
filed an Agreement and Plan of Merger (the "Agreement") with the Secretary of
States of Nevada and Delaware in order to change our state of incorporation to
Delaware and that as a result of such re-incorporation in Delaware, we changed
our name from ANTs software.com to ANTs software inc. Such report also disclosed
that Dr. John H. Williams resigned as Chief Executive Officer of the Company
effective as of January 8, 2001, that Dr. Clive G. Whittenbury resigned as
Chairman of the Company effective as of January 8, 2001, and that Mr. Francis K.
Ruotolo was appointed President, Chief Executive Officer, Chairman and a
director of the Company by the Board of Directors of the Company effective as of
January 8, 2001.

RISK FACTORS

     In addition to other information in this 10-QSB, the following risk factors
should be carefully considered in evaluating our business since we operate in a
highly changing and complex business environment that involves numerous risks,
some of which are beyond our control. The following discussion highlights a few
of these risk factors, any one of which may have a significant adverse impact on
our business, operating results and financial condition. As a result of the risk
factors set forth below and elsewhere in this 10-QSB, and the risks discussed in
our other Securities and Exchange Commission filings, actual results could
differ materially from those projected in any forward-looking statements.

     If we are unable to protect our intellectual property, our competitive
position would be adversely affected. We rely on patent protection, as well as
trademark and copyright law, trade secret protection and confidentiality
agreements with our employees and others to protect our intellectual property.
Despite our precautions, unauthorized third parties may copy our products and
services or reverse engineer or obtain and use information that we regard as
proprietary. We have also filed patent applications and intend to file more. We
do not know if any of our intended future patents will be issued or whether we
will be successful in prosecuting any additional patents. In addition, the laws
of some foreign countries do not protect proprietary rights to the same extent
as do the laws of the United States. Our means of protecting our proprietary
rights may not be adequate and third parties may infringe or misappropriate our
patents, copyrights, trademarks and similar proprietary rights. If we fail to
protect our intellectual property and proprietary rights, our business,
financial condition and results of

                                       10
<PAGE>

operations would suffer. We believe that we do not infringe upon the proprietary
rights of any third party, and no third party has asserted a patent infringement
claim against us. It is possible, however, that such a claim might be asserted
successfully against us in the future. We may be forced to suspend our
operations to pay significant amounts to defend our rights, and a substantial
amount of the attention of our management may be diverted from our ongoing
business, which can materially affect our ability to attain and maintain
profitability.

     We face possible competition from large companies. The industry that we are
in is highly competitive. Although we believe that our technology is unique, can
be protected, and, if adopted, will confer benefits that will be otherwise
unavailable for some significant time, we face very large competitors with
greater resources who may adopt various strategies to block or slow our market
penetration, thereby straining our more limited resources. They may also seek to
hinder our operations through attempts to recruit key staff with exceptionally
attractive terms of employment, including signing bonuses, or by offer of highly
competitive terms to potential or newly acquired customers.

     We depend on our key personnel and may have difficulty attracting and
retaining the skilled staff we need to execute our growth plans. Our success
will be dependent largely upon the personal efforts of our Chairman and Chief
Executive Officer, Francis K. Ruotolo, as well as other senior managers. The
loss of key staff could have a material adverse effect on our business and
prospects. To execute our plans, we will need to hire and retain substantially
more staff. We plan to increase our technical personnel in the near term. We are
recruiting personnel to meet this objective. Competition for highly skilled
employees with technical, management, marketing, sales, product development and
other specialized training is intense. We may not be successful in attracting or
retaining such qualified personnel. Specifically, we may experience increased
costs in order to attract and retain skilled employees. If we are unable to
hire, train and manage new skilled and experienced employees as needed, we would
be unable to support our planned growth and future operations.


     We face rapid technological change. The market for our products and
services is characterized by rapidly changing technologies, extensive research
and the introduction of new products and services. We believe that our future
success will depend in part upon our ability to continue to enhance our existing
products and to develop, manufacture and market new products and services. As a
result, we expect to continue to make a significant investment in engineering,
research and development. There can be no assurance that we will be able to
develop and introduce new products and services or enhance our initial intended
products and services in a timely manner to satisfy customer needs, achieve
market acceptance or address technological changes in our target markets.
Failure to develop products and services and introduce them successfully and in
a timely manner could adversely affect our competitive position, financial
condition and results of operations.

     We will need to manage growth well. We may experience substantial growth in
the size of our staff and the scope of our operations, resulting in increased
responsibilities for management. To manage this possible growth effectively, we
will need to continue to improve our operational, financial and management
information systems and to hire, train, motivate and manage a growing number of
staff. We expect to experience difficulty in filling our needs for qualified
engineers and other personnel. There can be no assurance that we will be able to
effectively achieve or manage any future growth, and our failure to do so could
delay product development cycles and market penetration or otherwise have a
material adverse effect on our financial condition and results of operations.

     We could face information and product liability risks and may not have
adequate insurance. Because we intend to provide middleware solutions to
critical business and Internet applications, we may become the subject of
litigation alleging that our products were ineffective or disruptive in their
treatment of data, or in the compilation, processing or manipulation of critical
business information. Thus, we may become the targets of lawsuits from injured
or disgruntled businesses or other users. We do not presently carry product or
information liability or errors and omissions insurance, and although we intend
to acquire such insurance prior to commencing substantial sales, such insurance
may not be available in an acceptable or affordable form. In the event that we
are required to defend more than a few such actions, or in the event that we
were found liable in connection with such an action, our business and operations
would be severely and materially adversely affected.

     We are dependent on new demand for our products and services. The success
of our business depends upon demand for and use of our technology, products and
services in general and the demand for additional computing power, cost
effectiveness and speed in particular. Our technology introduces a new kind of
middleware, so we may encounter substantial market resistance. In the event
sufficient demand does not develop, our business

                                       11
<PAGE>

and results of operations would be materially adversely affected. We believe
that there appears to be increased demand for computing power, cost
effectiveness and speed, but if general economic conditions decline or hardware
and memory advances make such power, cost effectiveness and speed more readily
available, then adoption, use and sales of our products and services may be
materially adversely affected.

     We will need to continue our product development efforts. We believe that
our market will be characterized by increasing technical sophistication. We also
believe that our eventual success will depend on our ability to continue to
provide increased and specialized technical expertise. There is no assurance
that we will not fall technologically behind competitors with greater resources.
Although we believe that we enjoy a significant lead in our product development
and introduction, and are hopeful that our patents provide some protection, we
will likely need significant additional capital in order to continue to enjoy
such a technological lead over competitors with more resources.

     A failure to obtain additional financing could prevent us from executing
our business plan. We anticipate that current cash resources will be sufficient
to fund our operations through August 2001. We believe that additional sources
of financing can be secured to enable us to complete the development and
commercialization of our proprietary technologies, although there is no
assurance of our ability to do so. A failure to obtain additional funding could
prevent us from making expenditures that are needed to allow us to hire
additional personnel and continue development of the technology. If we raise
additional funds by selling equity securities, the relative equity ownership of
our existing investors could be diluted or the new investors could obtain terms
more favorable than previous investors. If we raise additional funds through
debt financing, we could incur significant borrowing costs.

     Market acceptance of our products and services is not guaranteed. We are at
an early stage of development and our earnings will depend upon broad market
acceptance and utilization of our intended products and services. There can be
no assurance that our product and technology development efforts will result in
new products and services, or that they will be successfully introduced.

     Future profitability is not guaranteed. We have not recognized any
operating revenues to date. We expect to begin recognizing revenues from the
sale of products and services in calendar 2002. There is no assurance that our
plans will be realized, that we will be able to generate revenues in 2002 or
that we will achieve profitability in the future.

     Limited market for our common stock. Our common stock is not listed on any
exchange and trades in the over-the-counter (the "OTC") market. As such, the
market for our common stock is limited and is not regulated by the authorities
of any exchange. Further, the price of our common stock and its volume in the
OTC market may be subject to wide fluctuations.





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                                   SIGNATURES

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


                                     ANTs software inc.


Date:  May 13, 2002                  By: /s/ Francis K. Ruotolo
                                         ------------------------------
                                         Francis K. Ruotolo, Chairman,
                                         Chief Executive Officer and President





Date:  May 13, 2002                  By: /s/ Kenneth Ruotolo
                                         ------------------------------
                                         Kenneth Ruotolo
                                         Chief Financial Officer and Secretary







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