<PAGE>   1

                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 SECURTIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 1999

                                       OR

   [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
        OF THE SECURTIES EXCHANGE ACT OF 1934

    For the transition period from               To

                         Commission file number 0-288-42

                             SPATIAL TECHNOLOGY INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                                      <C>
                           DELAWARE                                                   84-1035353
(State or other jurisdiction of incorporation or organization)           (I.R.S. Employer Identification No.)

        2425 55TH STREET, SUITE 100, BOULDER, COLORADO                                  80301
           (address of principal executive offices)                                   (Zip Code)

                                                  (303) 544-2900
                               (Registrant's telephone number, including area code)
</TABLE>


     Indicate by check 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 such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes  X   No
                                      -----   -----

     As of October 1, 1999, there were outstanding 9,404,596 shares of the
Registrant's Common Stock (par value $0.01 per share).

   Transitional Small Business Disclosure Format (check one): Yes      No  X
                                                                 ------  -----


<PAGE>   2




                             SPATIAL TECHNOLOGY INC.

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                      Page
                                                                                                      ----
<S>                                                                                                  <C>

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements (unaudited)

         Condensed Consolidated Balance Sheets, December 31, 1998
              and September 30, 1999.................................................................   3

         Condensed Consolidated Statements of Operations, three and nine
              months ended September 30, 1998 and 1999...............................................   4

         Condensed Consolidated Statements of Cash Flows, nine
              months ended September 30, 1998 and 1999...............................................   5

         Notes to Condensed Consolidated Financial Statements........................................   6

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations.......   7

PART II.  OTHER INFORMATION..........................................................................  12

Signatures...........................................................................................  13
</TABLE>




                                        2
<PAGE>   3



                             SPATIAL TECHNOLOGY INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                          (In thousands, except shares)

                                     ASSETS
<TABLE>
<CAPTION>
                                                                                December 31,       September 30,
                                                                                    1998                1999
                                                                              -----------------   -----------------
                                                                                                    (Unaudited)
<S>                                                                                <C>                  <C>
Current Assets:
     Cash and cash equivalents.............................................           $  4,534            $  2,711
     Accounts receivable, net of allowance of $100 and $199 in 1998 and
         1999, respectively................................................              3,981               4,842
     Prepaid expenses and other............................................                542                 548
                                                                                   ------------         -----------
         Total current assets..............................................              9,057               8,101
Equipment, net.............................................................              1,392               1,549
Purchased computer software, net...........................................              1,140               1,636
                                                                                   ------------         -----------
                                                                                      $ 11,589            $ 11,286
                                                                                   ============         ===========


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
     Current maturities of long-term debt                                             $     10            $     --
     Accounts payable......................................................                626                 618
     Accrued expenses......................................................              1,203               1,380
     Deferred revenue......................................................              1,869               2,083
                                                                                   ------------         -----------
         Total current liabilities.........................................              3,708               4,081
                                                                                   ------------         -----------
Long-term debt, less current maturities....................................                 79                  --
                                                                                   ------------         -----------

Stockholders' Equity:
     Common stock, $.01 par value; 22,500,000 shares authorized; 9,239,791 and
         9,404,596 shares issued in 1998 and 1999, respectively........

                                                                                            92                  94
     Additional paid-in capital............................................             24,929              25,388
     Accumulated deficit...................................................            (17,075)            (18,130)
     Other comprehensive loss..............................................               (144)               (147)
                                                                                   ------------         -----------
         Total stockholders' equity........................................              7,802               7,205
                                                                                   ------------         -----------
                                                                                      $ 11,589            $ 11,286
                                                                                   ============         ===========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                       3
<PAGE>   4




                             SPATIAL TECHNOLOGY INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (Unaudited)

                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                             Three Months Ended            Nine Months Ended
                                                                September 30,                September 30,
                                                         -------------------------    -------------------------
                                                             1998          1999          1998           1999
                                                         ----------    -----------    ----------    -----------
<S>                                                       <C>            <C>           <C>            <C>
Revenue:
   License fees......................................        $1,760         $1,552       $ 4,455        $ 4,508
   Royalties.........................................           919          1,046         2,853          3,405
   Services..........................................           933          1,177         2,859          3,516
                                                          ----------    -----------    ----------    -----------
         Total revenue...............................         3,612          3,775        10,167         11,429
                                                          ----------    -----------    ----------    -----------
Cost of sales:
   License fees......................................           103            144           262            427
   Royalties.........................................             3             --            14              9
   Services..........................................            60            161           197            404
                                                          ----------    -----------    ----------    -----------
         Total cost of sales.........................           166            305           473            840
                                                          ----------    -----------    ----------    -----------
         Gross profit................................         3,446          3,470         9,694         10,589
                                                          ----------    -----------    ----------    -----------
Operating expenses:
   Sales and marketing...............................         1,351          1,494         3,834          4,169
   Research and development..........................         1,464          2,043         4,050          5,473
   General and administrative........................           561            444         1,589          1,410
   Acquired in-process research and development......            --             --            --            500
                                                          ----------    -----------    ----------    -----------
         Total operating expenses....................         3,376          3,981         9,473         11,552
                                                          ----------    -----------    ----------    -----------
         Earnings (loss) from operations.............            70           (511)          221           (963)
Other income (expense):
   Interest income...................................            59             39           188            127
   Interest expense..................................            (4)            --           (12)            (5)
   Other, net........................................            (2)             1            (5)            --
                                                          ----------    -----------    ----------    -----------
         Total other income..........................            53             40           171            122
                                                          ----------    -----------    ----------    -----------
         Earnings (loss) before income taxes.........           123           (471)          392           (841)
Income tax expense...................................            33             39           250            214
                                                          ----------    -----------    ----------    -----------
         Net earnings (loss).........................        $   90         $ (510)      $   142        $(1,055)
                                                          ==========    ===========    ==========    ===========
Earnings (loss) per common share:
     Basic...........................................        $ 0.01         $(0.05)      $  0.02        $ (0.11)
     Diluted.........................................        $ 0.01         $(0.05)      $  0.02        $ (0.11)

Weighted average number of shares outstanding:
     Basic...........................................         9,212          9,400         9,186          9,323
     Diluted.........................................         9,306          9,400         9,266          9,323
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       4
<PAGE>   5



                             SPATIAL TECHNOLOGY INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (Unaudited)

                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                       Nine Months Ended
                                                                                         September 30,
                                                                              -------------------------------------
                                                                                    1998                1999
                                                                              -----------------   -----------------
<S>                                                                                <C>                 <C>
Cash flows from operating activities:
   Net income (loss)............................................................       $   142            $ (1,055)
   Adjustments to reconcile net earnings (loss) to net cash used
     by operating activities:
     Acquired in-process research and development..........................                 --                 500
     Depreciation and amortization.........................................                385                 574
     Changes in operating assets and liabilities excluding affects of business
     combination:
       Accounts receivable.................................................             (1,085)               (861)
       Prepaid expenses and other..........................................                (90)                (62)
       Accounts payable....................................................                186                  (8)
       Accrued expenses....................................................                (46)                 63
       Deferred revenue....................................................                281                 214
                                                                                   ------------         -----------
         Net cash used by operating activities.............................               (227)               (635)
                                                                                   ------------         -----------
Cash flows from investing activities:
   Additions to equipment..................................................               (332)               (525)
   Additions to purchased computer software................................               (296)               (694)
                                                                                   ------------         -----------
         Net cash used by investing activities.............................               (628)             (1,219)
                                                                                   ------------         -----------
Cash flows from financing activities:
   Principal payments on debt..............................................                (21)                (89)
   Proceeds from issuance of stock.........................................                180                 123
                                                                                   ------------         -----------
         Net cash provided by financing activities.........................                159                  34
                                                                                   ------------         -----------
Foreign currency translation adjustment affecting cash.....................                (22)                 (3)
                                                                                   ------------         -----------
         Net decrease in cash and cash equivalents.........................               (718)             (1,823)
Cash and cash equivalents at beginning of period...........................              5,795               4,534
                                                                                   ------------         -----------
Cash and cash equivalents at end of period.................................            $ 5,077             $ 2,711
                                                                                   ============         ===========

Supplemental disclosures:
   Cash paid for interest..................................................            $    20             $     5
                                                                                   ============         ===========
   Cash paid for income taxes..............................................            $   128             $   150
                                                                                   ============         ===========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                       5
<PAGE>   6



                             SPATIAL TECHNOLOGY INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                               September 30, 1999

A. FINANCIAL STATEMENT PRESENTATION

     The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three-month and
nine-month periods ended September 30, 1999 are not necessarily indicative of
the results that may be expected for the year ending December 31, 1999. The
unaudited condensed consolidated financial statements should be read in
conjunction with the financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1998.

B. EARNINGS (LOSS) PER SHARE

     Basic earnings (loss) per share is computed using the weighted average
number of common shares outstanding during the period. Diluted earnings per
share is computed on the basis of the weighted average number of common shares
outstanding plus the dilutive effect of potential common stock. For the three
and nine month periods ended September 30, 1999, diluted loss per share is the
same as basic loss per share, as the effect of potential common stock,
consisting of common stock options, is antidilutive. The effect of potential
common stock for the three and nine month periods ended September 30, 1998 is
not significant

C.  ACQUISITION

     In June 1999 the Company acquired certain assets and liabilities of Sven
Technologies, Inc. ("Sven") for total consideration of $1.0 million, including
$500,000 cash and 96,931 shares of common stock. In addition, the Company issued
an additional 96,930 shares of common stock (the "Earnout Shares") and a warrant
to purchase 250,000 shares of common stock at an exercise price of $12.50 per
share (the "Warrant"). Pursuant to the purchase agreement, the Earnout Shares
and Warrant are being held in escrow, and will be released to Sven upon
attainment of certain performance objectives. The purchase price was allocated
to the assets acquired based on their estimated fair values, including $500,000
of purchased computer software and $500,000 of in-process research and
development projects. The purchased computer software is being amortized over
seven years. The Company charged the in-process research and development to
operations at the date of acquisition as such technology had not reached
technological feasibility and had no probable alternative future use by the
Company.



                                       6
<PAGE>   7



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

     Except for the historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
presented here. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in this section and those
discussed in the Company's Form 10-KSB for the year ended December 31, 1998,
particularly those contained in "Management's Discussion and Analysis of
Financial Condition and Results of Operations".

RESULTS OF OPERATIONS

Revenue

     Total revenue for the quarter ended September 30, 1999 increased 5% to $3.8
million from $3.6 million reported for the quarter ended September 30, 1998.
License fees decreased 12% to $1.6 million for the third quarter of 1999 from
$1.8 million reported in the third quarter of 1998 due to a decrease in the
average license fees received by the Company per contract in 1999 as compared to
1998. Decreased average license fees is the result of competition and a trend in
the high-end software market towards lower up front license fees. While the
Company has been anticipating this trend, it has occurred sooner than expected,
and the Company expects this trend to continue in the engineering software
market segment in which it operates. Accordingly, the Company has implemented a
new pricing strategy beginning in the fourth quarter of 1999 that requires lower
up front license fees in favor of increased fees from services in future
periods. Royalties increased 14% to $1.0 million for the third quarter of 1999
as compared to $919,000 reported for the same quarter in 1998, reflecting
increases in North America and Japan, partially offset by a decline in Europe.
Increased royalties for the quarter ended September 30, 1999 as compared to the
same quarter in 1998 were the result of an increase in the number of the
Company's customers shipping ACIS(R)-enabled software applications as well as
increased non-refundable prepaid royalties. Service revenue, derived from the
sale of maintenance contracts and the performance of training and consulting
services, advanced 26% to $1.2 million for the quarter ended September 30, 1999
as compared to $933,000 for the quarter ended September 30, 1998. The increase
in service revenue results from growth in the Company's installed customer base
and increased training and consulting services performed for these customers.

     For the nine month period ended September 30, 1999 total revenue increased
12% to $11.4 million as compared to $10.2 million reported for the same nine
month period in 1998, reflecting increases in royalty and service revenue.
License fees remained flat at $4.5 million for the quarters ended September 30,
1999 and 1998 reflecting a decrease in license fees received from the ACIS 3D
toolkit offset by revenue from products introduced during 1999. While revenue
from the ACIS(R) 3D Toolkit, the Company's principal product, remains the single
largest contributor to revenue, JetScream and interoperability products
introduced in the past nine months represent 28% of license revenue year to
date. Royalties increased 19% to $3.4 million as compared to $2.9 million in
1998. Increased royalties for 1999 as compared to 1998 resulted from an increase
in the number of the Company's customers shipping an ACIS-enabled software
applications, specifically in Japan, in addition to increased non-refundable
prepaid royalties. Service revenue increased 23% to $3.5 million from $2.9
million reported for the same prior year period. The increase in service revenue
reflects growth in the Company's installed customer base and increased training
and consulting services performed for these customers.

     Geographically, international revenue accounted for 48% of revenue in the
quarter ended September 30, 1999 as compared to 59% in the same prior year
period. Decreased international revenue for the third quarter of 1999 primarily
reflects a decrease in the number of license contracts executed in Europe
partially offset by an increase in contracts executed in Japan and corresponding
increased license activity in North America. For the nine month period ended
September 30, 1999 and 1998 international revenue remained flat at 48% of
revenue.


                                       7
<PAGE>   8



Cost of Sales

     Cost of sales consists of support costs, royalty payments by the Company to
third party developers, manufacturing costs (primarily media duplication,
manuals, and shipping) and amortization of purchased computer software. Total
cost of sales increased 84% to $305,000 for the quarter ended September 30, 1999
from $166,000 reported for the quarter ended September 30, 1998. For the nine
month period ended September 30, 1999 cost of sales increased 78% to $840,000
from $473,000 reported in the comparable prior year period. The increase in cost
of sales for all periods presented was primarily due to an increase in royalty
expenses to third party developers in addition to increased staffing in support
of increased revenue. As a percent of total revenue, cost of sales increased to
8% and 7% for the three and nine month periods ended September 30, 1999, as
compared to 5% for the comparable periods in 1998.

Operating Expenses

     Sales and marketing expense increased 11% to $1.5 million for the quarter
ended September 30, 1999 as compared to $1.4 million reported in the quarter
ended September 30, 1998. For the nine month period ended September 30, 1999
sales and marketing expense increased 9% to $4.2 million from $3.8 million
reported for the nine month period ended September 30, 1998. Increased sales and
marketing expense in 1999 as compared to 1998 was due to increased commissions
and travel related costs associated with increased headcount in support of
increased revenue. As a percent of total revenue, sales and marketing expense
increased to 40% for the three month period ended September 30, 1999 as compared
to 37% for the comparable prior year period. For the nine month period ended
September 30, 1999 sales and marketing expense decreased as a percent of total
revenue to 36% versus 38% for the same prior year period.

     Research and development, expense for the quarter ended September 30, 1999
increased 40% to $2.0 million, of which $415,000 was related to the costs
associated with the development of 3Dmodelserver.com, as compared to $1.5
million reported in the same prior year quarter. For the nine month period ended
September 30, 1999 research and development expense increased 35% to $5.5
million from $4.0 million reported for the nine month period ended September 30,
1998. In addition to incremental research and development expenses associated
with the Company's 3Dmodelserver.com product, increased research and development
expense in 1999 as compared to 1998 was attributable to increased headcount in
support of new interoperability products introduced in 1999. The Company expects
research and development expenses to continue to increase in the foreseeable
future as the Company continues to invest in the development of
3Dmodelserver.com and related Internet based services. As a percent of total
revenue, research and development expense increased to 54% and 48% for the three
and nine month periods ended September 30, 1999, respectively, from 41% and 40%
for the comparable prior year periods, respectively. The Company accounts for
research and development expense in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 86, under which the Company is required to
capitalize software development costs after technological feasibility is
established. Capitalizable software development costs incurred to date have not
been significant; therefore, the Company has expensed all of these costs in the
periods incurred.

     General and administrative expense decreased 21% to $444,000 for the
quarter ended September 30, 1999 from $561,000 reported for the same quarter in
1998. For the nine month period ended September 30, 1999 general and
administrative expense decreased 11% to $1.4 million from $1.6 million reported
for the comparable prior year period. Decreased general and administrative
expense was principally due to lower professional fees in 1999 as compared to
1998 and decreased variable compensation related to net losses incurred in 1999.
As a percent of total revenue, general and administrative expense decreased to
12% for the three and nine month periods ended September 30, 1999, respectively,
as compared to 16% for the comparable prior year periods, respectively.

Acquired In-process Research and Development

     Acquired in-process research and development expense of $500,000 for the
nine month period ended September 30, 1999 relates to the acquisition of certain
assets and liabilities of Sven. Specifically included in this expense were
amounts allocated to three separate projects which had not reached technological
feasibility and had no probable alternative future uses. At the acquisition date
each of these three projects were evaluated and it was determined that they were
between 20% and 30% complete. The projects identified include development of two
software components that will be sold as add-on extensions


                                       8
<PAGE>   9

("Husks") to the Company's ACIS 3D Toolkit and viewing product line, which are
referred to as the Level of Detail Husk and Large Model Viewing Husk,
respectively. The third project involves integration of the purchased
technology, as well as the software components noted above, with products and
internet based services the Company anticipates will be released in the fourth
quarter of 1999. Taking into consideration the percentage of completion, the
fair values of the Level of Detail Husk, Large Model Viewing Husk, and
integration project were determined to be $130,000, $210,000 and $160,000,
respectively. The method used to determine the fair values was a discounted cash
flow model, that assumed a 3-5 year period of cash inflow and a 22.5% risk
adjusted discount rate. The conclusion to expense the fair values of the
identified projects at the date of acquisition was based on the Company's
evaluation of the nature, timing and status of these projects. The Company,
having substantial experience with the design, development and marketing of
technical software products, concluded that the identified projects are complex,
and the related technology is unique with respect to the computer engineering
market segment in which it operates. Accordingly, the Company believes there
were significant risks associated with completing development of the identified
projects, and that failure to deliver the related products and services, and to
do so according to an established schedule, may have had an adverse affect on
the Company's ability to execute current business strategies.

Other Income (Expense), net

     Other income decreased to $40,000 for the third quarter of 1999 as compared
to $53,000 reported for the third quarter of 1998 and to $122,000 for the nine
month period ended September 30, 1999 from $171,000 for the comparable prior
year period. Decreased other income reflects lower interest income, as a result
of lower cash balances in 1999 as compared to 1998.

Income Tax Expense

     Income tax expense increased to $39,000 for the quarter ended September 30,
1999 as compared to $33,000 reported for the same quarter in 1998, reflecting
increased withholding taxes on sales in Japan. For the nine month period ended
September 30, 1999 income tax expense decreased to $214,000 from $250,000 for
the same period in 1998 due to income tax expense incurred in 1998 of
approximately $99,000 related to earnings by InterData Access, Inc. ("IDA"),
whereas no such expense was incurred during the nine month period ended
September 30, 1999. In December 1998 the Company acquired all of the outstanding
common stock of IDA, and accounted for the merger as a pooling of interests.
Accordingly, the Company's net operating loss carry forwards were not available
to offset IDA's taxable income for 1998. The remaining amount expensed in 1998,
as well as the 1999 expense, includes an income tax liability for the Company's
Japanese subsidiary in addition to withholding taxes on foreign sales.

Net Loss

     For the three and nine month periods ended September 30, 1999 the Company
incurred a net loss of $510,000 and $1.1 million, respectively. These losses
were primarily due to increased research and development investments in
3Dmodelserver.com and related Internet based services, which the Company expects
to release in the fourth quarter of 1999, and the one time acquired in-process
research and development charge of $500,000 associated with the acquisition of
Sven in June 1999 discussed above. The Company expects to continue to incur net
losses in the foreseeable future as it invests in 3Dmodelserver.com and related
Internet based strategies.

FLUCTUATIONS IN QUARTERLY RESULTS

     The Company has experienced in the past and expects to continue to
experience in the future significant fluctuations in quarterly operating results
due to a number of factors that are difficult to forecast, including, among
others, the volume of orders received within a quarter, demand for the Company's
products, the product mix purchased by the Company's customers, competing
capital budget considerations of the Company's customers, introduction and
enhancement of products by the Company and its competitors, market acceptance of
new products, reviews in the industry press concerning the products of the
Company or its competitors, changes or anticipated changes in pricing by the
Company or its


                                       9
<PAGE>   10

competitors and general economic conditions. Due to the foregoing factors, it is
possible that the Company's operating results for some future quarters may fall
below the expectations of securities analysts and investors.

LIQUIDITY AND CAPITAL RESOURCES

     As of September 30, 1999, the Company had $2.7 million in cash and cash
equivalents. Cash and cash equivalents decreased $1.8 million for the nine
months ended September 30, 1999, as compared to $718,000 for the comparable
prior year period.

     Net cash used by operating activities was $635,000 for the nine month
period ended September 30, 1999 as compared to $227,000 for the nine month
period ended September 30, 1998. Net cash used by operations in 1999 was
primarily the result of the Company's net loss in addition to increased accounts
receivable. Cash used by operations in the nine month period ended September 30,
1998 was primarily due to an increase in accounts receivable, partially offset
by increased deferred revenue.

     Net cash used by investing activities totaling $1.2 million for the nine
month period ended September 30, 1999 reflects $525,000 used for equipment
purchases and $694,000 used for purchased computer software, including $500,000
in connection with the Sven acquisition. Cash used by investing activities
during the same prior year period includes $332,000 for equipment purchases and
$296,000 for purchased computer software.

     Net cash provided by financing activities was $34,000 for the nine months
ended September 30, 1999, reflecting proceeds from the issuance of common stock
in connection with the exercise of employee stock options in addition to the
Company's employee stock purchase plan partially offset by principal payments on
debt. Net cash provided by financing activities in the nine month period ended
September 30, 1998 was $159,000 reflecting the issuance of stock in connection
with the exercise of stock options, as well as the Company's employee stock
purchase plan.

     The Company has allocated significant research and development resources to
its Internet based business strategy. To capitalize on this market strategy, the
Company will continue to invest in infrastructure, research and development and
Marketing. As a result, the Company believes that spending will continue to
outpace revenue for the foreseeable future. The Company will, therefore, be
required to seek sources of funding for the execution of this business strategy.
Such funding may not be available on a timely basis, in sufficient amounts or on
terms acceptable to us. Should the Company not be able to raise additional
capital, management believes it can scale back implementation of this internet
based business strategy such that cash generated form operations, together with
existing cash, will be sufficient to meet the Company's operating and capital
requirements for the foreseeable future including at least the next twelve
months.

NEW ACCOUNTING PRONOUNCEMENTS

     Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities," (SFAS No. 133) was issued by the
FASB in June 1998. SFAS No. 133 establishes accounting and reporting standards
for derivative instruments and hedging activities and requires all derivatives
to be recognized as either assets or liabilities in the consolidated balance
sheet, measured at fair value. The corresponding change in fair value of the
derivative will be recorded in the earnings of the Company, net of related
change in fair value of the hedged item, or as a component of comprehensive
income depending upon the intended use and designation. The Company does not
anticipate the impact of adopting SFAS No. 133 will have a material effect on
the Company's consolidated financial statements.

OUR SYSTEMS AND THOSE OF OUR CUSTOMERS MAY NOT BE YEAR 2000 COMPLIANT

     Many currently installed computer systems and software products accept only
two digit entries in the date code field. These date code fields will need to
accept four digit entries to distinguish 21st century dates from 20th century
dates. As a result, by the end of this year computer systems and/or software
used by many companies may need to be upgraded to comply with such "Year 2000"
requirements.


                                       10
<PAGE>   11

     We have evaluated Year 2000 compliance issues and believe that such issues
will not materially adversely impact our products and internal management
information systems. Our software products do not incorporate date-sensitive
algorithms. Any date codes contained in our software do not affect the
functionality of our products. We also incorporate third party software with
ACIS 3D, our core product. We have concluded that any date codes contained in
such third party software will not materially adversely impact our products.

     In addition, we have evaluated our management information systems and have
concluded that they are Year 2000 compliant. Moreover, we manage a low number of
transactions because we depend on low volume, high value orders. As a result, we
believe that any date-sensitive material contained in our software would not
materially adversely affect our management information systems software.
However, to the extent that any of our foregoing assessments are incorrect, the
cost of updating the performance of software might materially adversely affect
our business, financial condition and results of operations.

     Moreover, Year 2000 compliance issues affecting our customers' products and
internal management information systems might have a material adverse effect on
our business, financial condition and results of operations. Our customers' Year
2000 compliance is beyond our control. As an OEM provider, our products may be
incorporated directly into customers' products. Any Year 2000 issues affecting
our customers might, therefore, also affect our sales.

     The Company has been obtaining information from major vendors and service
providers to determine if their systems will be Year 2000 compliant. To date, no
material year 2000 risks have been identified. To the extent the Company has
identified such risks, the Company has work with the appropriate third parties
to mitigate such risks. However, the disruption or failure at or after the year
2000 of the systems of key vendors or service providers, as well as the failure
of any contingency plans, remains a possibility and could have a material
adverse effect on the Company's results of operations or financial condition.

INTERNATIONAL EXPANSION

     The Company believes that international sales will continue to represent a
significant portion of its total revenue, and that it will be subject to the
inherent risks of conducting business internationally. Such risks include, but
are not limited to, problems and delays in collecting accounts receivable,
fluctuations in currency exchange rates and other uncertainties relative to
regional economic circumstances. Sales of products by the Company currently are
denominated principally in U.S. dollars. Accordingly, any increase in the value
of the U.S. dollar as compared to currencies in the Company's principal overseas
markets would increase the foreign currency-denominated cost of the Company's
products, which may negatively affect the Company's sales in those markets, or
could delay collection of current or future accounts receivables. The Company
has not engaged in any currency exchange hedging practices. As of September 30,
1999, the Company believes it has adequately reserved for risks associated with
foreign currency transactions. However, there can be no assurance that one or
more of such factors will not have a material adverse effect on the Company's
business, operating results and financial condition.


                                       11
<PAGE>   12



                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings:

         On August 31, 1999 the Company was sued by Bentley Systems,
         Incorporated in the United States District Court for the Eastern
         District of Pennsylvania (Case No. 99-4383). The suit alleges trademark
         infringement, trademark dilution and unfair competition based on the
         Company's use of the domain names "www.modelserver.com" and
         "www.3dmodelserver.com". In the complaint Bentley Systems has requested
         that the Company discontinue use of "modelserver" and "3dmodelserver"
         in its business activities and relinquish related domain names to
         Bentley Systems. Further, Bentley Systems is seeking damages incurred
         as a consequence of any trademark infringements. In a closely-related
         matter on August 5, 1999, the Company has filed a trademark
         cancellation action against Bentley Systems before the Trademark Trial
         and Appeal Board of the United States Patent and Trademark Office,
         seeking to cancel Bentley's registrations for its "modelserver" marks.

Item 2.  Changes in Securities:

Item 3.  Defaults on Senior Securities:
         Not Applicable

Item 4.  Submission of Matters to Vote of Security Holders:
         None

Item 5.  Other Information:
         None

Item 6.  Exhibits and Reports on Form 8-K:

         a)  Exhibits
                27        Financial Data Schedule

         b)  Reports on Form 8-K
              None


                                       12
<PAGE>   13





                                   SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                         SPATIAL TECHNOLOGY INC.

Date November 16, 1999                   /s/ R. Bruce Morgan
                                         ---------------------------------------
                                             R. Bruce Morgan
                                             President, Chief Executive Officer,
                                             and Director (Principal Executive
                                             and Financial Officer)


                                         /s/ Todd S. Londa
                                         ---------------------------------------
                                             Todd S. Londa
                                             Vice President, Administration and
                                             Corporate Controller (Principal
                                             Accounting Officer)


                                       13
<PAGE>   14


                                 EXHIBIT INDEX

EXHIBIT
  NO.                    DESCRIPTION
-------                  -----------

  27             Financial Data Schedule