<PAGE>

                                   FORM 10-Q
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

[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

Commission file number 000-21593

                  WESTERN PENNSYLVANIA ADVENTURE CAPITAL FUND
            (Exact Name of Registrant as Specified in its Charter)

        Pennsylvania                                      25-1792727
(State of Other Jurisdiction of             (I.R.S. Employer Identification No.)
Incorporation or Organization)

                        Scott Towne Center, Suite A-113
                              2101 Greentree Road
                           Pittsburgh, PA 15220-1400
             (Address of Principal Executive Offices and Zip Code)

                                (412) 279-1760
             (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 such reports), and (2) has been subject to such filing
requirements for the past 90 days.


X    Yes       _____     No

Number of shares outstanding of the issuer's Common Stock, par value $.01 per
share, as of November 7, 2001: 4,224,870 Shares.

                                       1
<PAGE>

                        PART 1 - Financial Information

<TABLE>
<CAPTION>
                                                                                             Page No.

Item 1                                  Financial Statements
<S>                                                                                          <C>
           Report on Review by Independent Certified Public Accountants                          3

           Statements of Assets and Liabilities as of September 30, 2001 (unaudited)             4
           and December 31, 2000

           Statements of Operations, for the Periods July 1, 2001  through September 30,         5
           2001 (unaudited) and January 1, 2001 through September 30, 2001 (unaudited)

           Statements of Operations, for the Periods July 1, 2000 through September 30,          6
           2000 (unaudited) and January 1, 2000 through September 30, 2000 (unaudited)

           Statements of Changes in Net Assets for the Periods July 1, 2001 through              7
           September 30, 2001 (unaudited) and January 1, 2001 through September 30, 2001
           (unaudited)

           Statements of Changes in Net Assets, for the Periods July 1, 2000 through             8
           September 30, 2000 (unaudited) and January 1, 2000 through September 30, 2000
           (unaudited)

           Statements of Cash Flows, for the Periods July 1, 2001 through September 30,          9
           2001 (unaudited) and January 1, 2001 through September 30, 2001 (unaudited)

           Statements of Cash Flows, for the Periods July 1, 2000 through September 30,         10
           2000 (unaudited) and January 1, 2000 through September 30, 2000 (unaudited)

           Notes to Financial Statements                                                        11

Item 2     Management's Discussion and Analysis of Financial Condition and Results of           20
           Operations

Statement by Management Concerning Review of Interim Information by Independent                 21
Certified Public Accountants

Statement by Management Concerning the Fair Presentation of Interim Financial Information       22
</TABLE>

                                       2
<PAGE>

         REPORT ON REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


To the Board of Directors
Western Pennsylvania Adventure Capital Fund

We have reviewed the accompanying statement of assets and liabilities of Western
Pennsylvania Adventure Capital Fund as of September 30, 2001, and the related
statements of operations, changes in net assets, and cash flows for the three
and nine month periods ended September 30, 2001 and 2000.  These financial
statements are the responsibility of the company's management.

We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants.  A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters.  It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements taken as a
whole.  Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing
standards, the statement of assets and liabilities as of December 31, 2000 and
the related statements of operations, changes in net assets, and cash flows for
the year then ended (not presented herein), and in our report dated March 16,
2001, we expressed an unqualified opinion on those financial statements.



Goff Backa Alfera & Company, LLC
Pittsburgh, November 7, 2001

                                       3
<PAGE>

                  Western Pennsylvania Adventure Capital Fund
                     Statements of Assets and Liabilities
                                     As of

<TABLE>
<CAPTION>
                                                September 30, 2001       December 31, 2000
                                                ------------------       -----------------
                         Assets                    (unaudited)
<S>                                             <C>                      <C>
Cash and Cash Equivalents                             $  384,417               $  884,821
Short Term Investments, Net                              661,025                  728,551
Receivables                                                7,356                   18,250
Investment in Portfolio Companies                      2,860,677                3,999,650
Prepaid / Deferred Taxes                                  57,000                    2,606
Organization Costs                                         3,800                    6,080
                                                      ----------               ----------
  Total Assets                                        $3,974,275               $5,639,958
                                                      ==========               ==========
                        Liabilities
Accounts Payable                                      $        0               $    6,976
Accrued Liabilities                                        6,500                    6,500
Accrued Income Taxes                                      40,156                        0
                                                      ----------               ----------
  Total Current Liabilities                               46,656                   13,476
                                                      ----------               ----------
Deferred Income Taxes                                          0                  292,447
                                                      ----------               ----------
  Total Liabilities                                   $   46,656               $  305,923
                                                      ==========               ==========
                       Net Assets
Common Stock, Par Value $.01 Per Share,
Authorized 10,000,000 Shares, Issued and
Outstanding 4,224,870 Shares (4,452,120
Shares at December 31, 2000)                          $   44,749               $   44,521
Additional Paid in Capital                             5,146,276                5,110,104
Syndication Costs                                       (149,220)                (149,220)
Retained Earnings (Deficit)                             (987,621)                 455,195
Treasury Stock -  250,000 Shares, at cost               (126,565)                (126,565)
                                                      ----------               ----------
 Net Assets Applicable to Shares Outstanding          $3,927,619               $5,334,035
                                                      ==========               ==========
 Net Assets Value Per Share                           $     0.93               $     1.20
                                                      ==========               ==========
</TABLE>

See Accountant's Report and accompanying notes to financial statements.

                                       4
<PAGE>

                  Western Pennsylvania Adventure Capital Fund
                           Statements of Operations
                                For the Periods

<TABLE>
<CAPTION>
                                                 July 1, 2001        January 1, 2001
                                                   through               through
                                              September 30, 2001   September 30, 2001
                                              ------------------   ------------------
                                                 (unaudited)           (unaudited)
<S>                                           <C>                  <C>
Revenues:
   Interest                                       $  16,694            $    52,714
   Management Fees                                   (6,250)                 6,250
   Realized Gains                                         0                189,195
                                                  ---------            -----------
         Total Revenues                              10,444                248,159
                                                  ---------            -----------

Expenses:
   General and Administration                         4,500                 13,500
   Other Operating Expenses                          58,693                106,227
                                                  ---------            -----------
        Total Expenses                               63,193                119,727
                                                  ---------            -----------

Unrealized depreciation - Portfolio companies       (94,498)            (1,880,195)
Profit (Loss) Before Income Tax                    (147,247)            (1,751,763)
Income Tax Expense (Benefit)                         (8,332)              (308,947)
                                                  ---------            -----------
Net Income (Loss)                                 $(138,915)           $(1,442,816)
                                                  =========            ===========
Earnings (Loss) Per Share                         $   (0.03)           $     (0.34)
                                                  =========            ===========
</TABLE>

See Accountant's Report and accompanying notes to financial statements.

                                       5
<PAGE>

                  Western Pennsylvania Adventure Capital Fund
                           Statements of Operations
                                For the Periods

<TABLE>
<CAPTION>
                                                   July 1, 2000          January 1, 2000
                                                     through                 through
                                                 September 30, 2000     September 30, 2000
                                                 ------------------     ------------------
                                                     (unaudited)            (unaudited)
<S>                                              <C>                    <C>
Revenues:
 Interest                                             $ 42,781                 $160,682
 Management Fees                                         6,250                   18,750
 Realized Gains on Portfolio Securities                 82,127                   82,127
                                                      --------                 --------
    Total Revenues                                     131,158                  261,559
                                                      --------                 --------

Expenses:
 General and Administration                              4,500                   13,500
 Other Operating Expenses                               64,075                  139,466
                                                      --------                 --------
    Total Expenses                                      68,575                  152,966
                                                      --------                 --------

Unrealized Appreciation - Portfolio Companies          538,394                  538,394
Profit Before Income Tax                               600,977                  646,987
Income Tax Expense                                     249,000                  267,000
                                                      --------                 --------
Net Income                                            $351,977                 $379,987
                                                      ========                 ========
Earnings Per Share                                    $   0.08                 $   0.09
                                                      ========                 ========
</TABLE>

See Accountant's Report and accompanying notes to financial statements.

                                       6
<PAGE>

                  Western Pennsylvania Adventure Capital Fund
                      Statements of Changes in Net Assets
                                For the Periods

<TABLE>
<CAPTION>
                                                July 1, 2001           January 1, 200
                                                   through                 through
                                             September 30, 2001      September 30, 2001
                                             ------------------      ------------------
                                                  (unaudited)             (unaudited)
<S>                                          <C>                     <C>
From Operations
   Net Income (Loss)                           $  (138,915)            $(1,442,816)

From Share Transactions:
   Proceeds from Sale of Common Stock                    0                  36,400
   Syndication Costs                                     0                       0
                                                ----------             -----------
Net Increase in Net Assets Derived
   From Share Transactions                               0                  36,400
                                                ----------             -----------
Net Increase (Decrease) in Net Assets             (138,915)             (1,406,416)
Net Assets:
   Beginning of Period                           4,066,534               5,334,035
                                                ----------             -----------
   End of Period                                $3,927,619             $ 3,927,619
                                                ==========             ===========
</TABLE>

See Accountant's Report and accompanying notes to financial statements.

                                       7
<PAGE>

                  Western Pennsylvania Adventure Capital Fund
                      Statements of Changes in Net Assets
                                For the Periods

<TABLE>
<CAPTION>
                                                      July 1, 2000               January 1, 2000
                                                         through                    through
                                                    September 30, 2000         September 30, 2000
                                                    ------------------         ------------------
                                                        (unaudited)                (unaudited)
<S>                                                 <C>                        <C>
From Operations
   Net Income                                          $  351,977                   $  379,987

From Share Transactions:
    Proceeds from Sale of Common Stock                        -0-                    2,068,044
    Syndication Costs                                      (3,261)                     (12,941)
    Purchase of Treasury Stock                                -0-                     (125,126)
                                                       ----------                   ----------
Net Increase in Net Assets Derived from
    Share Transactions                                    348,716                    2,309,964
                                                       ----------                   ----------
Net Assets:
   Beginning of Period                                  4,966,695                    3,005,447
                                                       ----------                   ----------
   End of Period                                       $5,315,411                   $5,315,411
                                                       ==========                   ==========
</TABLE>

See Accountant's Report and accompanying notes to financial statements.


                                       8
<PAGE>

                  Western Pennsylvania Adventure Capital Fund
                           Statements of Cash Flows
                                For the Periods

<TABLE>
<CAPTION>
                                                           July 1, 2001        January 1, 2001
                                                             through               through
                                                        September 30, 2001    September 30, 2001
                                                        ------------------    ------------------
                                                           (unaudited)           (unaudited)
<S>                                                    <C>                   <C>
Cash Flow from Operating Activities:
  Income (Loss)                                              $(138,915)            $(1,442,816)

   Change in Assets and Liabilities:
      Organization Costs -  Amortization                           760                   2,280
      Receivables - (Increase) Decrease                         28,376                  10,894
      Prepaid Taxes - (Increase) Decrease                            0                 (54,394)
      Accounts Payable - Increase (Decrease)                      (405)                 (6,976)
      Accrued Liabilities - Increase (Decrease)                 (8,676)                 40,156
      Deferred Taxes - (Decrease)                                    0                (292,447)
                                                             ---------             -----------
  Net Cash Provided By (Used in) Operating Activities         (118,860)             (1,743,303)
                                                             ---------             -----------
Cash Flow from Financing Activities:
     Proceeds from Sale of Common Stock                              0                  36,400
     Payment of Syndication Costs                                    0                       0
                                                             ---------             -----------
Net Cash Provided by Financing Activities                            0                  36,400
                                                             ---------             -----------
Cash Flow from Investing Activities:
  Short Term Investments, Net of Redemptions                   296,414                  67,526
  Investment in Portfolio Companies                            (27,132)              1,138,973
                                                             ---------             -----------
  Net Cash Provided by (Used in) Investing Activities          269,282               1,206,499
                                                             ---------             -----------
Net (Decrease) in Cash and Cash Equivalents                    150,422                (500,404)
Cash and Cash Equivalents at Beginning of Period               233,995                 884,821
                                                             ---------             -----------
Cash and Cash Equivalents at End of Period                   $ 384,417             $   384,417
                                                             =========             ===========
Income Taxes Paid (Refunded)                                 $     344                 ($5,093)
</TABLE>

See  Accountant's Report and accompanying notes to financial statements.

                                       9
<PAGE>

                  Western Pennsylvania Adventure Capital Fund
                           Statements of Cash Flows
                                For the Periods

<TABLE>
<CAPTION>
                                                          July 1, 2000              January 1, 2000
                                                             Through                    through
                                                       September 30, 2000         September 30, 2000
                                                       ------------------         ------------------
                                                           (unaudited)                (unaudited)
<S>                                                    <C>                        <C>
Cash Flow from Operating Activities:

Income                                                   $   351,977                  $   379,987
Changes in Assets and Liabilities:
   Organization Costs - Amortization                             760                        2,280
   Receivables - Decrease                                     (9,999)                      (7,822)
   Accounts Payable -  Increase (Decrease)                       587                      (20,862)
   Accrued Liabilities - Increase (Decrease)                  (1,445)                       8,555
   Deferred Taxes - Increase                                 235,000                      235,000
                                                         -----------                  -----------
Net Cash Provided by Operating Activities                    576,880                      597,138
                                                         -----------                  -----------
Cash Flow from Financing Activities:
   Proceeds from Sale of Common Stock                              0                    2,068,044
   Payment of Syndication Costs                               (3,261)                     (12,941)
   Purchase of Treasury Stock                                      0                     (125,126)
                                                         -----------                  -----------
Net Cash Provided by (Used in) Financing
 Activities                                                   (3,261)                   1,929,977
                                                         -----------                  -----------

Cash Flow from Investing Activities:
   Short Term Investments, Net of Redemptions                801,878                   (1,135,375)
   Investment in Portfolio Companies                      (1,111,322)                  (1,819,356)
                                                         -----------                  -----------
   Net Cash (Used in) Investing Activities                  (309,444)                  (2,954,731)
                                                         -----------                  -----------
Net Increase (Decrease) in Cash and Cash
 Equivalents                                                 264,175                     (427,616)

Cash and Cash Equivalents at Beginning of Period             312,637                    1,004,428
                                                         -----------                  -----------
Cash and Cash Equivalents at End of Period               $   576,812                  $   576,812
                                                         ===========                  ===========
</TABLE>

See Accountant's Report and accompanying notes to financial statements.

                                       10
<PAGE>

                  Western Pennsylvania Adventure Capital Fund
                         Notes to Financial Statements
                              September 30, 2001

Note 1 - Summary of Significant Accounting Policies
---------------------------------------------------

This summary of significant accounting policies of Western Pennsylvania
Adventure Capital Fund (the "Fund") is presented to assist in understanding the
Fund's financial statements. These accounting policies conform with generally
accepted accounting principles and have been consistently applied in the
preparation of the financial statements.

Nature of Operations

The Fund was incorporated on May 23, 1996, and began its primary business
activities in November, 1997. The Fund has been formed to become a Business
Development Company ("BDC") and to be subject to the applicable provisions of
the Investment Company Act of 1940, as amended (the "1940 Act"). The Fund
invests primarily in the equity and/or debt securities of development stage
companies located in western Pennsylvania. The Fund seeks to make its
investments in conjunction with a consortium of investment partners such as
individual investors, other venture capital firms, private non-profit or for-
profit companies or foundations, and federal, state or local public, quasi-
public or publicly-supported economic development organizations, agencies or
authorities which provide investment capital or low interest or other financing
for economic development.

The Fund's Board of Directors, which is elected by the shareholders annually,
has responsibility for management of the Fund, including authority to select
portfolio securities for investment by the Fund. The Board is advised by the
officers of the Fund and, through December 31, 1998, had been advised by The
Enterprise Corporation of Pittsburgh ("Enterprise"), which served as the Fund's
investment advisor. Enterprise screened potential Portfolio Companies and
presented them to the Fund's Board for investment consideration, conducted due
diligence reviews of investment candidates and managed the day-to-day operations
of the Fund including, portfolio management, preparing reports to shareholders
and performing administrative services. The recommendations of Enterprise as to
investments were advisory only and were not binding on the Fund or its Board of
Directors. Enterprise was a private, non-profit consulting firm founded in 1983
for the purpose of assisting entrepreneurs in developing new businesses in
western Pennsylvania. As of December 31, 1998, Enterprise ceased operations and
is no longer serving as the Fund's investment advisor. The Fund's Board of
Directors now performs these activities.

Enterprise received a fee equal to 5% of the aggregate amount of assets invested
by the Fund in portfolio securities for providing investment advisory and
administrative services to the Fund. Enterprise may also have received
compensation from investment partners or members of any investment consortium
that invested with the Fund in portfolio securities, all on such basis as such
other parties and Enterprise may have agreed.

                                       11
<PAGE>

Basis of Presentation - Interim Financial Statements

The financial information included herein has been prepared from the books and
records without audit. The accompanying financial statements have been prepared
in accordance with the instructions to form 10-Q and do not include all of the
information and the footnotes required by generally accepted accounting
principles for statements. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the financial condition, results of operations, changes in net
assets, and cash flows, have been included.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.

These financial statements should be read in conjunction with the financial
statements and notes thereto for the period January 1, 2000 to December 31,
2000, contained in the Fund's 2000 Annual Report on Form 10-K.

Basis of Presentation - Net Assets

During 1996, the Fund began offering a total of 5,000,000 shares of its common
stock, par value $.01, at a price of $1.00 per share under Regulation E of the
Securities Act of 1933 (the "First Offering"). In connection with its services
in organizing the formation and development of the Fund, Enterprise purchased
250,000 shares of common stock for $.01 per share, which represented 4.8% of the
total potential outstanding shares of the Fund. The shares purchased by
Enterprise represented founder's shares. If less than 5,000,000 shares were sold
in the First Offering, the Fund had the right to repurchase from Enterprise for
$.01 per share such number of shares as would result in Enterprise's ownership
percentage in the Fund immediately following the First Offering being 4.8%.

During 1997, the Fund sold 2,104,333 shares of its common stock and closed the
First Offering. As of December 31, 1997, the Fund repurchased 143,899 shares of
its common stock from Enterprise, thereby reducing Enterprise's ownership to
106,101 shares, which represented 4.8% of the then total shares issued and
outstanding (2,210,434 shares). The repurchased shares are presented as Treasury
Stock, at cost. On June 7, 2000, the Fund repurchased from Innovation Works,
Inc., successor to Enterprise, the 106,101 shares. These repurchased shares also
are presented as Treasury shares, at cost.

On September 10, 1999, the Fund began offering a total of 2,750,000 shares of
its common stock, par value $.01, at a price of $1.45 per share under Regulation
E of the Securities Act of 1933 (the "Second Offering"). The Second Offering was
extended through January 31, 2000. The Fund sold 2,057,787 shares of its common
stock and closed the Second Offering.

On July 14, 2000, the Fund began offering a total of 875,000 shares of its
common stock, par value $0.01, at a price of $1.60 per share under Regulation E
of the Securities Act of 1933 (the "Third Offering"). The Third Offering was
extended through March 31, 2001. The Fund sold 62,750 shares of its common stock
and closed the Third Offering.

                                       12
<PAGE>

Syndication Costs

Legal, accounting and other costs of $149,220 ($85,507 in 1998) incurred in
connection with the Fund's First Offering, Second Offering and Third Offering
have been capitalized and reported as a permanent reduction of net assets in
accordance with generally accepted accounting principles.

There were no syndication costs incurred in the three and nine month periods
ended September 30, 2001. Syndication costs incurred in the three and nine month
periods ended September 30, 2000, were $3,261 and $12,941, respectively.

Cash and Cash Equivalents

Cash and Cash Equivalents consist of cash in checking accounts and high quality
money market instruments having or deemed to have remaining maturities of
thirteen months or less.
Short Term Investments

The Fund's short term investments consist of high quality commercial paper and
U.S. Government securities. These investments generally are purchased at a
discount or premium from face value and are redeemed at maturity at face value.
The difference represents interest income (expense) which will accrue over the
period from date of acquisition to date of maturity. The Fund uses the effective
yield to maturity method to recognize the accretion of interest income (expense)
over the life of each individual short term investment. This method produces a
rate of return which is constant over the period from acquisition to maturity.
Using this method, the interest income (expense) recognized on each individual
investment will increase over time as the carrying value of that investment
increases (decreases). The Fund records these investments net of remaining
unearned interest income (expense).

In accordance with Statement of Financial Accounting Standards ("SFAS") No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," the Fund has
classified all short term investments as held-to-maturity ("HTM") as of
September 30, 2001 and December 31, 2000.

Investments in Portfolio Companies

Investments are stated at value. Investments for which market quotations are
readily available are valued at the last trade price on or within one local
business day of the date of determination as obtained from a pricing source. If
no such trade price is available, such investments are valued at the quoted bid
price or the mean between the quoted bid and asked price on the date of
determination as obtained from a pricing source. Securities for which market
quotations are not readily available are valued at fair value in good faith
using methods determined by or under the direction of the Fund's Board of
Directors.

Start-Up and Organization Costs

Costs incurred in connection with the start-up and organization of the Fund have
been deferred and are being amortized ratably over a period of 60 months
beginning January 1, 1998. The balance of $3,800 ($6,080 at December 31, 2000)
represents the remaining portion of these costs subject to amortization.

                                       13
<PAGE>

Earnings Per Share

During 1997, the Fund adopted SFAS No. 128, "Earnings Per Share". Its
application is not expected to affect the calculations of basic and diluted
earnings per share.

Earnings per share is computed using the weighted average number of shares
outstanding during the respective periods, adjusted for outstanding stock
options. There are no other outstanding warrants, or other contingently issuable
shares.

The Fund's shareholders, at the annual meeting of shareholders held on November
17, 1999, approved a stock option plan which authorizes the granting of options
to purchase the Fund's common stock to directors, officers, employees, and
members of the advisory board of the Fund. Options to purchase 250,000 shares of
the Fund's common stock have been granted to directors of the Fund under the
terms of this stock option plan.

Income Taxes

The Fund has adopted the SFAS Standard No. 109, "Accounting for Income Taxes",
from its inception. SFAS 109 requires an asset and liability approach that
recognizes deferred tax assets and liabilities for the expected future tax
consequences of events that have been recognized in the Fund's financial
statements or tax returns. In estimating future tax consequences, SFAS 109
generally considers all expected future events other than enactments of changes
in the tax law or rates. During the quarter ended December 31, 1999, the Fund
recognized unrealized appreciation on its portfolio companies, and accordingly,
began recognizing deferred taxes due to temporary timing differences in
accordance with SFAS 109. A deferred tax expense of $235,000 was recognized
during the nine month period ended September 30, 2000. At September 30, 2000,
the deferred tax liability was $285,700.

During the nine month period ended September 30, 2001, the Fund revalued a
number of its investments in portfolio companies based on current economic
conditions and certain unfavorable developments at specific portfolio companies.
Accordingly, deferred tax benefit of $349,447 relating to unrealized
depreciation was recognized on a year-to-date basis. At September 30, 2001, the
deferred tax asset was $57,000.

Note 2 - Sale of Securities
---------------------------

During 1997, the Fund sold 2,104,333 shares of its common stock at $1.00 per
share, under an Offering Circular dated November 7, 1996 ("First Offering
Circular"). The proceeds were required to be deposited in an escrow account with
the Fund's escrow agent, PNC Bank, until such time as the escrow account reached
$1 million. At that time, the Fund was permitted to withdraw the funds from the
escrow account and begin to invest in portfolio securities.

As of July 11, 1997, the proceeds in the escrow account totaled $1,860,100. On
that date, the Fund withdrew substantially all of the funds from the escrow
account.

The funds released from escrow have been temporarily invested, pending
investment in Portfolio Securities, in cash equivalents, government securities,
and high quality debt securities. A portion of the funds released from escrow
were disbursed to pay accumulated obligations whose payment was deferred until
funds were released from escrow.

                                       14
<PAGE>

The Fund began offering for sale up to 2,750,000 shares of its Common Stock at
$1.45 per share, or a maximum of $3,987,500, under an Offering Circular dated
September 10, 1999 ("Second Offering Circular"). The Fund intends to use the
proceeds from this sale of securities primarily to invest in the equity and/or
debt securities of additional development stage companies located in western
Pennsylvania, and to make follow on investments, as appropriate, in existing
portfolio companies. The proceeds from this sale of securities have been
temporarily invested, pending investments in portfolio companies, in cash
equivalents, government securities, and high quality debt securities. A portion
of these proceeds may be used for normal operating expenses. The Fund sold
2,057,787 shares ($2,983,792) of its Common Stock under this Second Offering
Circular.

The Fund began offering for sale up to 875,000 shares of its Common Stock at
$1.60 per share, or a maximum of $1,400,000, under an Offering Circular dated
July 14, 2000 ("Third Offering Circular"). The Fund intends to use the proceeds
from this sale of securities primarily to invest in the equity and/or debt
securities of additional development stage companies located in western
Pennsylvania, and to make follow on investments, as appropriate, in existing
portfolio companies. The proceeds from this sale of securities will be
temporarily invested, pending investments in portfolio companies, in cash
equivalents, government securities, and high quality debt securities. A portion
of these proceeds may be used for normal operating expenses. As of December 31,
2000, the Fund had received subscriptions to purchase 40,000 shares ($64,000).
The Fund sold 62,750 shares of its Common Stock at $1.60 per share under the
Third Offering Circular, and closed the Third Offering as of March 31, 2001. As
of March 31, 2001, and December 31, 2000, $4,199,650 and $3,999,650,
respectively, were invested in Portfolio Securities, and the balance of the
funds remained invested in cash equivalents, government securities, and high
quality debt securities.

Note 3 - Investments in Portfolio Companies
---------------------------------------------

On July 24, 2001, TimeSys closed on the sale of 30,842,327 shares of its new
Series A Preferred Stock ("Series A") at $0.2673 per share for a total
investment of $8,244,154. The Series A is convertible into common stock and has
liquidation and other preferences. Concurrent with this closing, both classes of
previously outstanding preferred stock, "old" Series A and "old" Series B, were
converted into new Series B Preferred Stock which also is convertible into
common stock and has certain limited preferences. Also, at the same time, the
existing Convertible Bridge Notes were converted principal ($835,000) and
interest ($20,846) into Series A.

The Fund had previously purchased 100,000 shares of "old" Series A Preferred
Stock, 61,380 shares of "old" Series B Preferred Stock and $50,000 of Bridge
Loan Notes due August 30, 2001 with interest at 15 percent per annum. The Bridge
Loan Notes were convertible, principal and interest, into the Series A. On July
24, 2001, the Fund's "old" Series A and "old" Series B were converted into
142,857 shares of new Series B-1 Preferred Stock and 64,590 shares of new Series
B-2 Preferred Stock. As of the same date, the Bridge Loan Notes principal
($50,000) and interest ($1,687.50) were converted into 193,369 shares of new
Series A Preferred Stock.

TimeSys develops and markets software tools for embedded real time systems.

On June 5, 2001, the Fund placed in escrow, under control of its legal counsel,
$100,000 for the purchase of MindMatrix, Inc. ("MindMatrix") Convertible
Promissory Notes ("Notes"). The escrow was to be released to MindMatrix upon its
raising of total of $750,000, including the Fund's $100,000, through the
issuance of these Notes. The Notes mature upon the earlier of the next round
financing or December 31, 2001, bear interest at 10 percent per annum, and are
convertible into the same security as to be issued in the next round financing
subject to a discount from 15 - 50 percent dependent upon the timing of the next
round financing.

                                       15
<PAGE>

On August 16, 2001, MindMatrix reached $756,000 in this financing round, the
Fund authorized the release of its $100,000 being held in escrow, and MindMatrix
held an initial closing. At approximately the same time, other shareholders of
the Fund purchased $141,000 of the Notes. The offering is continuing at this
time.

MindMatrix offers a solution platform to vendors in the information technology
industry to better communicate the value of their products to customers.

On September 7, 2001, the Fund purchased 617,284 shares of Compas Controls, Inc.
("Compas") Series A Convertible Preferred Stock ("Compas A") at $0.1620 per
share for a total investment of $100,000. At approximately the same time, other
shareholders in the Fund purchased 895,741 shares for a total investment of
$145,110. The Compas A is convertible into Common Stock and has anti-dilution
protection and other typical preferences including liquidation, pre-emptive
rights, voting rights and board representation. The total investment by the
Fund, and by the Fund and its shareholders, represented an ownership interest,
on a fully diluted basis, of 4.47 percent and 10.49 percent, respectively.

Compas provides thermal process management software for heat treating and
related industries.

Note 4 - Co-Investor Agreement
------------------------------

On June 30, 1998, the Fund and the Urban Redevelopment Authority of Pittsburgh
("URA") entered into a co-investment agreement ("Agreement"). Under the terms of
this Agreement, the URA will create an escrow account of $1,000,000 to be used
for direct investment in certain select Fund's Portfolio Companies, located
within the City of Pittsburgh and meeting other criteria established by the URA.
The escrow account also will be used for payment of the Fund's investment and
management fees related to such investments. The URA will match, on a dollar-
for-dollar basis, the Fund's investment in Portfolio Companies, subject to the
limitations of the Portfolio Companies' location within the City of Pittsburgh
and such companies meeting the URA's criteria for funding.

The annual management fee payable to the Fund is $25,000. Further, the URA will
pay the Fund's investment advisor a transaction fee of five percent (5%) of the
URA's portion of its investment. All fees will be paid from the escrow account.

In addition, the URA, as part of the Agreement, has agreed to subordinate its
rights to any return on its investment until the private equity participants,
investing in each of the contemplated transactions, including the Fund, have
recovered their original investments in the portfolio companies. Thereafter, the
URA and all equity participants, including the Fund, will participate in all
future distributions in accordance with their investment.

As of June 30, 2001, the URA notified the Fund of its decision to terminate the
Agreement, effective as of July 31, 2001. Through June 30, 2001, the URA had
invested a total of $100,000, on its dollar-for-dollar matching basis in one
portfolio company.

                                       16
<PAGE>

Note 5 - Short Term Investments
-------------------------------

The Fund, pending investments in Portfolio Securities, temporarily invests its
excess funds in short term high quality commercial paper and U.S. Government
securities. These investments generally are purchased at a discount or premium
from face value and are redeemed at maturity at face value. The discount/premium
from face value represents unearned interest income/expense and is recognized
over the remaining term of the security using the effective yield to maturity
method. All of the short term investments are classified as HTM in accordance
with SFAS No. 115. The face value, carrying value, and market value for HTM
investments were as follows at September 30, 2001 and December 31, 2000:

                           As of September 30, 2001
                           ------------------------

Investment                    Face Value   Carrying Value   Market Value
----------                    ----------   --------------   ------------

U.S. Government Securities    $  666,000   $      661,025   $    663,758
                              ==========   ==============   ============


                            As of December 31, 2000
                            -----------------------

Investment                  Face Value     Carrying Value  Market Value
----------                  ----------     --------------  ------------

U.S. Government Securities  $  733,000     $      728,551  $    728,441
                            ==========     ==============  ============

Note 6 - Unrealized Appreciation (Depreciation)
-----------------------------------------------

The Fund recognizes unrealized appreciation (depreciation) on its portfolio
companies when significant and material events have occurred that clearly
indicates that an adjustment to the carrying value of those investments is
appropriate. Unrealized (depreciation) was $(1,178,070) as of September 30, 2001
and unrealized appreciation was $702,125 as of December 31, 2000.

During the nine month period ended September 30, 2001, the Fund reduced the
carrying value of a number of its investments in portfolio companies based upon:
(1) current general economic conditions within those industry markets in which
its portfolio companies operate, and (2) specific unfavorable developments at
certain of those companies. The unrealized (depreciation) recognized in the
three and nine month periods ended September 30, 2001 was $94,498 and
$1,880,195, respectively. Unrealized appreciation recognized in the three and
nine month periods ended September 30, 2000 was $538,394.

Note 7 - Related Party Transactions
-----------------------------------

Accrued liabilities at September 30, 2001 and December 31, 2000 include $4,500
for Board of Directors fees and $2,000 for accounting services payable to a
consulting firm in which one of the Fund's officers is a significant
shareholder.

Note 8 - Stock Option Plan
--------------------------

The shareholders, at the annual meeting of shareholders held on November 17,
1999, approved a stock option plan authorizing the granting of options to
purchase the Fund's common stock to directors, officers, employees and members
of the advisory board of the Fund. Under the terms of the plan, the stock option
committee has authority to award options to eligible persons on the basis of the
nature of their duties, their present and potential contributions to the success
of the Fund and like factors.

                                       17
<PAGE>

The maximum number of options that may be granted under the plan is 500,000. The
exercise price is determined by the stock option committee at the time the
option is granted, but cannot be less than the fair market value of the Fund's
common stock on the date of grant. Each option will have a term, not in excess
of 10 years, as determined by the stock option committee. In general, each
option will become exercisable in 25 percent increments beginning on the first,
second, third and fourth anniversaries of the date of grant. Options may be
granted as either incentive stock options or nonqualified stock options.

The stock option committee granted options to purchase 50,000 shares of its
common stock at an exercise price of $1.45 per share to each of the Fund's five
directors (250,000 shares in the aggregate), effective as of October 11, 1999.
These options vest 50% upon issuance, and 25% in equal increments on the first
and second anniversary dates of issuance.

Note 9 - Income Taxes
---------------------

The following table summarizes the provision for Federal and state taxes on
income.



               Current:                         2001            2000
                                                ----            ----
                  Federal                    $  33,000        $ 24,000
                  State                          7,500           8,000
                                             ---------        --------
                                                40,500          32,000
                                             =========        ========

               Deferred:
                  Federal                     (281,901)        179,000
                  State                        (67,546)         56,000
                                             ---------        --------
                                              (349,447)        235,000
                                             ---------        --------

               Total                         $(308,947)       $267,000
                                             =========        ========

The components of the deferred tax asset (liability), as reflected on the
balance sheet, consist of the following:

                                                        2001           2000
                                                        ----           ----
          Deferred tax liability:
            Unrealized appreciation                  $       0      $(320,000)
                                                     ---------      ---------

          Deferred tax asset:
            Net operating loss                               0         27,553
            Unrealized depreciation on securities      781,000              0
            Valuation allowance                       (724,000)             0
                                                     ---------      ---------
          Net deferred tax asset (liability)         $  57,000      $(292,447)
                                                     =========      =========

The Fund has provided a valuation allowance for the deferred tax asset since the
recognition of the unrealized depreciation is not sufficiently assured due to
the uncertainty of future capital gain income. The valuation allowance increased
since December 31, 2000 by $724,000.

                                       18
<PAGE>

Note 10 - Realized Gains
------------------------

In January, 2000, the Fund sold its investment in Medtrex Incorporated
("Medtrex"), one of the Fund's portfolio companies. The proceeds of sale were
placed in escrow pending claims against the escrow by the purchaser. On July 26,
2000, the Fund received its first distribution from its sale of its investment
in Medtrex. The excess of the proceeds received ($234,604) on July 26, 2000,
over the Fund's investment ($152,477) was recognized as realized gains during
the year ended December 31, 2000. On February 7, 2001, the Fund received its
second and final distribution from its sale of Medtrex on January 19, 2000. This
second distribution, which amounted to $189,195, has been recognized as realized
gains during the three month period ended March 31, 2001, and results in a total
return to the Fund of $423,799 on an investment of $152,477.

Note 11 - Treasury Stock
------------------------

On June 7, 2000, the Fund purchased 106,101 shares of its common stock
previously owned by Innovation Works, Inc. for $125,126. These shares are shown
as treasury stock as of September 30, 2001 and December 31, 2000.

As of December 31, 1997, the Fund repurchased 143,899 shares of its common stock
from Enterprise at $0.01 per share. These shares also are shown as treasury
stock as of September 30, 2001 and December 31, 2000.

Note 12 - Subsequent Events
---------------------------

On September 17, 2001, the Fund reached a decision to purchase 115,000 shares of
True Commerce, Inc. ("True Commerce") Class B Common Stock ("Common B") at
$0.8695 per share for a total investment of $100,000. The investment has not
been made as of this date pending finalization of legal documents.

True Commerce offers proprietary software products and electronic services for
business-to-business transactions via the internet.

During October, Laminar Software, Inc. ("Laminar") entered into discussions to
be acquired by another company. Those discussions are ongoing at this time, and
appear to indicate that the Fund may realize a loss of a significant portion of
its investment of $153,594. The Fund believes that the previously recognized
provision of $1,880,195 for unrealized depreciation on portfolio companies
provides adequate reserves for this possible loss.

On October 25, 2001, the Fund purchased 9,615 shares of e-Cruise, Inc. ("e-
Cruise") Series B Preferred Stock ("e-Cruise B") for $0.26 per share for the
total investment of $2,500. The e-Cruise B has a liquidation preference, board
representation, and is convertible into Common Stock. In addition, the e-Cruise
B carries warrants allowing the holder to purchase, for each 3 shares of e-
Cruise B purchased in this offering, 2 shares of e-Cruise B in exchange for 3
shares of Common Stock. The Fund is committed to purchase, in the near term, an
additional $2,500 of e-Cruise B on these same terms.

e-Cruise will provide online infomediary content for cruise lines to potential
passengers.

                                       19
<PAGE>

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

Results of Operations
---------------------

Revenues for the three month and nine month periods ending September 30, 2001
amounted to $10,444 and $248,159, respectively. The $248,159 includes $189,195
realized gain from the sale of Medtrex Incorporated, one of the Fund's portfolio
companies, which was recognized in the three month period ended March 31, 2001.
Revenues for the three and nine month periods ended September 30, 2000 amounted
to $131,158 and $261,559, respectively, and interest income represented $42,781
and $160,682, respectively. Realized gains for the three and nine month periods
ended September 30, 2000 amounted to $82,127. Interest income for the three and
nine month periods ending September 30, 2001 was $16,694 and $52,714,
respectively. The decline in interest income reflects both lower interest rates
and a reduction in short term investments due to additional investments in
portfolio companies.

General and administrative expenses for the three and nine month periods ending
September 30, 2001 amounted to $4,500 and $13,500, respectively, and consisted
of directors fees. These amounts are the same as the comparable periods of 2000.
Other operating expenses for the three and nine month periods ended September
30, 2001 amounted to $58,693 and $106,227, respectively. Other operating
expenses for the three and nine month periods ended September 30, 2000 amounted
to $64,075 and $139,466, respectively. The decrease in other operating expenses
in the three and nine month periods of 2001 compared with the same periods of
2000 was due to elimination of advisory board fees of $12,000 and $41,000,
respectively.

Income tax expense (benefit) for the three and nine month periods ending
September 30, 2001 was ($8,332) and ($308,947), respectively, compared with
$249,000 and $267,000 for the same periods of 2000. The (benefit) recognized in
the three and nine month periods ending September 30, 2001 reflects the
recognition of a portion of unrealized depreciation on investments in portfolio
companies during the three and nine month periods ending September 30, 2001. A
tax benefit has been recognized only to the extent of available net operating
loss carrybacks and previously recorded unrealized appreciation on investments
in portfolio companies since realization of additional tax benefits is not
sufficiently assured as to warrant recognition in the financial statements.


Financial Condition, Liquidity and Capital Resources
----------------------------------------------------

The Registrant, through its sale of Common Stock under the First Offering
Circular, raised $2,104,333 in 1997. The Registrant, through the sale of its
Common Stock under the Second Offering Circular, raised $2,983,792 in 1999 -
2000. The Registrant, through the sale of its Common Stock under the Third
Offering Circular, raised $100,400 in 2000-2001. As of September 30, 2001, the
Registrant held cash, cash equivalents, and short-term investments in high
quality commercial paper and U.S. Government securities of $1,045,442. Most of
this amount, except for normal operating expenses, is available for investment
in Portfolio Securities.

                                       20
<PAGE>

  Statement by Management Concerning Review of Interim Financial Information
                  by Independent Certified Public Accountants

The September 30, 2001 financial statements included in this filing on Form 10-Q
have been reviewed by Goff Backa Alfera & Company, LLC, independent certified
public accountants, in accordance with established professional standards and
procedures for such review. The report of Goff Backa Alfera & Company, LLC
commenting on their review accompanies the financial statements included in Item
1 of Part I.

                                       21
<PAGE>

           Statement by Management Concerning the Fair Presentation
                       Of Interim Financial Information

The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments), which are, in the opinion of management, necessary to a fair
statement of the results for the interim periods. The report of Goff Backa
Alfera & Company, LLC commenting upon their review accompanies the financial
statements included in Item 1 of Part I.

                                       22
<PAGE>

                          Part II - Other Information

Item 6.        Exhibits and Reports on Form 8-K

          (a)  List of Exhibits

               11   Computation of earnings per share for the three and nine
                    month periods ended September 30, 2001 and September 30,
                    2000

          (b)  Reports on Form 8-K

               No reports were filed on Form 8-K by the Registrant during the
               quarter covered by this report.

                                       23
<PAGE>

                                  SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Western
Pennsylvania Adventure Capital Fund has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized:

     Western Pennsylvania Adventure Capital Fund
     (Registrant)



     Date: November 7, 2001   /s/ G. Richard Patton
                              --------------------
                              G. Richard Patton
                              President and Chief Executive Officer and Director


     Date: November 7, 2001   /s/ Alvin J. Catz
                              ----------------
                              Alvin J. Catz
                              Chief Financial Officer, Treasurer and Director

                                       24