UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-QSB
                                   (Mark one)
                              (X) Quarterly Report
                               under Section 13 or
                                  15(d) of the
                               Securities Exchange
                                  Act of 1934 

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
                     ---------------------------------------
   ( ) Transition Report under Section 13 or 15(d) of the Exchange Act of 1934
         for the transition period from ______________ to ______________
                     --------------------------------------

                        Commission File Number: 000-21775
                     --------------------------------------
                              THINK NEW IDEAS, INC.
        (Exact name of small business issuer as specified in its charter)
                     --------------------------------------

                               Delaware 95-4578104
                (State or other jurisdiction of (I.R.S. Employer
              incorporation or organization) Identification Number)
                     --------------------------------------

            45 West 36th Street, 12th Floor, New York, New York 10018
                    (Address of principal executive offices)

                                 (212) 629-6800
                           (Issuer's telephone number)
                     --------------------------------------

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

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

      Class                                          Outstanding at May 12, 1999
      -----                                          ---------------------------
Common Stock, par value $.0001 per share                   10,075,570  shares

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


<PAGE>


                              THINK NEW IDEAS, INC.

                                   FORM 10-QSB

                                      INDEX



                                                                           Page
PART I - FINANCIAL INFORMATION
  Item 1.  Consolidated Financial Statements
     Condensed Consolidated Balance Sheets as of March 31, 1999 and
     June 30, 1998 (Unaudited)................................................3
     Condensed Consolidated Statements of Operations for the three 
     and nine months ended March 31, 1999 and 1998(Unaudited).................4
     Condensed Consolidated Statement of Shareholders' Equity as of
     March 31, 1999 (Unaudited) ..............................................5
     Condensed Consolidated Statements of Cash Flows for the nine months 
     ended March 31, 1999 and 1998 (Unaudited) ...............................6
     Notes to Condensed Consolidated Financial Statements (Unaudited).........7
  Item 2.  Management's Discussion and Analysis of Financial Condition 
           and Results of Operations.........................................11
PART II - OTHER INFORMATION
  Item 1.  Legal Proceedings.................................................17
  Item 2.  Changes in Securities and Use of Proceeds.........................18
  Item 3.  Defaults Upon Senior Securities...................................18
  Item 4.  Submission of Matters to a Vote of Security Holders...............18
  Item 5.  Other Information and Subsequent Events...........................19
  Item 6.  Exhibits and Reports on Form 8-K..................................19



<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS

                     THINK NEW IDEAS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                   (UNAUDITED)
<TABLE>


                                             -----------------------------------------
                                                  MARCH 31,              JUNE 30,
                                                    1999                   1998
                                             --------------------   ------------------

<S>                                               <C>                 <C>
ASSETS                                                               
Current assets:                                                      
   Cash and cash equivalents                   $   9,322,444          $   7,653,576
   Accounts  receivable, net of allowance                         
    for doubtful accounts of $1,041,209
    and $1,019,475                                17,042,143             14,431,288
   Unbilled receivables                            2,494,536              3,455,181
   Prepaid expenses and other assets               1,034,995                715,574
                                             ---------------        ---------------
      Total current assets                        29,894,118             26,255,619

   Property, plant and equipment, net              5,475,560              5,682,059
   Software development costs, net                 1,536,402              1,858,370
   Goodwill, net of accumulated amortization
    of $3,606,370 and $2,534,207                  20,308,509             17,344,798
   Other assets                                    1,815,170              1,112,225
                                             ---------------        ---------------
      Total assets                             $  59,029,759          $  52,253,071
                                             ===============        ===============

LIABILITIES AND SHAREHOLDERS' EQUITY                                 
Current liabilities:                                                 
   Accounts payable                            $   5,620,570          $   9,912,683
   Accrued expenses                                2,126,719              3,414,977
   Accrued restructuring costs                             -                307,482
   Media payable                                  10,214,439              3,407,266
   Income taxes payable                              351,069                566,578
   Bank payable                                    1,244,195                491,915
   Due to related party                               30,647                591,946
   Current portion of obligations under              
    capital leases                                   334,520                693,619
                                             ---------------        ---------------
      Total current liabilities                   19,922,159             19,386,466

   Obligations under capital leases                  267,218                260,645
   Other long-term liabilities                             -                102,548
                                             ---------------        ---------------
      Total liabilities                           20,189,377             19,749,659
                                             ---------------        ---------------
Commitments and contingencies
Shareholders' equity:
   Preferred stock, $.0001 par value;
    5,000,000 shares authorized; none issued
    and outstanding                                        -                      -
   Common stock, $.0001 par value;
    50,000,000 shares authorized; 10,032,550
    and 8,433,656 shares issued                          
    and outstanding                                    1,003                    843
   Additional paid-in capital                     78,804,586             67,731,946
   Accumulated deficit                           (39,957,858)           (35,229,377)
   Accumulated other comprehensive income             (7,349)                     -
                                             ----------------       ---------------
      Total shareholders' equity                  38,840,382             32,503,412
                                             ----------------       ---------------
      Total liabilities and shareholders'
       equity                                  $  59,029,759          $  52,253,071
                                             ================       ===============
</TABLE>

                         See accompanying notes to condensed consolidated
financial statements.

<PAGE>



                     THINK NEW IDEAS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>

                                            THREE MONTHS ENDED            NINE MONTHS ENDED
                                                MARCH 31,                     MARCH 31,
                                       -----------------------------  --------------------------
                                           1999           1998           1999          1998
                                       --------------  -------------  ------------  ------------

<S>                                    <C>            <C>             <C>           <C>        
Revenues                               $12,827,035    $10,969,701     $36,568,094   $27,993,587

Operating expenses:
   Salaries and related expenses         7,214,858      4,561,567      20,424,080    11,712,612
   Selling, general and 
    administrative expenses              5,786,137      5,055,937      17,396,230    13,428,052
   Depreciation and amortization         1,101,628        706,257       3,138,125     1,661,687
   Stock compensation expense              180,400              -         180,400             -
                                       --------------  -------------  ------------  ------------

   Operating (loss)/profit              (1,455,988)       645,940      (4,570,741)    1,191,236

   Interest income and other, net           16,702         87,007          39,712       188,287
                                       --------------  -------------  ------------  ------------

   Income/(loss) before provision
    for income taxes                    (1,439,286)       732,947      (4,531,029)    1,379,523

   Provision for income taxes              168,752         72,690         197,452       185,675
                                       ==============  =============  ============  ============
   Net (loss)/ income                  $(1,608,038)    $  660,257     $(4,728,481)  $ 1,193,848
                                       ==============  =============  ============  ============

   Net (loss)/ income per share -       
    basic                              $     (0.18)    $     0.11     $     (0.56)  $      0.20
   Weighted average shares outstanding   8,776,977      6,133,948       8,402,610     5,960,831

   Net (loss)/ income per share -       
    diluted                            $     (0.18)    $     0.10     $     (0.56)  $      0.18
   Weighted average shares outstanding   8,776,977      6,870,321       8,402,610     6,529,955

</TABLE>

                         See accompanying notes to condensed consolidated
financial statements.




<PAGE>


                     THINK New Ideas, Inc. and Subsidiaries
            Condensed Consolidated Statement of Shareholders' Equity
                                   (UNAUDITED)


<TABLE>

                                                                                           Accumulated
                                            Common Stock        Additional                    Other
                                       ---------------------     Paid-In     Accumulated  Comprehensive
                                          Shares     Amount      Capital       Deficit        Income        Total
                                       ------------------------------------------------------------------------------

<S>                                      <C>         <C>         <C>          <C>           <C>            <C> 
Balance at June 30, 1998                8,433,656   $    843    $67,731,946  $(35,229,377) $       -      $32,503,412
                                                                                                          -----------
   Comprehensive income
    Net (loss)                                  -          -              -    (4,728,481)         -       (4,728,481)
   Foreign currency translation
    adjustments                                                                               (7,349)          (7,349)
                                                                                                          -----------
   Comprehensive income                                                                                    (4,735,830)
   Stock Compensation Expense                   -          -        180,400             -          -          180,400
   Issuance of Common Stock on
    exercise of stock options             250,750         25      1,452,375             -          -        1,452,400
   Issuance of Common Stock in
    connection with acquisition           477,002         48      3,499,952             -          -        3,500,000
   Common Stock issued, net of
    issuance costs                        871,142         87      5,939,913             -          -        5,940,000
                                       ==============================================================================
Balance at March 31,1999               10,032,550   $  1,003    $78,804,586  $(39,957,858) $  (7,349)     $38,840,382
                                       ==============================================================================
</TABLE>



                         See accompanying notes to condensed consolidated
financial statements.

<PAGE>


9

                     THINK NEW IDEAS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>

                                                         NINE MONTHS ENDED
                                                             MARCH 31,
                                                  ---------------------------------
                                                       1999             1998
                                                  ---------------  ----------------
CASH FLOW FROM OPERATING ACTIVITIES:
<S>                                               <C>              <C>         
Net (loss)/ income                              $  (4,728,481)     $  1,193,848
Adjustments to reconcile net (loss)/ income to
 net cash (used in) provided by
 operating activities:
   Depreciation and amortization                    1,480,150           655,670
   Amortization of intangibles and deferred
    financing costs                                 1,657,975         1,006,017
   Stock compensation expense                         180,400                 -
   Changes in assets and liabilities: 
      Accounts receivable, net                     (2,563,531)       (5,007,658)
      Unbilled receivables                            960,645           197,434
      Accounts payable and accrued expenses        (6,257,923)          854,368
      Accrued restructuring                          (307,482)                -
      Media payable                                 6,606,697         7,230,837
      Other assets and liabilities                   (975,314)       (2,836,827)
                                                  ---------------  ----------------
Net cash (used  in) provided by operating  
 activities                                        (3,946,864)        3,293,689
                                                  ---------------  ----------------

CASH FLOW FROM INVESTING ACTIVITIES:                                
Payment for acquisition, net of cash acquired          44,910          (743,388)
Purchases of marketable securities                          -        (1,123,902)
Sales of marketable securities                              -         1,482,394
Purchases of property and equipment                (1,009,526)       (1,975,766)
Other                                                (579,263)         (268,000)
                                                  ---------------  ----------------
                                                  ---------------  ----------------
Net cash used in investing activities              (1,543,879)       (2,628,662)
                                                  ---------------  ----------------

CASH FLOWS FROM FINANCING ACTIVITIES:                               
Repayment of promissory notes                               -          (436,732)
Issuance of common stock                            7,392,400           485,480
Net borrowings on short term debt                     752,280                 -
Principal payments on capital leases                 (423,770)          (47,862)
Due to related party                                 (561,299)          500,000
                                                  ---------------  ----------------
Net cash provided by financing activities           7,159,611           500,886
                                                  ---------------  ----------------

Net increase in cash and cash equivalents           1,668,868         1,165,913
Cash and cash equivalents, beginning of period      7,653,576         3,451,347
                                                  ===============  ================
Cash and cash equivalents, end of period          $ 9,322,444      $  4,617,260
                                                  ===============  ================

Supplemental cash flow information:                                 
   Cash paid during the period                                      
    Income taxes                                  $   193,696      $    192,880
    Interest                                           31,654            77,022

Non-cash investing and financing activities:                        
   Additions to capital lease obligations              67,816                 -
   Receipt of equity  securities  for  payment of     
    accounts receivable                               754,200                 -
   Equipment recorded in connection with final
    purchase price allocation of Interweb             133,333                 -
    
   Fair value of non-cash assets                    4,674,363                 -
   Liabilities assumed                             (1,219,273)                -
   Common Stock issued                             (3,500,000)                -
                                                  ===============
   Net cash acquired                                   44,910                 -
                                                  ===============
</TABLE>

                         See accompanying notes to condensed consolidated
financial statements.



<PAGE>




                     THINK NEW IDEAS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Basis of Presentation

      The accompanying  unaudited condensed  consolidated  financial  statements
should  be  read  in  conjunction  with  the  Notes  to  Consolidated  Financial
Statements  contained  in the  Form  10-KSB  for  THINK  New  Ideas,  Inc.  (the
"Company") for the fiscal year ended June 30, 1998, as filed with the Securities
and Exchange Commission (the "SEC") in September 1998. Certain items included in
these  statements  are  based  on  management's  estimates.  In the  opinion  of
management,  all material  adjustments,  which are of a normal  recurring nature
necessary for a fair  presentation of the results for the interim  period,  have
been  included.  The results for the nine months ended March 31,  1999,  are not
necessarily indicative of the results expected for the year.

Business Acquisition

      In March 1999 the Company entered into a purchase agreement to acquire the
assets  and  operations  of  Envision  Group  ("Envision"),  a  California-based
partnership  that  provides  Internet  marketing and  web-based  solutions.  The
acquisition  was closed on March 10,  1999,  at which time the  Company  made an
initial payment of $3,500,000 by issuing 477,002 shares of the Company's  common
stock (the "Common Stock"). The terms of the purchase agreement provide that the
sellers are  entitled  to an  additional  payment,  due March 1, 2000 and not to
exceed  $5,500,000,  equal to the amount,  if any,  by which 200% of  Envision's
revenues for the year ended December 31, 1999 exceeds $3,500,000. The additional
payment will be made by the issuance of shares of Common Stock, valued using the
average  price per share of Common  Stock for the five  trading  days  preceding
March 1, 2000,  provided,  however,  that the sellers may elect to receive up to
$500,000 of any additional payment in cash.

      The  acquisition  has been  accounted  for as a purchase,  with the assets
recorded  on the  basis  of the  initial  purchase  price of  $3,551,247,  which
includes acquisition costs but excludes any possible future contingent payments.
The initial  purchase price  exceeded the fair value of the net (of  liabilities
assumed)  tangible assets acquired by approximately  $3,738,000,  which has been
recorded as goodwill and is being  amortized  over the  remainder of the 15 year
period.  The results of Envision have been included in the consolidated  results
of operations from February 23, 1999,  representing the effective date specified
in the purchase  agreement (the results of Envision's  operations for the period
February 23, 1999 to March 10, 1999 were not material).

Pro Forma Financial Data

      The following  unaudited pro forma  information  for the nine months ended
March 31,  1999,  assumes the  acquisition  of Envision  had occurred on July 1,
1998.  The unaudited pro forma  information  for the nine months ended March 31,
1998 assumes the Company had completed the  acquisition of Envision,  along with
the  fiscal   year  1998   acquisitions   of  BBG  New  Media,   Inc.   ("BBG"),
Herring/Newman, Inc. ("Herring/Newman"), Interweb, Inc. ("Interweb") and UbiCube
Group,  Inc.  ("UbiCube") as of July 1, 1997. The pro forma information has been
prepared for  informational  purposes only and is not necessarily  indicative of
the results of operations  that would have occurred had the  transactions  taken
place on the basis assumed above.



<PAGE>


                                                MARCH 31,
                                   ------------------------------------
                                         1999                1998
                                   ------------------   ---------------
Revenue                            $  38,696,388        $  40,978,751
Net (loss)/ income                 $  (4,954,026)       $     602,284
Net (loss)/ income per share -
 basic                             $       (0.59)       $        0.10
Weighted average shares
 outstanding - basic                    8,402,610           5,960,831
Net (loss)/ income per share -
diluted                            $        (0.59)      $        0.09
Weighted average shares
 outstanding - diluted                  8,402,610            6,529,955

Securities Purchase Agreement

      In March 1999 the Company  entered  into a Securities  Purchase  Agreement
(the  "Securities   Purchase   Agreement")   whereby  certain   purchasers  (the
"Purchasers") agreed to purchase:  (i) shares of Common Stock; and (ii) warrants
to acquire  shares of Common  Stock,  for an aggregate  purchase  price of up to
$11,000,000.  The Company plans to use the proceeds of the financing for general
working capital purposes, including the funding of its strategic growth plan. On
March 5, 1999 (the "Initial  Closing Date"),  the Company sold to the Purchasers
for  $6,000,000:  (i) 871,142  shares of Common  Stock at $6.8875 per share (the
"Initial Closing Price"), calculated at ninety-five percent (95%) of the closing
bid price on the trading day  immediately  preceding the  effective  date of the
Securities  Purchase  Agreement;  and (ii) warrants (the "Closing  Warrants") to
purchase an additional  174,230  shares (20% of the number of shares sold on the
Initial Closing Date) of Common Stock at an exercise price of $10.33, calculated
at 150% of the Initial Closing Price for a five-year term. Additionally,  at any
time  prior  to the  one-year  anniversary  of the  Initial  Closing  Date,  the
Purchasers  have the right but not the  obligation  to purchase,  for $9.425 per
share  (calculated at 130% of the market price on the Initial  Closing date), up
to 530,504 additional shares (the "Optional  Shares") of Common Stock,  together
with a warrant for 1/5 share for each  Optional  Share  purchased  (a maximum of
106,101 warrants),  exercisable at a per share price equal to 150% of the market
price of the Common  Stock on the date of the  purchase of the related  Optional
Shares.

Related Party Transaction

      The Company used a portion of the proceeds  from the  Securities  Purchase
Agreement to repay the $500,000  principal of the loan with Omnicom Finance Inc.
("Omnicom"),   a  shareholder  of  the  Company.  The  Company  has  no  further
obligations to Omnicom with respect to this loan.

Bank Payable

      The Company's $5,000,000 line of credit with the Bank of New York ("BONY")
expired on March 31, 1999.  During April 1999, BONY agreed to permit the Company
to extend the period of availability on the line of credit to July 31, 1999. The
Company  borrowed  $1,164,000  under  its  line of  credit  and  had  $3,836,000
available for borrowing at March 31, 1999.

Shareholders' Equity

(a) Earnings Per Share

      Statement of Financial  Accounting  Standards  ("SFAS") No. 128, "Earnings
per Share"  requires the  presentation  of basic  earnings per share and diluted
earnings per share. Basic earnings per share is computed as net earnings divided
by the  weighted-average  number of common  shares  outstanding  for the period.
Diluted earnings per share reflects the potential dilution that could occur from
common shares issuable through stock options and other  convertible  securities.
Shares of common stock held in escrow related to the Company's  acquisitions are
not included in the calculation of  weighted-average  shares outstanding for the
periods presented, as the conditions required to release escrow shares for these
acquisitions were not fulfilled at the end of the applicable periods presented.

      A  reconciliation  of   weighted-average   common  shares  outstanding  to
weighted-average common shares outstanding assuming dilution follows:


<PAGE>


                                                 MARCH 31,
                                         ---------------------------
                                            1999           1998
                                         -----------   -------------
Weighted-average common shares
 outstanding                              8,402,610       5,960,831
Incremental common shares issuable                -         569,124
Weighted-average common shares assuming
 dilution                                 8,402,610       6,529,955

      Incremental  common  shares were not included in the  computation  for the
three and nine months ended March 31, 1999 since their inclusion in periods when
the Company reported a net loss would be anti-dilutive.

(b) Stock Compensation Expense

      During the third quarter ended March 31, 1999, the Compensation  Committee
approved the grant of options to two  directors,  appointed in January and March
1999, respectively, each for the purchase of 20,000 shares of Common Stock at an
exercise  price equal to the closing  price of the share of Common  Stock on the
date of  grant.  As  required  by  SFAS  No.123,  "Accounting  for  Stock  Based
Compensation,"  upon the grant of these  non-employee  stock options the Company
recognized  $180,000 in stock compensation  expense,  equal to the fair value of
the options granted based on the Black Scholes option pricing model. The options
vest one year after the date of grant,  are exercisable  over a four year period
and expire five years from the date of grant.


<PAGE>


Comprehensive Income

      The Company adopted SFAS No. 130, "Reporting Comprehensive Income," in the
first fiscal quarter of 1999. SFAS No. 130  establishes  standards for reporting
and displaying  comprehensive income and its components in financial statements.
Comprehensive  income is a more inclusive financial  reporting  methodology that
includes  the  disclosure  of certain  financial  information  that has not been
recognized in the  calculation of net income or loss,  such as foreign  currency
translations  and changes that are recorded  directly to  shareholders'  equity.
Accumulated  other   comprehensive   loss  was  comprised  of  foreign  currency
translation  adjustments  of  $7,349  at March  31,  1999,  as a  result  of the
Company's  operations in the United Kingdom,  which the Company  acquired in the
fourth quarter 1998 through its acquisition of UbiCube.

Reclassifications

      Certain  prior year  amounts  have been  reclassified  to conform with the
presentation adopted in the current period.

Legal Proceedings

      On September 25, 1998, a shareholder of the Company filed a putative class
action suit  against the Company and current and former  officers of the Company
in the United  States  District  Court for the  Southern  District  of New York.
During  October  1998,  six  additional  complaints  were filed against the same
parties making  substantially the same allegations.  These seven suits have been
consolidated  by the Court and the plaintiffs  filed a Consolidated  and Amended
Class Action Complaint on February 10, 1999. This consolidated complaint alleges
that the Company and certain of its current and former  officers  and  directors
disseminated  materially  false and misleading  information  about the Company's
financial  position and results of operations  through certain public statements
and in certain  documents  filed by the Company with the SEC.  The  consolidated
complaint alleges that these statements and documents caused the market price of
the Common Stock to be artificially inflated. The plaintiffs further allege that
they purchased their shares of Common Stock at such artificially inflated prices
and  suffered  damages  as a  result.  The  relief  sought  by the  consolidated
complaint is  unspecified,  but includes  claims for  compensatory  damages with
interest,  punitive damages where  appropriate,  and reasonable costs (including
attorneys'  and  experts'  fees).  The Company has filed a motion to dismiss the
consolidated  complaint on a number of grounds and the  plaintiffs  have opposed
the motion.  The motion is currently  pending before the court and oral argument
has not yet been scheduled. See Part II, Item 1: "Legal Proceedings."


<PAGE>



ITEM 2.     MANAGEMENT'S  DISCUSSION   AND   ANALYSISOF FINANCIAL CONDITION AND 
            RESULTS OF OPERATIONS

Results of Operations 

Revenues

      Consolidated revenues for the three months ended March 31, 1999, increased
seventeen   percent  (17%)  or  $1,857,000  to   $12,827,000  as  compared  with
$10,970,000  for the three  months  ended  March  31,  1998.  The  growth in the
Company's revenues reflects increases in revenues from interactive marketing and
communication services,  offset by lower revenues from traditional marketing and
communication  services.  The decline in revenues from traditional marketing and
communication   services   reflects  the  Company's  shift  to  an  emphasis  on
interactive assignments.

      The Company achieved the growth in interactive services revenues from both
the acquisition of companies engaged in the interactive market, and the addition
of new clients and competencies at its existing  offices.  Interactive  services
revenues increased approximately $3,720,000 for the three months ended March 31,
1999, as compared to the quarter ended March 31, 1998.  Assignments performed by
Interweb,  UbiCube, and Envision (the "Interactive  Acquisitions") accounted for
approximately  $3,481,000 of this increase.  These Interactive Acquisitions were
completed in the fourth  quarter  (for  Interweb and UbiCube) of fiscal 1998 and
the third quarter (for Envision) of fiscal 1999.  Offsetting this increase was a
decrease of $1,429,000 in revenue from traditional marketing and communications,
and a decrease of $434,000  which  represents a loss of revenues  resulting from
the Company's  fourth quarter fiscal 1998 closure of its Atlanta  graphic design
department.

      Consolidated  revenues  for the nine month  period  ended  March 31,  1999
increased thirty-one percent (31%) or $8,575,000 to $36,568,000 as compared with
$27,993,000 for the nine months ended March 31, 1998.  Revenues from interactive
services  increased by  $12,057,000  which increase was comprised of revenues of
$9,119,000  generated  by  the  Interactive  Acquisitions,  and an  increase  in
revenues  of  $2,938,000  from  new  interactive   services  and   competencies.
Offsetting  this  increase  was  a  decrease  of  $1,986,000  in  revenues  from
traditional   marketing  and  communications,   and  a  decrease  of  $1,496,000
reflecting  the loss of revenues  resulting  from the Company's  fourth  quarter
fiscal 1998 closure of its Atlanta graphic design department.

Operating Results

      The operating loss of $1,456,000 for the three months ended March 31,1999,
reflects  a  $2,102,000  change  from an  operating  profit of  $646,000  in the
corresponding prior year period. The decrease in operating results for the three
months ended March 31, 1999 is due to the  $1,857,000  increase in revenue being
more than offset by increases in all components of operating expenses,  totaling
$3,959,000,  for the three months ended March 31, 1999.  The  operating  loss of
$4,571,000  for the nine months  ended  March 31,  1999,  reflects a  $5,762,000
change from an operating  profit of $1,191,000 in the  corresponding  prior year
period.  The decrease in  operating  results for the nine months ended March 31,
1999,  is primarily  due to the  $8,575,000  increase in revenue being more than
offset  by  increases  in  all  components  of  operating   expenses,   totaling
$14,337,000 for the nine month period ended March 31, 1999.

      The increases in the Company's  operating expenses  throughout fiscal 1999
have been the result of the Company's growth strategy,  which included plans for
growth through  acquisitions,  and from the addition of new services to clients.
To achieve  this latter  internal  growth the Company has added  personnel  with
certain  specialized  competencies,  and to  support  both the  acquisition  and
internally   generated  growth,  the  Company  has  added  personnel  in  senior
management,  finance  and  administrative  positions.  As  a  result,  operating
expenses,  relative  to  revenues,  have  been at  levels  above  the  Company's
long-term goals.

      The operating  losses the Company has experienced  throughout  fiscal 1999
have  been  due,  in part,  to these  higher  level of  expenses.  Additionally,
although  the  Company's  revenues  have  increased,  the level of the growth in
revenues has, especially in the most recently completed quarter, been lower than
planned in determining  operating expense budgets. The Company has found that as
it, and its competitors,  seek larger and more complex assignments, the decision
process of prospective  clients has  lengthened.  This has caused revenue growth
from  new  clients  and  competencies  to be  more  sporadic,  and  slower  than
management initially expected.  As a result,  projecting short-term revenues and
adjusting operating expenses accordingly has been more difficult, leading to the
operating losses.

      The Company now plans to shift its focus to internal  growth and  improved
matching of revenue and expense levels. Personnel additions will be slowed until
revenues  from  new  clients  and  competencies   increase,  and  net  personnel
reductions will be undertaken if such revenue levels are not achieved. While the
Company  may, but not  necessarily  will,  examine  selected  highly  attractive
acquisitions,  in general acquisition  activities will be discontinued until the
Company has completed the process of aligning its current  revenues and expenses
to produce operating profits.

      Salaries and related  expenses  consist  primarily of wages and associated
payroll costs and benefits for all  employees,  including such costs for finance
and   administrative   personnel.   Salaries  and  related  expenses   increased
fifty-eight percent (58%) or $2,653,000 in the three months ended March 31, 1999
to $7,215,000  from  $4,562,000  for the  corresponding  prior year period.  The
Interactive  Acquisitions and the acquisition of  Herring/Newman  (a provider of
traditional marketing and communication services) in the third quarter of fiscal
1998 (collectively the "Acquisitions") accounted for approximately $2,313,000 of
the overall  increase in salaries  and related  costs.  The  remaining  $340,000
increase  includes  the effect of savings of  $182,000  from the fourth  quarter
fiscal 1998 closure of the Atlanta  graphic  design  department.  The  increase,
excluding  this  saving of $522,000  was due to the  addition  of  personnel  in
finance and administration, marketing, and production. Additionally, bonuses and
awards were paid to certain employees during the quarter ended March 31, 1999.

      Salaries  and related  expenses  for the nine months ended March 31, 1999,
increased   seventy-four   percent  (74%)  or  $8,711,000  to  $20,424,000  from
$11,713,000 for the nine months ended March 31, 1998. The Acquisitions accounted
for approximately  $7,519,000 of the overall increase. The remaining increase of
$1,192,000  includes  $487,000  of  savings  resulting  from the  closure of the
Atlanta graphic design department. The increase in salaries and related expenses
for the nine months  ended March 31, 1999  reflects  the addition of finance and
administrative,  marketing and production  discussed above, and additions during
the first quarter of fiscal 1999 to executive  management,  consistent  with the
growth strategy discussed above.

      Selling,   general  and  administrative   expenses  consist  of  marketing
expenses,  technology  costs  (hardware and software  purchases and leasing) and
telecommunications   costs   for   Internet   access.   Selling,   general   and
administrative  expenses  also include  corporate  expenses  such as  insurance,
accounting  and legal fees,  and management  information  systems.  In addition,
selling,  general and  administrative  expenses  include direct expenses such as
contract  labor,  travel  and  production  expenses  associated  with  providing
services to clients.  Selling,  general and  administrative  expenses  increased
fourteen  percent  (14%) or $730,000 to  $5,786,000  for the three  months ended
March 31, 1999 compared with $5,056,000 for the corresponding  prior year period
ended  March  31,  1998.   The   Acquisitions   caused   selling,   general  and
administrative expenses to increase by $1,745,000. That increase was offset by a
net decrease of  $1,015,000 in the expenses of the  Company's  other  operations
compared to the prior period, reflecting a decrease of $190,000 from the closure
of the Atlanta  graphic design  department,  and a net decrease of $825,000 from
the decline in traditional marketing and communication assignments.

      Selling,  general and  administrative  expenses  increased  thirty percent
(30%) or $3,968,000 to  $17,396,000  for the nine months ended March 31, 1999 as
compared with  $13,428,000 for the  corresponding  prior year period ended March
31, 1998. The Acquisitions caused selling,  general and administrative  expenses
to  increase by  $4,549,000.  This  increase  was  combined  with an increase of
$184,000 in the expenses of the Company's other operations, offset by a decrease
of $765,000 from the closure of the Atlanta graphic design department.

      Also included in operating expenses at March 31, 1999 is $180,000 of stock
compensation expense related to Common Stock options granted to Directors of the
Company. This amount was valued using the Black Scholes option pricing model and
is consistent with the application of SFAS No. 123,  "Accounting for Stock Based
Compensation."

      Depreciation and amortization for the three and nine months ended March 31
1999  increased   $395,000  and   $1,476,000  to  $1,102,000   and   $3,138,000,
respectively,  as compared with the three and nine month periods ended March 31,
1998.  These  increases  primarily  relate to the  increase in  amortization  of
goodwill related to the Acquisitions.



<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

      Net cash used in operating  activities of  $3,947,000  for the nine months
ended March 31, 1999  reflects the net loss of  $4,728,000,  reduced by non-cash
charges for depreciation  and amortization of $3,138,000 and stock  compensation
expense of $180,000,  and the  absorption  of cash of  $2,537,000  by changes in
working  capital  assets and  liabilities.  The  significant  changes in working
capital,  which  absorbed  cash,  were an  increase in  accounts  receivable  of
$2,564,000  and  a  decrease  in  accounts   payable  and  accrued  expenses  of
$6,258,000.  Cash provided from an increase in media  payables and a decrease in
unbilled receivables of $6,607,000 and $961,000, respectively,  partially offset
the cash  absorbed by those  changes.  The increases in media  payables,  and in
accounts  receivable  because  such  balance  includes  the  rebilling  of media
placement  costs to clients,  is consistent  with the seasonal  nature of client
advertising  expenditures  (generally  higher  in the  fall  and  winter  months
preceding  March 31,  than in the spring  months  preceding  June 30).  Unbilled
receivables  decreased  as a  result  of the  timing  and  execution  of  client
projects.  Accrued  restructuring costs represent the charges recorded in fiscal
1998 related to the Company's  disposition  of its  traditional  graphic  design
departments.  The  reduction of the accrued  restructuring  charge  reflects the
payment  of certain  severance  and other  costs  included  in the  fiscal  1998
accrual, and the adjustment of $167,000 reflecting the cancellation of equipment
and facility leases.  The Company financed the negative  operating cash flow for
the nine months ended March 31, 1999 through the use of cash on hand at June 30,
1998, amounts drawn under the line of credit with BONY and with a portion of the
net proceeds of $5,940,000 received from the Securities Purchase Agreement

      Net cash provided by operating  activities for the nine months ended March
31, 1998 of $3,294,000  reflects net income of  $1,194,000  adjusted by non-cash
charges of $1,662,000  for  depreciation  and  amortization,  combined with cash
provided  from  increases in media  payables  and  accounts  payable and accrued
expenses of  $7,231,000  and  $854,000,  respectively,  offset by an increase in
accounts  receivable of $5,008,000.  The increase in media payables and accounts
receivable  reflects  increases in the level of media placement costs being paid
by the  Company  on behalf  of and then  rebilled  to  clients,  which  increase
resulted from the May 1997 acquisition of Fathom  Advertising.  Accounts payable
and accrued expenses increased primarily due to the timing of vendor payments.

     Net  cash used in investing  activities  totaled  $1,544,000  for  the nine
months  ended  March 31, 1999 as compared  with  $2,629,000  for the nine months
ended March 31, 1998. Net cash used in investing  activities for the nine months
ended March 31, 1999  includes  the net cash  acquired  in  connection  with the
acquisition  of Envision of $45,000,  additions  to property  and  equipment  of
$1,010,000  combined  with  additions  to other  assets,  including  capitalized
software  development costs, of $148,000.  Net cash used in investing activities
for the nine months  ended  March 31,  1998  includes  capital  expenditures  of
$1,976,000,  net cash paid in  connection  with the merger with BBG of $744,000,
additions  to software  development  costs of  $268,000,  offset by net sales of
marketable equity securities of $359,000.

      Net cash  provided by financing  activities  was  $7,160,000  for the nine
months ended March 31, 1999 as compared  with $501,000 for the nine months ended
March 31, 1998. Cash provided by financing  activities for the nine months ended
March 31, 1999  includes  the net  proceeds of  $5,940,000  from the  Securities
Purchase Agreement,  $752,000 in net borrowings on short term debt, and proceeds
of $1,452,000  from the exercise of stock options during the period.  Offsetting
these cash inflows was a payment of $500,000 to Omnicom,  a  shareholder  of the
Company,  in connection with a loan agreement entered into during March 1998 and
principal  payments on capital  leases of  $424,000.  These net  financing  cash
inflows  allowed the Company to finance its negative  operating cash flows,  its
acquisition  and  capital  expenditures,  and  increase  its  cash  reserves  by
$1,669,000 to $9,322,000 as of March 31, 1999. At March 31, 1999 the Company has
net working capital of $9,972,000 and a current ratio of 1.5 to 1.

      Net cash provided by financing  activities for the nine months ended March
31, 1998 is  comprised  of $500,000 in  borrowings  from Omnicom and proceeds of
$485,000  from  exercised  stock  options  during the  period,  offset by,  loan
repayments of $437,000 in connection with the acquisition of BBG and payments on
long-term capital leases of $48,000.

      In addition to the cash and positive  working  capital  positions at March
31,  1999,  the  Company has at March 31, 1999  $3,836,000  of unused  borrowing
capacity  under its $5,000,000  line of credit with BONY.  The unused  borrowing
capacity is subject to a borrowing base  limitation.  The Company  believes that
cash  generated  from its  operations  in fiscal 1999 or  available  through its
existing  borrowing  facilities will be sufficient to fund its  operations,  pay
required debt and capital lease  obligations,  and continue the Company's growth
strategy.  However, unexpected changes in operating or capital market conditions
could require the Company to seek additional external  financing,  and there can
be no assurance that such additional  capital will be available when needed. The
inability  to obtain  such  financing,  if needed,  could  adversely  affect the
Company's ability to achieve its business objectives.

IMPACT OF YEAR 2000

      The Year 2000  ("Y2K")  issue is the  result of  computer  programs  being
written using two digits,  rather than four, to define the applicable  year. Any
of the Company's  computer programs that have date sensitive  software may cause
system  failures or  miscalculations  if data entry of "00" is recognized as the
year 1900 rather than 2000.  The  Company  has  instituted  a plan to assess its
state of readiness for Y2K, to remediate  those  systems that are  non-compliant
and to ensure that material third parties will be Y2K compliant.

State of Readiness

      The Company has assessed all mainframe,  operating and application systems
for Y2K  readiness,  giving  highest  priority to those  information  technology
("IT")  systems  that are  considered  critical to its business  operations.  At
present,  approximately  eighty percent of the IT systems have been  remediated.
The  Company's  primary  focus  is  the  state  of  readiness  of  the  Internet
infrastructure and is working with the Internet Engineering Task Force (of which
the Company is a member),  Cisco  Systems and Worldcom to ensure  mitigation  of
risk with redundant and Y2K compliant  infrastructure.  The Company's assessment
of its systems will be completed  during fiscal 1999.  Extensive  testing of the
remediated systems will be performed  throughout 1999 for implementation  during
the year.

      The Company is presently  compiling  an  inventory of its non-IT  systems,
which include those systems containing  embedded chip technology  commonly found
in buildings and equipment connected with a building's infrastructure.  Once the
inventory  is  complete,  the  systems  will be  prioritized  and  assessed  for
compliance.  Preliminary  investigations  of the embedded chip systems  indicate
that Y2K will not effect  systems such as heating,  ventilation,  and  security.
On-going testing and  implementation of any remediation  required for the non-IT
systems will be performed throughout 1999.

Material Third Parties

      Key vendors and service providers have been identified, and management has
provided  its  vendors  with the tools  needed to perform  their Y2K  compliance
initiatives.  Because the  Company's  computer  systems are state of the art, no
hardware upgrade will be required. In addition,  the Company is working with and
seeking Y2K compliance statements from its key vendors.

Y2K Costs

      The Company is utilizing  both internal and external  resources to address
the Y2K issue.  Internal  resources  reflect the reallocation of IT personnel to
the Y2K  project  from other IT  projects.  In the  opinion of  management,  the
deferral of such other  projects will not have a significant  adverse  affect on
continuing operations.  The Company estimates the total direct cost to remediate
the Y2K  issue to be  immaterial  to the  Company's  results  of  operations  or
financial  condition  because of the current  state of  readiness of most of the
Company's  IT  systems.  All costs  will be  expensed  as  incurred,  unless new
software is purchased that will be capitalized.

Contingency Plan/Risks

      The Company is in the process of  developing  contingency  plans for those
areas that might be affected by Y2K. Although the full consequences are unknown,
the failure of either the  Company's  critical  systems or those of its material
third  parties  to be Y2K  compliant  would  result in the  interruption  of its
business,  which  could  have  a  material  adverse  affect  on the  results  of
operations or financial condition of the Company.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

      Management's Discussion and Analysis of Financial Condition and Results of
Operations contain forward-looking  statements within the meaning of the federal
securities laws. All statements of historical facts,  which address  activities,
events or developments that the Company expects or anticipates will or may occur
in the future,  including such things as expansion,  strategic plans,  growth of
the  Company's  business and  operations,  Y2K related  actions,  and other such
matters are forward-looking statements. The forward-looking statements are based
on many assumptions and factors  including  effects of consumer  preferences and
economic  conditions  worldwide,  which affect the timing and amount of projects
undertaken by the Company's clients and can affect client project  expenditures.
In addition,  forward-looking  statements are based on the cost and availability
of capital for the Company,  and the effect of foreign  currency  exchange rates
and the ability of the Company to implement,  in a timely  manner,  the programs
and actions related to the Y2K issue. Any changes in such assumptions or factors
could produce significantly different results.

                            PART II-OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

      On  September 25, 1998,  Michael R. Farrell, a shareholder of the Company,
filed a putative  class action suit,  styled  Farrell v. Think New Ideas,  Inc.,
Scott Mednick,  Melvin Epstein and Ronald Bloom,  No. 98 Civ. 6809,  against the
Company,  Ronald  Bloom and Melvin  Epstein  (both  officers of the Company) and
Scott Mednick (a former officer of the Company) (the "Farrell  complaint").  The
suit was filed in the United States District Court for the Southern  District of
New York on behalf of all persons who purchased or otherwise  acquired shares of
Common Stock in the class period from November 14, 1997,  through  September 21,
1998.

      On  various dates in October,  1998, six additional  putative class action
suits were filed in the same court  against  the same  parties by six  different
individuals,  each  purporting  to represent a class of  purchasers of Think New
Ideas, Inc., common stock. These subsequent suits claimed  substantially similar
class periods (one alleged a class period  starting on November 5, 1997,  rather
than  November  14,  1997) and made  similar  allegations  as those  made in the
Farrell  complaint.  All seven of these lawsuits were ultimately  transferred to
Judge  Sidney H.  Stein of the United  States  District  Court for the  Southern
District of New York and  consolidated  by order of the Court dated December 15,
1998,  into one  action  styled  In Re:  Think  New  Ideas,  Inc.,  Consolidated
Securities Litigation, No. 98 Civ. 6809 (SHS).

      Pursuant to an order of the Court, the plaintiffs filed a Consolidated and
Amended  Class  Action  Complaint  on  February  10,  1999  (the   "consolidated
complaint").  The consolidated  complaint supersedes all prior complaints in all
of the cases and shall  serve as the  operative  complaint  in the  consolidated
class action. The consolidated  complaint names fourteen  individual  plaintiffs
and purports to be filed on behalf of a class of individuals who purchased Think
New Ideas, Inc., common stock from November 5, 1997, through September 21, 1998.
The  consolidated  complaint  makes  substantially  similar  allegations  as the
Farrell  complaint.  The  consolidated  complaint  alleges  that the Company and
certain of its current and former officers and directors disseminated materially
false and  misleading  information  about the Company's  financial  position and
results of operations through certain public statements and in certain documents
filed by the company with the SEC. The consolidated complaint alleges that these
statements and documents  caused the market price of the Company's  common stock
to be artificially  inflated.  The plaintiffs further allege that they purchased
shares of common stock at such artificially inflated prices and suffered damages
as a result. The relief sought in the consolidated complaint is unspecified, but
includes a plea for  compensatory  damages and interest,  punitive damages where
appropriate, reasonable costs and expenses associated with the action (including
attorneys' fees and experts' fees) and such other relief as the court deems just
and proper.

      Management  believes  that the  Company  has  meritorious  defenses to the
consolidated  complaint  and intends to contest it  vigorously.  The Company has
filed a motion to dismiss the consolidated  complaint on a number of grounds and
the plaintiffs have opposed the motion.  The motion is currently  pending before
the court and oral argument has not yet been scheduled. Although there can be no
assurance as to the outcome of these matters,  unfavorable resolution could have
a  material  adverse  effect  on the  results  of  operations  and/or  financial
condition of the Company in the future.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

      There have been no changes in the securities of the Company required to be
disclosed pursuant to this item.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

      There have been no material  defaults with respect to any  indebtedness of
the Company required to be disclosed pursuant to this item.

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

      The Company  held its annual  meeting of  stockholders  on January 7, 1999
(the  "Annual  Meeting").  Three  proposals  were  submitted  to a  vote  of the
stockholders  at the Annual  Meeting:  (i) to elect seven (7) directors to serve
for a period of one year or until their  successors  have been duly  elected and
qualified;  (ii) to approve and ratify the adoption of the THINK New Ideas, Inc.
Amended and Restated 1998 Stock Option Plan,  which provides for the issuance of
Qualified  Incentive  Stock Options and  Non-Qualified  Stock Options (the "1998
Stock Option Plan");  and (iii) to ratify the selection of Ernst & Young, LLP as
independent  accountants  for the  Company.  At the Annual  Meeting  each of the
following  persons  were elected to serve as directors of the Company for a term
of one (1) year: Ronald Bloom, Adam Curry, Barry Wagner,  Larry Kopald,  Richard
Char,  Scott Metcalf and Howard Tullman.  Ronald Bloom received  6,448,328 votes
cast in favor of election,  with 157,254  shares  against.  Adam Curry  received
5,884,448 votes cast in favor of election,  with 721,134 shares  against.  Barry
Wagner received  6,576,598  votes cast in favor of election,  with 28,984 shares
against.  Larry Kopald received 6,050,568 votes cast in favor of election,  with
555,014 shares against.  Richard Char received  6,576,633 votes cast in favor of
election,  with 28,949 shares against.  Scott Metcalf  received  6,569,831 votes
cast in favor of election,  with 35,751 shares against.  Howard Tullman received
6,576,198  votes cast in favor of  election,  with 29,384  shares  against.  The
stockholders  approved the adoption of the 1998 Stock Option Plan with 3,269,320
votes  cast in  favor of the  proposal,  107,367  votes  against,  52,217  votes
abstaining  and  3,176,768  votes  not  voted.  The  stockholders  approved  the
selection of Ernst & Young, LLP as independent  accountants for the Company with
6,583,227  votes cast in favor of the  proposal,  with 9,361  votes  against and
12,994 votes abstaining. No other matters were submitted to the stockholders for
a vote.

ITEM 5.  OTHER INFORMATION AND SUBSEQUENT EVENTS

      There is no other  information or subsequent events to report at March 31,
1999.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)   EXHIBITS.

Exhibit 27, Financial Data Schedule.

(b) Reports on Form 8-K.

      The Company filed a   Current  Report on   Form 8-K dated March 12, 1999, 
relating to a  Securities Purchase   Agreement where the Company sold shares of 
Common Stock and Warrants to acquire shares of Common Stock.

      The Company filed a   Current   Report on  Form 8-K dated March 29, 1999, 
relating to the acquisition of Envision on February 23, 1999.



<PAGE>


                                   SIGNATURES

      Pursuant  to  requirements  of the  Securities  Exchange  Act of 1934,  as
amended,  the Issuer has duly  caused  this report to be signed on its behalf by
the undersigned hereunto duly authorized.

May 13, 1999                        THINK New Ideas, Inc.

                                    By: /s/ Melvin Epstein
                                        ----------------------------------------
                                         Melvin Epstein, Chief Financial Officer



<PAGE>