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

                                   FORM 10-QSB
              (X) QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1997
                     ---------------------------------------
      ( ) Transition Report under Section 13 or 15(d) of the Exchange Act.

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

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 February 9, 1998
-----                                           --------------------------------
Common Stock, par value $.0001 per share                      6,950,137 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.................................................3
Item 1. Financial Statements...................................................3
   Condensed Consolidated Balance Sheet as of December 31, 1997................3
   Condensed Consolidated Statements of Operations for the Three 
   and Six Month Periods ended December 31 1997 and 1996.......................4
   Condensed Consolidated Statements of Cash Flows for the Six Month 
   Periods ended December 31, 1997 and 1996....................................5
   Notes to Condensed Consolidated Financial Statements........................6
Item 2.  Management's Discussion and Analysis or Plan of Operation.............9
Part II - Other Information...................................................19
   Item 1.  Legal Proceedings.................................................19
   Item 2.  Changes in Securities.............................................19
   Item 3.  Defaults Upon Senior Securities...................................19
   Item 4.  Submission of Matters to a Vote of Security Holders...............19
   Item 5.  Other Information and Subsequent Events...........................20
   Item 6.  Exhibits and Reports on Form 8-K..................................20


                                       2
<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

                                                              DECEMBER 31, 1997
                                                             ------------------
                                                           
ASSETS
Current assets:
     Cash and cash equivalents                                   $  5,790,909
     Marketable securities                                            662,233
     Accounts receivable, net of allowance for doubtful
       accounts of $624,154                                        16,527,571
     Unbilled receivables                                           2,519,172
     Prepaid expenses and other current assets                      1,319,507
                                                                 ------------
         Total current assets                                      26,819,392

Property, plant and equipment, net                                  4,277,474
Software development costs                                             86,125
Goodwill, net of accumulated amortization of $1,766,819             4,806,224
Other assets                                                          602,184
                                                                 ------------
         Total assets                                            $ 36,591,399
                                                                 ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:

     Accounts payable and accrued expenses                       $  9,040,053
     Accrued restructuring costs                                      434,632
     Deferred revenue                                                 411,223
     Prebilled media                                                7,523,945
     Income taxes payable                                             154,698
     Due to related party                                           1,502,550
     Current portion of obligations under capital leases              333,588
                                                                 ------------
         Total current liabilities                                 19,400,689

     Obligations under capital leases                                 603,819
     Note payable to related party                                    515,760
     Other long-term liability                                         41,671
                                                                 ------------
         Total liabilities                                         20,561,939
                                                                 ------------
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; 6,945,137 shares issued and outstanding                  695
   Additional paid in capital                                      23,171,652
   Accumulated deficit                                             (7,142,887)
                                                                 ------------
         Total shareholders' equity                                16,029,460
                                                                 ============
         Total liabilities and shareholders' equity              $ 36,591,399
                                                                 ============

     See accompanying notes to condensed consolidated financial statements.



                                       3
<PAGE>



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


                                                   THREE MONTHS ENDED                  SIX MONTHS ENDED
                                                        DECEMBER 31,                      DECEMBER 31,
                                              ----------------------------     ------------------------------     
                                                   1997            1996             1997          1996
                                              -------------   ------------     ------------   ------------
<S>                                           <C>             <C>             <C>             <C>

Revenues                                      $ 10,067,406    $  3,803,633     $ 17,023,886   $8,042,601

Operating expenses:
    Direct salaries and related expenses         4,487,444       1,990,080        7,927,707    3,936,087
    Other direct expenses                        2,567,727       1,318,366        4,133,414    2,315,975
    Selling, general and administrative          
      expenses                                   2,005,716       1,024,110        3,462,039    2,014,709
    Depreciation and amortization                  527,835         314,327          955,430      731,191
                                              ------------    ------------     ------------   ----------  

Operating profit/(loss)                            478,684        (843,250)         545,296     (955,361)

Interest income/(expense) and other, net           102,478          26,802          101,280      (35,568)
                                              ------------    ------------     ------------   ----------  
Profit/(loss) before provision for taxes           581,162        (816,448)         646,576     (990,929)
Provision for income taxes                         108,406         (38,713)         112,985      (11,939)
                                              ------------     -----------     ------------   ----------  
Net (loss) income                              $   472,756     $  (777,735)     $   533,591   $ (978,990)
                                              ============     ===========     ============   ==========  

Net income loss) per share - basic             $      0.07     $    (0.19)     $       0.08   $    (0.29)
Weighted average shares outstanding              6,819,819       4,066,721        6,703,608    3,384,864

Net income per share - diluted                 $      0.06     $    (0.19)     $       0.07   $    (0.29)
Weighted average shares outstanding              7,469,069       4,066,721        7,245,809    3,384,864


     See accompanying notes to condensed consolidated financial statements.

</TABLE>

                                       4
<PAGE>


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

<TABLE>
<CAPTION>

                                                                                      SIX MONTHS ENDED
                                                                                        DECEMBER 31,
                                                                          ------------------------------------------
                                                                               1997                     1996
                                                                          -----------------     --------------------
<S>                                                                      <C>                   <C>

CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss)                                                         $    533,591          $        (978,990)
Adjustments  to  reconcile  net income  (loss) to net cash  
provided  by (used in) operating activities:
    Depreciation  and amortization                                             287,049                     84,337
    Amortization of intangibles and deferred financing costs                   668,381                    646,854
    Deferred income taxes                                                           --                    (12,000)
    Bad debt expense                                                                --                     51,664
    Consulting fees, non-cash                                                   38,000                         --
    Changes in assets and liabilities:
        Accounts receivable                                                 (6,223,750)                (1,337,396)
        Unbilled receivables                                                   (21,783)                  (182,339)
        Accounts payable and accrued expenses                                2,903,098                    325,600
        Deferred revenue                                                      (542,333)                  (309,088)
        Prebilled media                                                      7,523,945                         --
        Other assets and liabilities                                          (994,889)                  (473,261)
                                                                          -----------------     --------------------
Net cash provided by (used in) operating activities                          4,171,309                 (2,184,619)
                                                                          -----------------     --------------------
CASH FLOW FROM INVESTING ACTIVITIES:
Additions to software development costs                                             --                   (367,829)
Payment for BBG New Media, Inc., net of cash acquired                         (743,888)                        --
Purchases of marketable securities                                          (1,123,902)                        --
Sales of marketable securities                                               1,586,784                         --
Purchases of property and equipment                                         (1,039,856)                  (424,456)
                                                                          -----------------     --------------------
Net cash used in investing activities                                       (1,320,862)                  (792,285)
                                                                          -----------------     --------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of promissory notes                                                 (548,404)                (1,880,505)
Proceeds from issuance of common stock                                         122,052                 11,972,851
Proceeds from private placement                                                     --                  4,948,062
Borrowings from operating lines of credit                                           --                    195,295
Due to shareholders                                                                 --                   (500,000)
Principal payments on capital leases                                           (84,533)                        --
                                                                          -----------------     --------------------
Net cash (used in) provided by financing activities                           (510,885)                14,735,703
                                                                          -----------------     --------------------
Net increase in cash and cash equivalents                                    2,339,562                 11,758,799
Cash and cash equivalents, beginning of period                               3,451,347                    429,596
                                                                          =================     ====================
Cash and cash equivalents, end of period                                  $  5,790,909           $     12,188,395
                                                                          =================     ====================

Supplemental Cash Flow Information:
  Cash paid during the period

    Income taxes                                                          $      9,880           $        101,000
    Interest                                                                    40,022                    124,708


Noncash investing and financing activities:
    Issuance of Common Stock to settle long-term liability                     206,250                         --
    Issuance of Common Stock to consultant                                     359,268                         --
    Issuance of Common Stock  related to  acquisition  of 
      BBG New Media, Inc.                                                    3,602,091                        --
    Additions to capital lease obligations                                     465,000                         --

     See accompanying notes to condensed consolidated financial statements.

</TABLE>

                                       5
<PAGE>

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

Note 1 - Financial Statements


         The accompanying  condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information  and the  instructions  to Form 10-QSB and Regulation S-B
(including  Item 310(b)  thereof) and do not include all of the  information and
note  disclosures  required by  generally  accepted  accounting  principles  for
complete  financial  statements.  In the opinion of  management,  such condensed
consolidated  financial  statements include all adjustments,  consisting only of
normal  recurring  adjustments,   necessary  to  present  fairly  the  Company's
financial  position at December 31, 1997 and the results of  operations  for the
three and six month  periods  ended  December 31, 1997 and 1996.  The results of
operations  for the three and six month periods ended  December 31, 1997 may not
be  indicative  of the results  that may be expected  for the fiscal year ending
June 30,  1998 or any  other  period.  These  condensed  consolidated  financial
statements should be read in conjunction with the audited consolidated financial
statements  of the Company and the notes  thereto for the fiscal year ended June
30, 1997 included in the Company's Form 10-KSB. 

         Certain  amounts for the three and six months  ended  December 31, 1996
have been  reclassified  to  conform  to the  presentation  of the three and six
months ended December 31, 1997.

Note 2 - Summary of Significant Accounting Policies

         In 1997, the Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards No. 128, Earnings per Share ("Statement  128").
Statement  128  replaced  the  previously  reported  primary  and fully  diluted
earnings  per share with basic and diluted  earnings per share.  Unlike  primary
earnings per share,  basic earnings per share  excludes any dilutive  effects of
options,  warrants,  and convertible  securities.  Diluted earnings per share is
very similar to the previously  reported fully diluted  earnings per share.  All
earnings  per share  amounts for all  periods  presented  have been  restated to
conform to the Statement 128 requirements. 

Note 3 - Business Acquisitions

         FATHOM ADVERTISING AGENCY, INC.   On May 31, 1997, the Company acquired
certain assets and operations of Fathom Advertising Agency, Inc.  ("Fathom"),  a
provider  of  traditional  full  service  advertising  services,   from  Ketchum
Communications,  Inc.  ("Ketchum"),  a wholly-owned  subsidiary of Omnicom Group
Inc.  ("Omnicom"),  a principal  shareholder  of the  Company,  in exchange  for
120,000 shares of the Company's  common stock (the "Common  Stock").  Fathom had
revenues of approximately $1,800,000 for the year ended December 31, 1996, which
were derived primarily from one customer. The acquisition has been accounted for
using the  purchase  method of  accounting  and,  accordingly,  the  results  of
operations  of  Fathom  have  been  reflected  in  the  consolidated   financial
statements of the Company from the date of  acquisition.  In connection with the
acquisition,  the Company is to return the excess of media  accounts  receivable
purchased  ($3,012,592) over accounts payable assumed ($1,106,080) to Ketchum in
the amount of $1,906,512,  as collected.  The purchase price of $442,500,  which
equals the excess over the carrying values of the net assets acquired,  is being
amortized by the Company over two years.


                                       6
<PAGE>


                     THINK NEW IDEAS, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)


Note 3 - Business Acquisitions (Continued)

        BBG NEW MEDIA, INC.  On November 3, 1997,  the Company  entered  into an
agreement and plan of merger (the "BBG Agreement")  with BBG New Media,  Inc., a
Massachusetts   corporation  ("BBG"),   which  provides  interactive   marketing
services,  in exchange  for: (i) the issuance of 303,334  shares of Common Stock
and $175,000 in cash; and (ii) the subsequent issuance of shares of Common Stock
based upon a percentage  of sales growth of BBG during the period from  November
1, 1998 through October 31, 1999. In connection with the agreement,  the Company
repaid  approximately  $548,000 in  outstanding  debt of BBG  subsequent  to the
closing.  The  acquisition  has been accounted for using the purchase  method of
accounting and, accordingly,  the results of operations of BBG will be reflected
in the Company's financial statements from the effective date of the merger. The
initial  portion of the purchase  price of $4,539,000  has been allocated to the
assets  purchased and the  liabilities  assumed based upon their  estimated fair
values at the date of merger as follows: 

       Value of shares issued                                       $ 3,602,000
       Cash paid                                                        175,000
       Estimated transaction costs                                      762,000
                                                                  -------------
                                                                      4,539,000

       BBG stockholders' equity - November 3, 1997                     (567,000)
                                                                  --------------
       Excess of cost over fair value                               $ 3,972,000
                                                                   =============

The Company is  amortizing  the excess of cost over fair value or goodwill  over
thirty  (30) years.  Additional  consideration  is payable if BBG meets  certain
sales targets, as discussed above, which would result in an increased balance of
goodwill and amortization related thereto.

Note 4 - Restructuring Costs

        In June 1997, the Company  implemented a plan to close the operations of
two of its subsidiaries,  NetCube Corporation ("NetCube") and Internet One, Inc.
("Internet  One") and to dispose of related assets.  The Company's  decision was
based upon the  continued  decline in the operating  performance  of NetCube and
Internet One. The cost of this plan was  accounted  for in  accordance  with the
guidance  set  forth  in  Emerging  Issues  Task  Force  Issue  94-3  "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity  (Including Certain Costs Incurred in a Restructuring)"  ("EITF 94-3").
The pretax costs of  approximately  $1,732,000  which were incurred as a part of
this plan represent employee  termination and severance costs, the write-down of
capitalized  software  costs and other  related  costs that were  incurred  as a
direct result of the plan. The components of the restructuring  costs accrued as
of June 30, 1997,  amounts  paid for the six months ended  December 31, 1997 and
remaining accrual as of December 31, 1997 are as follows:


                                       7
<PAGE>


                     THINK NEW IDEAS, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)


<TABLE>
<CAPTION>

Note 4 - Restructuring Costs (Continued)

                                                            June 30,                   December 31,
                                                              1997          Paid           1997
                                                           -----------   -----------   ------------
<S>                                                        <C>           <C>           <C>

        Write-down of capitalized software costs           $   597,000   $   597,000   $        --
        Severance benefits and employee termination costs      681,000       533,000       148,000
        Disposal of fixed assets and other assets              369,000            --       369,000
        Other                                                   85,000       167,000       (82,000)
                                                           -----------   -----------   -----------
                                                           $ 1,732,000   $ 1,297,000   $   435,000
                                                           ===========   ===========   ===========

</TABLE>

      Aggregate  revenues and operating  losses for NetCube and Internet One for
fiscal 1997 and 1996 were as follows:

                                        1997                      1996
                                     ------------------    ---------------------

         Revenues                      $1,253,000              $2,740,000
         Operating loss                (1,746,000)             (1,073,000)

Note 5- Consulting Agreement

         On June 30, 1997,  the Company  entered into a one (1) year  consulting
agreement  with an  individual  whereby  the  Company  agreed  to issue up to an
aggregate of 200,000 shares of Common Stock and options to acquire up to 150,000
shares of Common Stock.  The agreement was  terminated by the Company during the
quarter ended  December 31, 1997.  Pursuant to the terms of the  Agreement,  the
Company  issued an  aggregate  of 75,000  shares  of Common  Stock and  options,
exercisable  through June 30, 1998, to purchase 75,000 shares of Common Stock at
exercise  prices  based on the market value of the Common Stock and ranging from
$5.30 to $11.56 per share. The fair value of the shares of Common Stock were and
the options  will be charged to  operations  on the date of issuance  and grant,
respectively.

         In connection  with the  termination of the Agreement in November 1997,
the Company and the Consultant have agreed,  in lieu of issuing shares of Common
Stock and  options to purchase  shares of Common  Stock,  the  Company  will pay
finders  fees to the  Consultant  in the future on a  transaction-by-transaction
basis.  The  Company  has paid  $700,000  pursuant  to this  agreement.  


                                       8

<PAGE>



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 

         The following  discussion  and analysis of the  Company's  consolidated
financial condition and results of operations should be read in conjunction with
the Condensed  Consolidated  Financial  Statements  and Notes thereto  appearing
elsewhere  herein.  This document may contain  forward-looking  statements  that
involve  risks and  uncertainties.  The  Company's  actual  results  may  differ
significantly  from the results  discussed  in the forward  looking  statements.
Factors  that might  cause such a  difference  include,  but are not limited to,
those discussed in the section entitled  "Business--Factors  Affecting Operating
Results and Market Price of Stock" included in the Company's Form 10-KSB for the
year ended June 30, 1997 filed with the  Securities  and Exchange  Commission in
October 1997.

Corporate Background

         The Company was  incorporated  in the State of Delaware in January 1996
for the purpose of creating a corporate  structure to facilitate the combination
and integration of specialized businesses operating in the areas of advertising,
marketing, Internet and Intranet services and data management.

         On June 30, 1996, the Company  completed the  acquisition of all of the
outstanding  shares of  capital  stock of Scott A.  Mednick &  Associates,  Inc.
("Mednick"),  On  Ramp,  Inc.  ("On  Ramp"),  Internet  One,  NetCube,  Creative
Resources Agency, Inc.  ("Creative  Resources") and The S.D. Goodman Group, Inc.
("Goodman") in exchange for an aggregate of 723,167 shares of Common Stock.  The
Company's  acquisition of On Ramp was accounted for using the purchase method of
accounting. Each of the Company's other acquisitions was accounted for using the
pooling of interests method. Accordingly,  the results of operations for each of
the  Company's  subsidiaries  (other  than On Ramp)  have been  included  in the
Company's financial statements since the earlier of July 1, 1993 or each of such
subsidiary's inception.  The results of operations of On Ramp have been included
in the Company's financial statements since July 1, 1996.

         On May 31, 1997, the Company  acquired certain assets and operations of
Fathom from Ketchum, a wholly-owned  subsidiary of Omnicom,  in exchange for the
issuance  of an  aggregate  of 120,000  shares of Common  Stock.  The  Company's
acquisition  of the assets and operations of Fathom has been accounted for using
the purchase  method of  accounting.  Accordingly,  the results of operations of
Fathom have been included in the Company's  financial  statements  since June 1,
1997.  Fathom's single largest client accounts for virtually all of its revenue.
See Note 3 to the Condensed Consolidated Financial Statements included elsewhere
herein.  Larry Kopald, the individual who was responsible for the this principal
client account while at Fathom, joined the Company as an officer and employee of
the Company in connection with its acquisition of Fathom.

                                       9

<PAGE>

         In  June  1997,  the  Company  commenced  implementation  of a plan  to
restructure the operations of two of its subsidiaries,  Internet One in Boulder,
Colorado  and  NetCube  in  Edgewater,  New  Jersey.  Internet  One had become a
production facility for high level technology client services,  but with limited
sales  and  marketing  efforts.  The  Company  determined  it could  effectively
consolidate the client  relationships  of its Boulder,  Colorado office into its
New York and Los Angeles  facilities  with minimal  impact,  and therefore,  the
facility was closed and all of the  employees  of Internet One were  terminated.
NetCube had developed  proprietary  data mining and analysis  software for large
data base and data  warehousing  applications.  The Company  determined that the
marketing of  "shrink-wrapped"  software was not its core  competency  and would
both confuse the  Company's  focus and involve too great an  investment  for the
anticipated  return.  The Company has hired several key developers  from NetCube
for its New York interactive  group,  ceasing the ongoing marketing and helpdesk
development at its New Jersey facility.  This has resulted in the termination of
the remaining employees of NetCube. The Company is currently discussing the sale
of the remaining  assets of NetCube,  primarily the software code,  with several
different  companies.  Total  estimated  costs  associated with the above in the
amount of  approximately  $1,732,000  were included in the  Company's  financial
statements  for the fiscal year ended June 30,  1997.  As of December  31, 1997,
approximately  $1,297,000  was paid  under this  arrangement.  See Note 4 to the
Condensed Consolidated Financial Statements included elsewhere herein.

         On  November  3, 1997,  the  Company  entered  into the BBG  Agreement,
pursuant to which the Company  acquired BBG in exchange for: (i) the issuance of
303,334  shares of Common  Stock and $175,000 in cash;  and (ii) the  subsequent
issuance of shares of Common  Stock based upon a  percentage  of sales growth of
BBG during the period  from  November 1, 1998  through  October  31,  1999.  The
acquisition  has been accounted for using the purchase method of accounting and,
accordingly,  the  results  of  operations  of BBG  has  been  reflected  in the
Company's financial statements from the effective date of the merger. See Note 3
to the Condensed Consolidated Financial Statements included elsewhere herein.

Overview of Operations and Revenue

         The Company  generates  revenue  from both  traditional  marketing  and
Internet and  interactive  media  services  including  Website  development  and
hosting,  corporate  internal  communications  solutions,   database  marketing,
corporate  identity and product  branding and packaging,  advertising  and media
placement  services,  and interface solutions that provide high-speed access via
the Internet to off-line databases.  Historically,  revenues from these services
by the Company have been derived on a  project-by-project  basis, which tends to
cause fluctuations in revenues between reporting periods.  Substantial  portions
of those  revenues have been fixed fees for services to be delivered.  While the
Company has recently entered into a number of contracts for ongoing maintenance,
content  updates,   server  hosting  and  software  licensing  and  subscription
services,  which will  create  recurring  revenue  streams for the life of their
respective  contracts  (typically  twelve (12) months),  it is anticipated  that
project  revenue will continue to be a significant  component of total  revenues
and therefore  revenue may continue to fluctuate  significantly  from quarter to
quarter.

         The Company  generally  provides  Website  design and  development  and
traditional marketing services under contracts that vary in duration from two to
four weeks in the case of smaller  projects and up to five months in the case of
larger projects. In connection with Website design and development,  the Company
typically  enters into  twelve-month  arrangements  providing  for  maintenance,
content  updates of  Websites  and  software  licensing  and hosting of a client
Website  on  the  Company's  servers.  Revenues  from  contracted  services  are
generally  recognized  using the percentage of completion  method based upon the
ratio of costs incurred to total estimated  costs of the project.  Revenues from
hosting, maintenance and updates are recognized as the services are provided.

                                       10

<PAGE>


Business Strategy

         Part of the  Company's  overall  business  strategy  is to  continue to
increase the percentage of revenue that is recurring and to continue to increase
the  number  of  services  provided  to a  particular  client.  The  Company  is
implementing   this   strategy  by   increasing   its  over-all   marketing  and
cross-marketing efforts.

         Another part of the Company's  business strategy is to grow through the
acquisition  and  integration  of  synergistically  compatible  businesses.  The
Company  believes  that there  will be a  consolidation  among  technology-based
marketing solution providers and that this consolidation will continue to create
opportunities for the Company to expand through acquisitions and joint ventures.
In addition to its  acquisition  of the assets and  operations of Fathom and its
acquisition  of and  merger  with  BBG,  the  Company  has  continued  to pursue
discussions with several  companies engaged in businesses that are complementary
or supplementary to those of the Company. The Company's  acquisition  strategies
include acquiring  companies that will be integrated into the Company's existing
infrastructure,  enabling the Company to acquire access to additional product or
service  offerings,  experienced  management that can contribute to building the
business  in  a  profitable  manner,  and  potentially,   provide  international
expansion (through the acquisition of companies outside of the United States).

RESULTS OF OPERATIONS

THREE MONTHS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1996

         REVENUES

         Consolidated  revenues  increased to  $10,067,000  for the three months
ended December 31, 1997 from  $3,804,000 for the three months ended December 31,
1996 (165%). The increase is attributed to larger projects for both existing and
new  clients  as well as the  acquisition  of Fathom in May 1997.  Revenues  for
interactive  services  increased  to  $3,936,000  during the three  months ended
December 31, 1997 from  $1,863,000  during the three  months ended  December 31,
1996 (111%).  The increase  results from the inclusion of the  operations of BBG
since its merger with the Company in November  1997.  Revenues  for  traditional
strategic marketing  operations  increased to $6,131,000 during the three months
ended December 31, 1997 from  $1,941,000  during the three months ended December
31, 1996 (216%).  The increase is a result of including the revenues for clients
gained  through the  acquisition  of Fathom,  the garnering of new clients,  and
providing additional services to existing clients.  Traditional services revenue
increased as a  percentage  of total  revenue from 51% in the second  quarter of
fiscal 1997 to 61% in the second  quarter of fiscal 1998 which can be attributed
to an increase in media  advertising  fees from both new and existing clients as
well as the acquisition of Fathom in May 1997. 

         OPERATING EXPENSES

Direct Salaries And Related Expenses

         Direct  salaries and related  expenses  consist  primarily of wages for
regular and temporary  employees,  as well as payroll taxes,  employment  agency
fees and benefits  for regular  employees.  The  Company's  direct  salaries and

                                       11

<PAGE>


related expenses  increased to $4,487,000 during the three months ended December
31, 1997 from $1,990,0000 during the three months ended December 31, 1996 (125%)
principally  resulting  from  the  Company's  hiring  of  additional  marketing,
technology  and creative  employees to meet its higher level of revenues and its
expected growth from existing outstanding project proposals. Direct salaries and
related  expenses as a percentage of revenues  decreased  from 52% in the second
quarter of fiscal 1996 to 45% in the second  quarter of fiscal 1997 which can be
attributed  to the  Company's  more  efficient use of resources and economies of
scale achieved with the increase in revenues and  acquisitions of both Fathom in
May 1997 and BBG in November 1997. 

Other Direct Expenses

         Other direct expenses  include  materials,  contract  freelance  talent
(independent  consultants and contractors),  facilities and equipment  expenses.
Other  direct  expenses  increased to  $2,568,000  during the three months ended
December 31, 1997 from  $1,318,000  during the three  months ended  December 31,
1996 (95%).  The increase was primarily  related to increased  costs  associated
with the  Company's  higher  level  of  revenues.  Other  direct  expenses  as a
percentage of revenues  decreased  from 35% in the second quarter of fiscal 1996
to 26% in the second  quarter of fiscal  1997  which can be  attributed  to more
efficient  use of  resources  and  economies  of scale  achieved  given both the
increase  in  revenues  and  acquisitions  of both Fathom in May 1997 and BBG in
November 1997.

Selling, General And Administrative Expenses

         Selling,   general  and   administrative   expenses  include  corporate
expenses, insurance, personnel costs for finance and administration,  accounting
and legal fees, bad debt expense,  management  information systems expenses, and
employee benefits.  Selling,  general and  administrative  expenses increased to
$2,006,000  during the three  months  ended  December  31, 1997 from  $1,024,000
during the three months ended  December 31, fiscal 1996 (96%),  primarily due to
the formation and continued expansion of the Company's corporate  infrastructure
for both internal growth and growth through acquisition.

Depreciation and Amortization

         Depreciation  and  amortization  increased to $528,000 during the three
months  ended  December  31, 1997 from  $314,000  during the three  months ended
December 31, 1996 (68%)  Approximately  36% of the increase is from amortization
of goodwill and other  intangibles  resulting from the acquisitions of Fathom in
May 1997 and BBG in  November  1997 both of which were  accounted  for using the
purchase  method  of  accounting.  The  remaining  percentage  increase  is from
increased  depreciation which resulted from capital  expenditures made to expand
the Company's  infrastructure.  Depreciation and amortization includes $300,000,
$55,000 and  $22,000 for the  amortization  of  goodwill  and other  intangibles
relating  to the  purchase  method  of  accounting  required  for the  Company's
acquisitions  of On Ramp in June  1996,  Fathom in May 1997 and BBG in  November
1997, respectively.

                                       12

<PAGE>



         INTEREST INCOME/EXPENSE AND OTHER, NET

         The $102,000 in net other income  reflected  for the three months ended
December  31,  1997  compares  favorably  to the net  other  income  of  $27,000
reflected  for the three months ended  December  31, 1996  primarily  because of
interest  income earned from  investment of the cash proceeds from the Company's
initial public offering in November 1996 (the "Initial Public Offering").

         PRE-TAX PROFIT/LOSS

         The Company had a pre-tax  profit of $581,000 in the three months ended
December  31, 1997  compared to a pre-tax  loss of $816,000 in the three  months
ended  December 31, 1996.  This  represents  the  Company's  second  consecutive
profitable  fiscal  quarter since the Initial  Public  Offering and results from
both an increase in revenues as well as a reduction in  operating  expenses as a
percentage of revenues.

         INCOME TAXES

         The Company incurred income tax expense of $108,000, primarily relating
to state and local taxes,  in the three months ended  December 31, 1997 compared
to an income tax credit of $39,000 in the three months ended  December 31, 1996.
The increase  results from the Company's  profitability in the second quarter of
fiscal 1998 versus its loss in the second  quarter of fiscal 1997. Net operating
loss  carryforwards  have been applied  against  pre-tax profits for federal tax
purposes. 

SIX MONTHS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1996

         REVENUES

         Consolidated revenues increased to $17,024,000 for the six months ended
December 31, 1997 from  $8,043,000  for the six months  ended  December 31, 1996
(112%).  The increase is attributed to larger projects for both existing and new
clients  as  well  as the  acquisition  of  Fathom  in May  1997.  Revenues  for
interactive  services  increased  to  $7,000,000  during  the six  months  ended
December 31, 1997 from $4,318,000  during the six months ended December 31, 1996
(62%).The increase results from the inclusion of the operations of BBG since its
merger with the Company in November  1997.  Revenues for  traditional  strategic
marketing  operations  increased  to  $10,024,000  during the six  months  ended
December 31, 1997 from $3,725,000  during the six months ended December 31, 1996
(169%).  The increase is a result of including  the revenues for clients  gained
through the acquisition of Fathom,  the garnering of new clients,  and providing
additional services to existing clients.  Traditional services revenue increased
as a percentage  of total  revenue from 46% in fiscal 1997 to 59% in fiscal 1998
which can be attributed to an increase in media  advertising  fees from both new
and existing clients as well as the acquisition of Fathom in May 1997.


                                       13

  
<PAGE>


       OPERATING EXPENSES

Direct Salaries And Related Expenses

         Direct  salaries and related  expenses  consist  primarily of wages for
regular and temporary  employees,  as well as payroll taxes,  employment  agency
fees and benefits  for regular  employees.  The  Company's  direct  salaries and
related  expenses  increased to $7,928,000  during the six months ended December
31, 1997 from  $3,936,0000  during the six months ended December 31, 1996 (101%)
principally  resulting  from  the  Company's  hiring  of  additional  marketing,
technology  and creative  employees to meet its higher level of revenues and its
expected growth from existing outstanding project proposals. Direct salaries and
related  expenses as a percentage of revenues  decreased  from 49% in the second
quarter of fiscal 1996 to 47% in the second  quarter of fiscal 1997 which can be
attributed  to the  Company's  more  efficient use of resources and economies of
scale achieved with the increase in revenues and  acquisitions of both Fathom in
May 1997 and BBG in November 1997. 

Other Direct Expenses

         Other direct expenses  include  materials,  contract  freelance  talent
(independent  consultants and contractors),  facilities and equipment  expenses.
Other  direct  expenses  increased  to  $4,133,000  during the six months  ended
December 31, 1997 from $2,316,000  during the six months ended December 31, 1996
(79%). The increase was primarily related to increased costs associated with the
Company's  higher level of revenues.  Other direct  expenses as a percentage  of
revenues  decreased  from 29% in the second quarter of fiscal 1996 to 24% in the
second  quarter of fiscal 1997 which can be attributed to more  efficient use of
resources  and economies of scale  achieved  given both the increase in revenues
and acquisitions of both Fathom in May 1997 and BBG in November 1997.

Selling, General And Administrative Expenses

         Selling,   general  and   administrative   expenses  include  corporate
expenses, insurance, personnel costs for finance and administration,  accounting
and legal fees, bad debt expense,  management  information systems expenses, and
employee benefits.  Selling,  general and  administrative  expenses increased to
$3,462,000  during the six months ended December 31, 1997 from $2,015,000 during
the six months  ended  December  31,  fiscal  1996 (72%),  primarily  due to the
formation and continued expansion of the Company's corporate  infrastructure for
both internal growth and growth through acquisition. 

Depreciation and Amortization

         Depreciation  and  amortization  increased  to $955,000  during the six
months  ended  December  31,  1997 from  $731,000  during the six  months  ended
December 31, 1996 (31%)  Approximately  36% of the increase is from amortization
of goodwill and other  intangibles  resulting from the acquisitions of Fathom in
May 1997 and BBG in  November  1997 both of which were  accounted  for using the
purchase  method  of  accounting.  The  remaining  percentage  increase  is from
increased  depreciation which resulted from capital  expenditures made to expand
the Company's  infrastructure.  Depreciation and amortization includes $600,000,
$110,000  and $22,000 for the  amortization  of goodwill  and other  intangibles

                                       14

<PAGE>


relating  to the  purchase  method  of  accounting  required  for the  Company's
acquisitions  of On Ramp in June  1996,  Fathom in May 1997 and BBG in  November
1997, respectively.

         INTEREST INCOME/EXPENSE AND OTHER, NET


         The  $101,000 in net other  income  reflected  in the six months  ended
December  31,  1997  compares  favorably  to the net other  expense  of  $36,000
reflected  in the six  months  ended  December  31,  1996  primarily  because of
interest  income earned from  investment of the cash proceeds from the Company's
Initial Public  Offering in November 1996 as well as the elimination of interest
expense  associated with debt  securities  repaid in the first quarter of fiscal
1996.

         PRE-TAX PROFIT/LOSS


         The Company had a pre-tax  profit of $647,000  for the six months ended
December  31,  1997  compared to a pre-tax  loss of $990,000  for the six months
ended  December 31, 1996 which results from both an increase in revenues as well
as a reduction in operating expenses as a percentage of revenues.

         INCOME TAXES

         The Company incurred income tax expense of $113,000, primarily relating
to state and local taxes,  in the six months ended December 31, 1997 compared to
an income tax credit of $12,000 in the six months ended  December 31, 1996.  The
increase results from the Company's profitability in fiscal 1998 versus its loss
in fiscal 1997.  Net  operating  loss  carryforwards  have been applied  against
pre-tax profits for federal tax purposes. 

LIQUIDITY AND CAPITAL RESOURCES

         Since their  respective  formations,  the Company's  subsidiaries  (the
"Subsidiaries")  have financed their operations primarily through cash generated
from  operations,   bank  borrowings,   shareholder  contributions  and  private
financings.  Since the Initial Public Offering in November 1996, the Company has
financed its operations with the proceeds of such offering and cash generated by
operations.

         During 1996, the Company entered into a series of transactions in order
to fund the operations of the Subsidiaries and to prepare itself for the Initial
Public  Offering.  In March  1996,  the  Company  raised  $270,000  in a private
offering,  pursuant to which the Company issued six 10%  convertible  promissory
notes (the "10% Notes").  Proceeds of the private  placement  were used to cover
costs related to the Company's  acquisitions of the Subsidiaries and the Initial
Public Offering.  The Company raised an additional $1,800,000 in another private
offering  in April  1996,  pursuant  to which the  Company  issued  several  12%
convertible  promissory  notes  (the  "12%  Notes").  Proceeds  received  by the
Company, after deducting placement fees and other expenses,  totaled $1,582,500.
An aggregate of $1,000,000 of the proceeds  received from this private placement
was  loaned  to On Ramp in  order to  complete  a  transaction  in which On Ramp
redeemed  outstanding  shares  of its  capital  stock.  The  remaining  proceeds
received from this private placement were used to provide working capital for On
Ramp and Internet One.

                                       15

<PAGE>


         In August 1996, the Company received net proceeds of $4,948,000 through
the issuance of 938,667  shares of Common Stock to Omnicom.  Proceeds  from this
transaction (the "Omnicom  Transaction")  were used by the Company to retire the
nonconvertible  portion of the outstanding  principal and accrued interest under
the 10% Notes and 12% Notes  (aggregating  $1,880,505),  to repay  certain other
debt and outstanding obligations, to fund the operations of the Subsidiaries and
to cover expenses and costs incurred in connection with the  acquisitions of the
Subsidiaries and the Initial Public Offering.

         In November  1996, the Company  completed its Initial Public  Offering,
which  has  provided   significant  working  capital  to  the  Company  and  its
Subsidiaries.  In connection with the Initial Public Offering the Company issued
2,150,000 shares of Common Stock and received net proceeds of $11,973,000.

         The Company had cash and cash equivalents of  approximately  $3,451,000
and  $5,791,000  at June 30, 1997,  and December  31, 1997,  respectively.  This
increase  principally  relates  to  the  net  cash  provided  by  operations  of
$4,171,000  which was  partially  offset by net cash used in both  investing and
financing activities of $1,321,000 and $511,000,  respectively.  Working capital
decreased  from  $8,079,000  at June 30, 1997 to $7,419,000 at December 31, 1997
primarily as a result of an increase in  pass-through  cost related  payables in
excess of the increase in pass-through related accounts  receivables  associated
with media advertising revenue.

         Net cash  provided by  operating  activities  for the six months  ended
December 31, 1997 of $4,171,000 resulted from net income of $534,000,  increased
by  non-cash   charges  for:  (i)  depreciation  and  amortization  of  $955,000
(including amortization of intangibles of $668,000), and (ii) consulting fees of
$38,000,  absolute  changes in the  balances  of  accounts  payable  and accrued
expenses and prebilled media of $2,903,000 and $7,524,000,  respectively, offset
by  absolute  changes  in  the  balances  of  accounts   receivables,   unbilled
receivables,  deferred  revenue and other assets and  liabilities of $6,224,000,
$22,000,  $542,000 and  $995,000,  respectively.  The increase in the balance of
prebilled media  substantially  represent  pass-through  costs billed to clients
associated  with the operation of Fathom,  which was acquired in May 1997 and is
related  almost  entirely  to the  increase  in  accounts  receivable.  Accounts
receivable  greater than sixty (60) days old increased  from  $1,582,000 at June
30, 1997 to $2,964,000 at December 31, 1997.  Such  receivables  primarily arose
from ongoing strategic marketing and branding assignments undertaken for certain
significant long-standing clients whom the Company believes to be credit-worthy.
These  amounts  were either  collected  subsequent  to December  31, 1997 or the
Company believes them to be collectible in the near future. The Company believes
that its reserve for bad debts of approximately $624,000 is sufficient to adjust
the carrying  amount of its  receivables at December 31, 1997 to an amount which
approximates net realizable value.

         Net cash used in investing activities for the six months ended December
31,  1997  of  $1,321,000  resulted  primarily  from  capital   expenditures  of
$1,040,000 to expand the Company's  infrastructure,  net cash paid in connection
with the merger with BBG of $744,000 offset, in part, by net sales of marketable
securities of $463,000.

         Net cash used in financing activities for the period ended December 31,
1997 of $511,000  resulted from loan  repayments  in connection  with the merger
with BBG of $548,000,  and  principal  payments on long-term  capital  leases of

                                       16

<PAGE>



$85,000 offset,  in part, by proceeds from the issuance of Common Stock to those
employees who exercised their stock options during the six months ended December
31, 1997. 

         The Company is a party to  employment  agreements  ranging in term from
one year to three years  (exclusive of extensions) with several of its executive
officers  pursuant to which the Company is obligated to pay such  individuals up
to an aggregate of $2,200,000 per year.

         Management of the Company anticipates that the Company will continue to
experience   significant   changes  in  its  operating  cost  structure  as  the
Subsidiaries  and  newly  acquired  companies  continue  to be  integrated,  and
administration  and  control of the  Company's  future  operations  become  more
centralized.  Management  believes that the Company's existing cash balances and
the cash generated  from  continuing  operations  will be sufficient to fund its
operations,  the anticipated expenditures required for product development,  its
organizational  infrastructure  (including  additional  personnel  and  upgraded
telecommunications  and computer  systems) and general  corporate  needs for the
next twelve (12) months.  However,  there can be no  assurance  that the Company
will  not be  required  to seek  additional  sources  of  financing  within  the
foreseeable  future.  The  failure to raise the funds  necessary  to finance the
Company's future cash requirements  would adversely affect the Company's ability
to pursue its operational strategies. 

         In connection  with the  acquisition of On Ramp,  the Company  recorded
goodwill and other  intangible  assets in the  aggregate  amount of  $2,410,000,
substantially  all of which is being  amortized using the  straight-line  method
over a period of two years. As a result, during the first fiscal quarter of 1997
and over the next  several  fiscal  quarters,  the Company has incurred and will
incur  non-cash  charges to  operations  aggregating  for each full  fiscal year
approximately $1,205,000.

         In  connection  with the  acquisition  of the assets and  operations of
Fathom, the Company recorded goodwill in the amount of $442,500,  which is being
amortized using the straight-line  method of accounting over a period of two (2)
years.  As a result,  during the three months  ended  September  30,  1997,  the
Company  incurred a non-cash charge to operations of  approximately  $55,000 and
will  incur  over the  next  eight  (8)  fiscal  quarters  non-cash  charges  to
operations aggregating approximately $55,000 per quarter.

         In  connection  with  the  acquisition  of BBG,  the  Company  recorded
goodwill  in the  amount  of  $3,972,000,  which is being  amortized  using  the
straight-line  method of  accounting  over a period of thirty (30)  years.  As a
result,  during the six months ended December 31, 1997,  the Company  incurred a
non-cash charge to operations of  approximately  $22,000 and will incur over the
next one hundred and twenty (120) fiscal quarters non-cash charges to operations
aggregating  approximately  $33,000 per  quarter.  Additional  consideration  is
payable if BBG meets  certain  sales  targets which would result in an increased
balance of goodwill and amortization related thereto.

         In connection with the Initial Public Offering, certain stockholders of
the  Company  agreed to place  their  shares of Common  Stock in an escrow to be
released upon the Company's attainment of certain performance goals (the "Escrow
Shares").  In the event of the release of the Escrow  Shares,  the Company  will
recognize  during the period in which the  earnings  thresholds  are probable of
being  met or such  stock  levels  achieved,  a  substantial  noncash  charge to
earnings  equal to the fair  market  value of such  shares  on the date of their
release,  which would have the effect of significantly  increasing the Company's
loss or reducing or eliminating  earnings, if any, at such time. The recognition
of such compensation expense may have a depressive effect on the market price of

                                       17

<PAGE>


the Company's securities. Notwithstanding the foregoing discussion, there can be
no  assurance  that the Company  will attain the targets  which would enable the
Escrow Shares to be released from escrow.  Similar accounting treatment is being
applied  with  respect to the  issuance in  subsequent  periods of the shares of
Common  Stock  pursuant to exercise  of the options  under a certain  consulting
agreement.  See  Note  5 to  the  Condensed  Consolidated  Financial  Statements
included elsewhere herein. 



























                                       18

<PAGE>



                            PART II-OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         The  Company  is not a  party  to any  pending  or  ongoing  litigation
required to be disclosed pursuant to this item.

ITEM 2.  CHANGES IN SECURITIES

         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 December 11,
1997 (the "Annual Meeting"). There were two (2) proposals 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;  and (ii) to approve the  adoption of the THINK New Ideas,  Inc.
Amended and Restated  1997 Stock Option Plan which  provides for the issuance of
Qualified  Incentive  Options and  Non-Qualified  Stock Options (the "1997 Stock
Option Plan"). At the Annual Meeting:

          (i) each of the  following  persons were elected to serve as directors
              of the Company for a term of one (1) year:  Scott Mednick,  Ronald
              Bloom, Adam Curry,  Barry Wagner,  Larry Kopald,  Richard Char and
              Marc Canter.  Each of the foregoing  received 5,704,210 votes cast
              in  favor  of  election,  with  10,700  shares  withheld  for each
              nominee; and

          (ii)the  stockholders  approved the adoptions of the 1997 Stock Option
              Plan.  There were 4,458,081  votes cast in favor of this proposal,
              with 31,800 votes  against,  9,545 votes  abstaining and 1,215,484
              votes not voted.

         No other matters were submitted to the stockholders for a vote.



                                       19

<PAGE>


ITEM 5.  OTHER INFORMATION AND SUBSEQUENT EVENTS

         There has been no other information or subsequent events required to be
disclosed pursuant to this item.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBITS. There are no exhibits incorporated herein by reference.

(b)  REPORTS ON FORM 8-K. The Company filed a Current  Report on Form 8-K during
     the period ended  December 31, 1997 relating to its  acquisition  of BBG on
     November 18, 1997. The financial  statements relating to the acquisition of
     BBG were filed by amendment to the Form 8-K on January 20, 1998.

















                                       20

<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.

February 12, 1997                    THINK New Ideas, Inc.


                                      By:   /s/ Scott A. Mednick
                                             -------------------------------
                                            Scott A. Mednick, Chief Executive
                                               Officer


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












                                       21