<PAGE>   1
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q

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

               FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999

                                       OR

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

          FOR THE TRANSITION PERIOD FROM ____________ TO ____________

                        COMMISSION FILE NUMBER: 0-26513

                                  NFRONT, INC.
             (Exact name of registrant as specified in Its charter)


<TABLE>
<S>                                                                             <C>
                          GEORGIA                                                              58-2242756
(State or other Jurisdiction of incorporation or organization)                  (I.R.S. Employer Identification No.)
</TABLE>


                         520 GUTHRIDGE COURT, SUITE 100
                               NORCROSS, GA 30092
                    (Address of principal executive offices)
                                   (Zip Code)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (770)209-4460

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

As of November 9, 1999, the Company had 14,196,136 shares of Common Stock, no
par value, outstanding.


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

<PAGE>   2

                                  NFRONT, INC.

                               INDEX TO FORM 10-Q

<TABLE>
<CAPTION>
                                                                                                         PAGE
                                                                                                         ----
         <S>               <C>                                                                           <C>
         PART I            FINANCIAL INFORMATION

         Item 1.           Financial Statements                                                            3

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

         Item 3.           Quantitative and Qualitative Disclosures About Market Risk                     13


         PART II           OTHER INFORMATION

         Item 6.           Exhibits and Reports on Form 8-K                                               13
</TABLE>


                                       2
<PAGE>   3

                                     PART I
                             FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

                                  NFRONT, INC.

                                 BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                      SEPTEMBER 30,           JUNE 30,
                                                                                          1999                  1999
                                                                                      -------------          -----------
                                          ASSETS                                      (Unaudited)

          <S>                                                                         <C>                    <C>
          Current assets:
            Cash and cash equivalents ......................................          $ 25,352,238           $   128,434
            Accounts receivable ............................................             2,663,332             2,047,915
            Prepaid expenses ...............................................               275,121                41,859
            Other current assets ...........................................               429,957                    --
            Refundable income taxes ........................................                    --                47,198
                                                                                      ------------           -----------
                   Total current assets ....................................            28,720,648             2,265,406
          Property and equipment:
            Projects in progress ...........................................             2,534,966               358,107
            Leasehold improvements .........................................                47,172                32,342
            Software .......................................................               463,402               420,741
            Furniture and fixtures .........................................               417,200               353,421
            Equipment ......................................................             1,124,328               878,624
                                                                                      ------------           -----------
                                                                                         4,587,068             2,043,235
            Less accumulated depreciation ..................................              (311,315)             (198,218)
                                                                                      ------------           -----------
                                                                                         4,275,753             1,845,017
          Other assets .....................................................                42,292               984,803
                                                                                      ------------           -----------
             Total assets ..................................................          $ 33,038,693           $ 5,095,226
                                                                                      ============           ===========


                      LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

         Current liabilities:
           Current portion of long-term debt ...............................          $         --           $   777,880
           Accounts payable ................................................             1,518,583             1,412,884
           Accrued liabilities .............................................             1,153,059             1,840,588
           Deferred revenue ................................................             1,897,373             1,331,847
                                                                                         ---------           -----------
              Total current liabilities ....................................             4,569,015             5,363,199
         Long-term debt, net of current portion ............................                    --               307,566
         Redeemable convertible preferred stock, no par value;
           10,000,000 shares authorized; issuable in series:
           Series A -- 255,885 shares authorized,
             issued and outstanding at June 30, 1999,
             liquidation preference of $2,782,873 at June 30, 1999 .........                    --             2,648,442
         Stockholders' equity (deficit):
           Common stock, no par value; 70,000,000 shares
             authorized; 14,196,152 and
             8,661,867 shares issued and outstanding at
             September 30, 1999 and June 30, 1999, respectively ............            34,900,130               642,761
           Accumulated deficit .............................................            (6,430,452)           (3,866,742)
                                                                                      ------------           -----------
              Total stockholders' equity (deficit) .........................            28,469,678            (3,223,981)
                                                                                      ------------           -----------
              Total liabilities and stockholders' equity (deficit) .........          $ 33,038,693           $ 5,095,226
                                                                                      ============           ===========
</TABLE>

                            See accompanying notes.


                                       3
<PAGE>   4

                                  NFRONT, INC.

                            STATEMENTS OF OPERATIONS
                                  (Unaudited)


<TABLE>
<CAPTION>

                                                              THREE MONTHS ENDED
                                                                 SEPTEMBER 30,
                                                      ----------------------------------
                                                          1999                  1998
                                                      ------------           -----------

         <S>                                          <C>                    <C>
         Revenues:
           Implementation fees .............          $  1,507,773           $   481,677
           Monthly service fees ............               884,514               132,706
           Other ...........................               126,699                12,014
                                                      ------------           -----------
           Total revenues ..................             2,518,986               626,397
         Operating expenses:
           Cost of implementation ..........               527,404               211,823
           Cost of Internet banking data
              center .......................               332,531                47,085
           Selling and marketing ...........             2,432,709               260,471
           Product development .............               693,960               146,881
           General and administrative ......             1,333,377               363,640
           Depreciation ....................               113,097                16,048
                                                      ------------           -----------
           Total operating expenses ........             5,433,078             1,045,948
                                                      ------------           -----------
         Operating loss ....................            (2,914,092)             (419,551)
         Other (income) expense:
           Interest income .................              (352,964)              (26,186)
           Interest expense ................                 2,582                   518
                                                      ------------           -----------
                                                          (350,382)              (25,668)
                                                      ------------           -----------
         Loss before income taxes ..........            (2,563,710)             (393,883)
         Income tax expense (benefit) ......                    --                    --
                                                      ------------           -----------
         Net loss ..........................            (2,563,710)             (393,883)
         Accretion on redeemable convertible
           preferred stock .................                    --               (68,220)
                                                      ------------           -----------
         Net loss attributable
           to common stock .................          $ (2,563,710)          $  (462,103)
                                                      ============           ===========
         Net loss per common share
          -- basic and diluted .............          $      (0.18)          $     (0.06)
                                                      ============           ===========
         Weighted average shares outstanding
          -- basic and diluted .............            14,135,997             8,209,941
                                                      ============           ===========
</TABLE>

                            See accompanying notes.


                                       4
<PAGE>   5

                                  NFRONT, INC.

                            STATEMENTS OF CASH FLOWS

                                  (Unaudited)

<TABLE>
<CAPTION>

                                                                                    THREE MONTHS ENDED
                                                                                        SEPTEMBER 30,
                                                                             -----------------------------------
                                                                                 1999                   1998
                                                                             ------------           ------------

         <S>                                                                 <C>                    <C>
         OPERATING ACTIVITIES:
           Net loss ............................................             $ (2,563,710)          $   (393,883)
           Adjustments to reconcile net loss to net cash
             used in operating activities:
             Depreciation ......................................                  113,097                 16,048
             Changes in operating assets and liabilities:
               Accounts receivable .............................                 (615,417)              (340,815)
               Prepaid expenses and other assets ...............                  279,292                (71,071)
               Income taxes ....................................                   47,198                     --
               Accounts payable ................................                  105,699                110,208
               Accrued liabilities .............................                 (687,529)                13,133
               Deferred revenue ................................                  565,526                140,116
                                                                             ------------           ------------
           Net cash used in operating activities ...............               (2,755,844)              (526,264)
         INVESTING ACTIVITIES:
           Purchase of property and equipment ..................               (2,543,833)              (208,014)
                                                                             ------------           ------------
           Net cash used in investing activities ...............               (2,543,833)              (208,014)
         FINANCING ACTIVITIES:
           Proceeds from bank credit facility ..................                       --                310,000
           Repayment of bank credit facility ...................               (1,085,446)                    --
           Proceeds from issuance of common stock ..............               35,000,000                600,000
           Increase in stock offering costs                                    (3,391,073)                    --
                                                                             ------------           ------------
           Net cash provided by financing activities ...........               30,523,481                910,000
                                                                             ------------           ------------
           Net increase in cash and cash equivalents ...........               25,223,804                175,722
           Cash and cash equivalents at the
             beginning of the period ...........................                  128,434              2,521,384
                                                                             ------------           ------------
           Cash and cash equivalents at the end
             of the period .....................................             $ 25,352,238           $  2,697,106
                                                                             ============           ============
         SUPPLEMENTAL CASH FLOW INFORMATION
           Cash paid for interest ..............................             $      3,955           $         --
                                                                             ============           ============
</TABLE>

                            See accompanying notes.


                                       5
<PAGE>   6

                                  NFRONT, INC.

                         NOTES TO FINANCIAL STATEMENTS
                                  (Unaudited)

1.       Certain information and footnote disclosures normally included in
         financial statements prepared in accordance with generally accepted
         accounting principles have been condensed or omitted pursuant to
         Article 10 of Regulation S-X of the Securities and Exchange
         Commission. The accompanying unaudited financial statements reflect,
         in the opinion of management, all adjustments necessary to achieve a
         fair statement of financial position and results for the interim
         periods presented. All such adjustments are of a normal recurring
         nature. It is suggested that these financial statements be read in
         conjunction with the financial statements and notes thereto included
         in the Annual Report of the Company on Form 10-K for the year ended
         June 30, 1999.

2.       The Company received the proceeds from its initial public stock
         offering of 3.5 million shares of common stock on July 2, 1999. The
         offering price was $10.00 per share and raised approximately $32.5
         million in new capital, net of underwriter fees.

3.       On June 17, 1999, the Company entered into a loan agreement which was
         comprised of a $4,425,000 revolving line of credit (the "Line") and a
         $575,000 term loan (the "Loan"). All outstanding borrowings under this
         loan agreement were repaid in July 1999 using proceeds from the
         initial public stock offering. As a result of the consummation of the
         initial public stock offering, this loan agreement is no longer in
         existence.

4.       In May, 1998, the Company entered into an agreement to sell 255,885
         shares of Series A Redeemable Convertible Preferred Stock ("Series A")
         for $9.77 per share. As a result of stock splits subsequent to the
         issuance of the Series A, the Series A conversion price was reduced to
         $1.23 per share which resulted in a conversion ratio of 7.95-for-one.
         On July 2, 1999, in connection with the closing of the Company's
         initial public stock offering, the Series A was converted into common
         stock.

5.       Net loss per share has been computed in accordance with SFAS 128 which
         requires disclosure of basic and diluted earnings per share. Basic
         earnings per share excludes any dilutive effects of options, warrants
         and convertible securities. Diluted earnings per share includes the
         impact of potentially dilutive securities. Potentially dilutive
         options to purchase 1,047,951 shares of common stock with a weighted
         average exercise price of $2.05 per share outstanding at September 30,
         1999 and 846,630 shares of common stock with a weighted average
         exercise price of $1.23 per share outstanding at September 30, 1998
         along with 2,034,285 common shares issuable upon conversion of the
         redeemable convertible preferred stock at September 30, 1998 were not
         included in the computation of historical diluted loss per share for
         the periods outstanding because the Company reported a loss and,
         therefore, the effect would be anti-dilutive.


                                       6
<PAGE>   7

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

OVERVIEW

         nFront provides a comprehensive, outsourced solution that enables
small to mid-sized banks to offer their retail and commercial customers banking
and financial services through the Internet in a secure environment. nFront's
products and services provide bank-branded Internet applications to these
banks. We were founded and incorporated in June 1996. From June 1996 through
May 1997, our principal activities consisted of developing our nHome product,
recruiting employees and raising capital. Our revenue during this period was
generated primarily through software licensing fees from our nHome product. In
June 1997, in response to the significant demand from small to mid-sized banks,
we opened our Internet banking data center and began focusing on providing our
client banks with a comprehensive outsourced Internet banking solution. In
March 1999, we released our nBusiness product, which is designed to meet the
specific needs of a bank's commercial customers. Our nHome product has been
responsible for generating most of our revenue to date.

         We derive revenue from multi-year service contracts under which our
client banks pay us the following fees:

         -        an up-front implementation fee for developing each client
                  bank's uniquely branded web site;

         -        recurring fees based primarily on the number of customers of
                  our client banks that use our products;

         -        transaction-based fees; and

         -        fees for materials and services provided to client banks to
                  support their customer marketing efforts and to train their
                  staff on how best to manage customers on the Internet branch.

         The implementation fee, which is generally billable to the client bank
when the contract is executed, is recognized as revenue over the implementation
period, which currently averages approximately three months. We record the
unrecognized portion of billable implementation fees as deferred revenue.
Revenue from monthly user fees and transaction fees are recognized monthly
based on the number of users with accounts on the bank's Internet branch at the
end of the month and the transactions occurring during the month. The service
contracts with the banks are typically five year exclusive agreements. The
revenue from marketing and training support materials and services is
recognized at the time the materials are delivered or the services are
provided.

    We compensate both our sales representatives and companies with which we
have strategic marketing alliances with commissions. Sales representatives'
commissions are determined using a fixed commission schedule, which is based on
the total asset size of the applicable client bank sold and the product sold.
Commissions on sales from companies with which we have strategic marketing
alliances are paid in accordance with the contractually agreed upon commission
schedules in the respective contracts. These commissions, typically between 10%
and 40%, vary by relationship and are generally expressed as a percentage of
the up-front implementation fee and the monthly recurring fees.

    Our strategic marketing agreements stipulate that either nFront or the
company with which we have a strategic marketing alliance is responsible for
billing a client bank. In the event that nFront is responsible for billing the
client bank, we recognize the gross amount of revenue and record the sales
commission to the company with which we have a strategic marketing alliance as
a selling and marketing expense. In the event that the company with which we
have a strategic marketing alliance is responsible for billing the client bank,
that company remits an agreed upon amount to us. Accordingly, we recognize the
related revenue collected and no sales commission expense is incurred.


                                       7
<PAGE>   8

         To date, the majority of our resources have been directed to creating
our nHome and nBusiness Internet banking products, building our Internet
banking data center, forming exclusive strategic marketing alliances, marketing
our products and building our sales and marketing team. Our strategy is to
rapidly expand our base of client banks, assist these banks in promoting the
use of the nFront system by their customers and increase the retail and
commercial banking communities' awareness and acceptance of the nFront
solution. We anticipate that our operating expenses will continue to increase
in future periods as we continue to expand our sales force, increase our
marketing and branding efforts, continue to develop new distribution channels,
fund greater levels of product development and expand our support staff and
facilities to facilitate our anticipated growth. Accordingly, we expect to
incur additional losses in future periods.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1998

The following table shows unaudited financial data for the three months ended
September 30, 1999 and 1998. Operating results for any period are not
necessarily indicative of results for any future period.


<TABLE>
<CAPTION>

                                                                                    THREE MONTHS ENDED
                                                                                       SEPTEMBER 30,
                                                                            ----------------------------------
                                                                                1999                  1998
                                                                            ------------           -----------

                   <S>                                                      <C>                    <C>
                   STATEMENT OF OPERATIONS DATA:
                     Revenues:
                      Implementation fees ........................          $  1,507,773           $   481,677
                      Monthly service fees .......................               884,514               132,706
                      Other ......................................               126,699                12,014
                                                                            ------------           -----------
                        Total revenues ...........................             2,518,986               626,397
                     Operating expenses:
                      Cost of implementation .....................               527,404               211,823
                      Cost of Internet banking data center .......               332,531                47,085
                      Selling and marketing ......................             2,432,709               260,471
                      Product development ........................               693,960               146,881
                      General and administrative .................             1,333,377               363,640
                      Depreciation ...............................               113,097                16,048
                                                                            ------------           -----------
                        Total operating expenses .................             5,433,078             1,045,948
                                                                            ------------           -----------
                     Operating loss ..............................            (2,914,092)             (419,551)
                     Other (income) expense:
                      Interest income ............................              (352,964)              (26,186)
                      Interest expense ...........................                 2,582                   518
                                                                            ------------           -----------
                     Loss before income taxes ....................            (2,563,710)             (393,883)
                     Income tax expense (benefit) ................                    --                    --
                                                                            ------------           -----------
                     Net loss ....................................            (2,563,710)             (393,883)
                     Accretion on redeemable convertible preferred
                       stock .....................................                    --                68,220
                                                                            ------------           -----------
                     Net loss attributable to common stock .......          $ (2,563,710)          $  (462,103)
                                                                            ============           ===========
                     Net loss per common share -- basic and
                       diluted ...................................          $      (0.18)          $     (0.06)
                                                                            ============           ===========
                     Weighted average shares outstanding -- basic
                       and diluted ...............................            14,135,997             8,209,941
                                                                            ============           ===========

                  OPERATING DATA (AT END OF PERIOD):
                     Total client banks under contract ...........                   210                    67
                     Total client banks implemented ..............                   144                    38
                     Total customers at client banks using our
                       solution ..................................                55,327                 7,855
</TABLE>


REVENUES

         Implementation Fees. Implementation fees represent fees generated from
developing the client banks' uniquely branded web sites. Implementation fees
increased from $482,000 during the three months ended


                                       8
<PAGE>   9

September 30, 1998 to $1.5 million for the three months ended September 30,
1999. This 213% increase was partly attributable to an increase in the number
of new banks implementing the nFront solution during the first quarter of
fiscal 1999, from 18 banks for the three months ended September 30, 1998 to 33
banks for the three months ended September 30, 1999. This increase in banks
implementing our Internet banking solution reflects the growth in our sales
force from one individual as of September 30, 1998 to a team of 22 sales
representatives at September 30, 1999. In addition, we introduced our nBusiness
product in March 1999. This additional product offering generated increased
fees from banks purchasing both the nHome product and the nBusiness product as
well as existing bank clients adding on this product offering. During the three
month period ended September 30, 1999, these additional implementation fees
from the nBusiness product totaled $489,000 compared to none for the same
period in 1998.

         Monthly Service Fees. Monthly service fees consist of the monthly fees
charged to our client banks based primarily on the number of bank customers
with accounts on the system and the volume of transactions such as bill
payment, ACH transfers and check imaging. These fees increased from $133,000
for the three months ended September 30, 1998 to $885,000 for the three months
ended September 30, 1999. This increase is attributable to the increase in
customers at our client banks utilizing the nFront system from approximately
7,800 at September 30, 1998 to over 55,000 at September 30, 1999.

         Other. Other revenue consists of the fees charged to our client banks
for materials and services to support marketing and training efforts as well as
other non-recurring fees, such as fees for custom web site development. These
revenues increased from $12,000 for the three months ended September 30, 1998
to $127,000 for the three months ended September 30, 1999 primarily because of
increased sales of our marketing and training materials by our expanded sales
team.

EXPENSES

         Cost of Implementation. Cost of implementation consists primarily of
salaries and wages and facilities costs directly attributable to the
implementation process. Cost of implementation increased from $212,000 during
the three months ended September 30, 1998 to $527,000 during the three months
ended September 30, 1999. This increase reflects the significant growth in
personnel required to accommodate the increase in new banks purchasing and
implementing our solution. During the three months ended September 30, 1999, 33
new bank implementations were completed compared to only 18 new bank
implementations during the three month period ended September 30, 1998.

         Cost of Internet Banking Data Center. Cost of Internet banking data
center consists primarily of salaries and wages and communications costs
required to operate the Internet banking data center as well as fees paid to
vendors that provide certain transaction processing such as end-user bill
payment. These costs increased from $47,000 for the three months ended
September 30, 1998 to $333,000 for the three months ended September 30, 1999 to
support the significant growth in the number of client banks and those banks'
customers utilizing the nFront system.

         Selling and Marketing. Selling and marketing expenses consist
primarily of salaries and wages, advertising costs, sales commissions, travel
and public relations costs. Sales and marketing expenses increased from
$260,000 for the three months ended September 30, 1998 to $2.4 million for the
three months ended September 30, 1999. This increase reflects the expansion of
our sales and marketing teams and a substantial increase in sales commissions
paid to our sales representatives and companies with which we have strategic
marketing alliances due to our increased sales. In addition, we have increased
our marketing efforts designed to increase the number of our client banks'
customers utilizing the nFront system. We believe that these expenses will
continue to increase in the future as we grow our sales and marketing teams and
penetrate a larger number of banks. As the number of our client banks grows, we
will increase our marketing and advertising efforts to increase the number of
end-users utilizing the nFront system, thereby generating increased recurring
monthly service fees.

         Product Development. Product development expenses consist primarily of
salaries and wages costs.


                                       9
<PAGE>   10

Product development expenses increased from $147,000 during the three months
ended September 30, 1998 to $694,000 during the three months ended September
30, 1999. This increase reflects the increase in technical personnel to support
the continued development of our nHome and nBusiness products, including the
development of new add-on features. The 1998 amount reflects costs associated
primarily with the nHome product whereas the 1999 amount reflects costs related
to both the nHome and nBusiness products.

         General and Administrative. General and administrative expenses
consist primarily of salaries and wages and other related costs for
administrative and executive employees, professional fees and
facilities-related expenses. General and administrative expenses increased from
$364,000 for the three months ended September 30, 1998 to $1.3 million for the
three months ended September 30, 1999. This increase is attributable to an
increase in personnel and facilities expenses necessary to support our expanded
operations as well as an increase in the level of professional fees incurred as
a result of the Company becoming a publicly traded corporation effective June
29, 1999.

         Depreciation. Depreciation expense increased from $16,000 during the
three months ended September 30, 1998 to $113,000 during the three months ended
September 30, 1999 primarily as a result of depreciation of new computer
equipment associated with the growth of the Internet banking data center and
the growth in the number of employees, as well as depreciation of our enhanced
administrative systems. During fiscal 1999, we added new sales automation,
customer support and accounting systems.

         Interest Income. Interest income increased from $26,000 during the
three months ended September 30, 1998 to $353,000 during the three months ended
September 30, 1999 as a result of interest earned on the proceeds obtained from
the initial public stock offering which closed on July 2, 1999. We received
approximately $32.5 million from this offering, net of underwriter fees.

         Income Taxes. As of September 30, 1999, we had approximately $4.3
million of federal net operating loss carryforwards, which begin expiring in
2013. Utilization of these net operating loss carryforwards could become
subject to annual limitation due to "change of ownership" provisions of the
Internal Revenue Code and similar state provisions. For financial reporting
purposes, a valuation allowance has been recognized to reduce net deferred tax
assets to zero due to uncertainties with respect to nFront's ability to realize
the benefit of net deferred income tax assets.

LIQUIDITY AND CAPITAL RESOURCES

         As a result of the Company's initial public stock offering which
closed July 2, 1999, we have raised approximately $32.5 million of capital, net
of underwriter fees. The Company issued 3.5 million shares of common stock in
connection with this offering and converted the outstanding redeemable
convertible preferred stock into 2,034,285 shares of the Company's common
stock. Through September 30, 1999, we have invested approximately $2.5 million
of the proceeds in capital expenditures related to the Internet banking data
center and we have paid off the outstanding debt as of June 30, 1999 in the
amount of approximately $1.1 million. An additional $2.8 million of the
proceeds has been applied to support our working capital needs as we grow our
business. Our working capital needs have expanded significantly as our client
base has grown to 210 banks and over 55,000 end-users as of September 30, 1999.
At September 30, 1999, we had cash of $25.4 million, and all previously
existing credit facilities have been terminated upon the repayment of the
amounts borrowed.

         For the remainder of fiscal 2000, we expect to invest an additional $2
million in capital expenditures to continue to enhance our data center
operations, to furnish expanded facilities and to support the continued growth
of the Company. We believe that our existing capital resources will be
sufficient to fund our operations for at least the next 18 to 24 months. If we
expand more rapidly than currently anticipated, if our working capital needs
exceed our current expectations or if we make acquisitions, we may need to
raise additional capital from equity or debt sources. We cannot be sure that we
will be able to obtain the additional financing necessary to satisfy these
expanded cash requirements or to implement an expanded growth strategy on
acceptable terms or at all. If we cannot obtain this


                                      10
<PAGE>   11

financing on terms acceptable to us, we may be forced to curtail some planned
business expansion and may be unable to fund our ongoing operations.

         During the three months ended September 30, 1999, we used net cash of
$2.8 million for operating activities, as compared to $526,000 for the three
month period ended September 30, 1998. Operating activities for the 1999 period
consisted primarily of a $2.6 million net loss and an increase in accounts
receivable of $615,000 and a decrease in accounts payable and accrued
liabilities of $582,000, partially offset by an increase in deferred revenue of
$566,000. The decrease in payables relates primarily to the payment of charges
incurred in connection with the Company's initial public stock offering and the
increase in accounts receivable and in deferred revenue is due to the increase
in sales volume generated during the three months ended September 30, 1999.
Cash used in operating activities during the 1998 period included a net loss of
$394,000 and an increase in accounts receivable of $341,000 partially offset by
an increase in accounts payable of $110,000 and an increase in deferred revenue
of $140,000.

         Cash used in investing activities was $2.5 million for the three
months ended September 30, 1999, as compared to $208,000 for the three months
ended September 30, 1998. Investing activities for the 1999 period and the 1998
period consisted of capital expenditures which were related primarily to the
expansion of our existing Internet banking data center and the build out of a
fully redundant data center that will be hosted in Sterling, Virginia. The
majority of the costs related to this redundant data center have been incurred
as of September 30, 1999.

         Cash provided by financing activities was $30.5 million for the three
months ended September 30, 1999, as compared to $910,000 for the three months
ended September 30, 1998. Financing activities in the three months ended
September 30, 1999 included gross proceeds from the initial public stock
offering of $35 million, offset by the repayment of our bank credit facility in
the amount of $1.1 million and stock offering costs of $3.4 million. Cash
provided by financing activities in the three months ended September 30, 1998
included proceeds of $600,000 from the sale of common stock and $310,000 from
borrowings against a bank credit facility.

RECENT ACCOUNTING PRONOUNCEMENTS

         In March 1998, the AICPA issued Statement of Position 98-1, Accounting
for the Costs of Computer Software Developed or Obtained for Internal Use, or
SOP 98-1. We have adopted SOP 98-1 effective July 1, 1999 and there was no
material effect on our financial position or results of operations.

IMPACT OF YEAR 2000 COMPUTER ISSUES

         The year 2000 issue is the result of computer programs using two
digits rather than four to define the applicable year without specifying the
century. As a result, date-sensitive software may recognize a date of "00" as
the year 1900 rather than the year 2000. This could result in system failures
or miscalculations causing disruptions of nFront's operations, including a
temporary inability to process transactions, send invoices or engage in other
business activities, and, as a result, the operations of the banks and end
users that we serve. Year 2000 issues impact nFront both on an external basis
in connection with the products and services we offer to banks and end users,
as well as on an internal basis as to our own operations and systems. We also
face risks relating to the potential year 2000 non-compliance with institutions
that provide services to us, merchants processing electronic transfer of funds,
the FedWire system governing electronic funds transfers and the Federal Reserve
system itself. We believe that based on our assessments to date, material year
2000 issues that we have identified that are within our control have been
corrected. The failure of nFront or third party hardware or software that is
used by nFront or in conjunction with our products to be year 2000 compliant
could have a material adverse effect on nFront's financial position and results
of operations.

         Year 2000 Project Team. We have assembled a year 2000 project team,
composed of nFront employees from our senior management, product management,
development, Internet banking data center, support,


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implementation, accounting and facilities management working groups. Our year
2000 project team has identified software, equipment and systems that are
material to our business, and we have reviewed and tested our nFront products,
as well as the software, equipment and systems supplied to us by third party
vendors, to determine their ability to correctly process date changes from 1999
through 2000. The goals of the project team are to minimize any year
2000-related impact to our bank customers and their customers; maintain year
2000 readiness as a top business priority; and work closely with our internal
and external business associates to achieve year 2000 readiness. Management
believes the costs related to year 2000 compliance have not and will not have a
material effect on nFront's financial condition, results of operations and cash
flows.

         nFront Products. We designed our products to be year 2000 compliant.
Year 2000 remediation efforts to nFront's products were minor due to nFront's
awareness of year 2000 issues when our products were updated in early 1998.
nFront products require users to enter a four-digit date code for each date,
and each product process stores and displays dates only in a four-digit year
format. We tested our products in test environments intended to emulate a year
2000 environment. Testing was performed on the century date change as well as
other critical date rollovers such as leap year using significant dates both
before and after January 1, 2000. No significant problems were detected as a
result of this testing.

         Year 2000 External Efforts and Issues. We have substantially completed
the replacement, modification or retirement of hardware or software components
for nFront products and services that were identified by the year 2000 project
team to be vital to our core business processes and at risk for year 2000
failures. In addition, we have requested that our customers, vendors, and other
business associates participate in our readiness efforts and update us on their
year 2000 progress. Many of our computer systems and business operations are
provided and/or maintained by outside suppliers. nFront's key vendors and
suppliers, including core processors with which our systems interface, have
been asked to demonstrate sufficient year 2000 readiness. Where feasible, we
have tested vendor supplied products that are critical to our operations.

         Year 2000 Internal Efforts and Issues. Our year 2000 project team has
completed corporate-wide inventory of nFront's internal application and system
software and of our computers and other equipment, such as our building
security systems, fire alarm systems and heating and air conditioning
equipment, to determine if this equipment uses embedded computer chips that may
be date sensitive. Based on this analysis, nFront has upgraded hardware and
software deemed vital to our on-going business by the year 2000 project team to
versions or releases identified by their vendors as year 2000 ready or
compliant; implemented computer code changes for non-critical issues not
affecting year 2000 compliance; and substantially completed remediation of
identified year 2000 issues in "mission critical" systems, or systems that are
vital to the successful continuance of core business activities.

         Most Likely Worst Case Scenarios of Year 2000 Problems. nFront expects
to identify and resolve all year 2000 problems that could materially adversely
affect its business, financial condition or operating results. However, we
believe that it is not possible to determine with complete certainty that all
year 2000 problems affecting us have been identified or corrected. In addition,
we cannot accurately predict how many failures related to the year 2000 problem
will occur or the severity, duration or financial consequences of these
failures. As a result, we expect that the following worst case scenarios could
occur:

         -    a significant number of operational inconveniences and
              inefficiencies for nFront, our services and our clients that may
              divert our time and attention and financial and human resources
              from our ordinary business activities; and

         -    a number of serious system failures that may require significant
              efforts by us to prevent or alleviate material business
              disruptions.

         Contingency and Business Continuity Planning. Our year 2000 project
team has designed a corporate business continuity plan specific to year 2000
issues to address potential disruptions to business identified by the year 2000
project team that may impact our customers and other business associates. In
addition, we have


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developed consolidated readiness plans and schedules for business areas to
enable us to react to such identified potential events that could impact normal
business routines. Depending on the systems affected, these plans could include
(a) replacement of affected equipment; (b) use of backup equipment or
facilities; (c) increased work hours for our personnel to correct any year 2000
problems which arise; and (d) other similar approaches. If we are required to
implement any of these contingency plans or are unable to implement any of
these plans effectively, they could have a material adverse effect on our
business, financial condition or operating results.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

         This Report contains statements which constitute forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended and the Securities Exchange Act of 1934, as amended. These statements
appear in a number of places in this Report and include all statements which
are not historical facts and which relate to our intent, belief or current
expectations, or that of our directors or officers, with respect to, among
other things: (i) trends affecting the demand for our products and our ability
to effectively compete for customers; (ii) trends affecting our financial
condition or results of operations; (iii) our financing plans, including our
ability to obtain financing in the future; (iv) our growth strategy (including
the ongoing strength of our strategic alliances) and operating strategy; (v)
our anticipated capital needs and anticipated capital expenditures; and (vi)
our ongoing product development strategies. Investors are cautioned that any
such forward-looking statements are not guarantees of future performance and
involve risks and uncertainties, and that actual results may differ materially
from those projected in forward-looking statements as a result of : (i) factors
affecting the availability, terms and cost of capital, risks associated with
dependence on the Internet, competitive factors and pricing pressures, general
economic conditions, the failure of the market demand for our products and
services to be commensurate with our management's expectations or past
experience, the impact of present or future laws and regulations on our
business, changes in operating expenses or the failure of operating expenses to
be consistent with our management's expectations and the impact that any
network security or performance problems could have on demand for our products
and services; (ii) various factors discussed herein; and (iii) those factors
discussed in detail in our previous filings with the Securities and Exchange
Commission, including under (a) the heading "Factors That May Affect Future
Results of Operations" in our Annual Report on Form 10-K for the year ended
June 30, 1999 and (b) the heading "Risk Factors" in our Registration Statement
on Form S-1 (Registration number (333-76955), as declared effective by the
Securities and Exchange Commission on June 28, 1999.

ITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         There have been no material changes in the applicable disclosures
since those set forth in the Company's Annual Report on Form 10-K for the year
ended June 30, 1999.

                                    PART II
                               OTHER INFORMATION

ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K

             (a) Exhibit Number 27 - Financial Data Schedule (for SEC use only).

             (b) Reports on Form 8-K.

                 None.


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                                   SIGNATURES

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

                               NFRONT, INC.

Date: November 12, 1999        /S/ BRADY L. "TRIPP" RACKLEY, III
                               --------------------------------------------
                               BRADY L. "TRIPP" RACKLEY, III
                               Chairman of the Board and Chief Executive Officer
                               (Duly Authorized Officer)

Date: November 12, 1999        /S/ JEFFREY W. HODGES
                               --------------------------------------------
                               JEFFREY W. HODGES
                               Chief Financial Officer and Secretary
                               (Principal Financial and Accounting Officer)


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