<PAGE>
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--------------------------------------------------------------------------------
 
                       SECURITIES AND EXCHANGE COMMISSION
 
                             WASHINGTON, D.C. 20549
 
                            ------------------------
 
                                   FORM 10-Q
 
MARK ONE [1]
 
  /X/        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
                          SECURITIES EXCHANGE ACT OF 1934
 
                  FOR THE QUARTERLY PERIOD ENDED JULY 31, 1998
 
                                       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 0-8345
 
                            ------------------------
 
                           4FRONT TECHNOLOGIES, INC.
 
             (Exact name of registrant as specified in its charter)
 
                  DELAWARE                             84-0675510
      (State or other jurisdiction of               (I.R.S. Employer
       incorporation or organization)              Identification No.)
 
                     5650 GREENWOOD PLAZA BLVD., SUITE 107
                           ENGLEWOOD, COLORADO 80111
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
 
       Registrant's telephone number, including area code: (303) 721-7341
 
                            ------------------------
 
        Securities registered pursuant to Section 12(b) of the Act: None
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                    COMMON STOCK, PAR VALUE $.001 PER SHARE
                                (TITLE OF CLASS)
 
                            ------------------------
 
    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 / /
 
    The number of shares outstanding of each of the Registrant's classes of
Common Stock at August 28, 1998 was 10,593,067 shares of Common Stock, $.001 par
value.
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
 
                   4FRONT TECHNOLOGIES, INC. AND SUBSIDIARIES
 
                SIX AND THREE MONTH PERIODS ENDED JULY 31, 1998
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                                                              PAGE
                                                                                                             NUMBER
                                                                                                          -------------
<S>                                                                                                       <C>
CONSOLIDATED FINANCIAL STATEMENTS
 
Condensed Consolidated Balance Sheets as of January 31, 1998 and
  July 31, 1998 (unaudited).............................................................................            1
 
Condensed Consolidated Statements of Operations for the six and three month periods ended July 31, 1997
  and 1998 (unaudited)..................................................................................            3
 
Condensed Consolidated Statements of Changes in Stockholders' Equity for the six months ended July 31,
  1998 (unaudited)......................................................................................            4
 
Condensed Consolidated Statements of Cash Flows for the six and three month periods ended July 31, 1997
  and 1998 (unaudited)..................................................................................            5
 
Notes to the Condensed Consolidated Financial Statements................................................            6
</TABLE>
<PAGE>
                   4FRONT TECHNOLOGIES, INC. AND SUBSIDIARIES
 
                     CONDENSED CONSOLIDATED BALANCE SHEETS
 
                                     ASSETS
 
<TABLE>
<CAPTION>
                                                                                          JANUARY 31,   JULY 31,
                                                                                             1998         1998
                                                                                          -----------  -----------
<S>                                                                                       <C>          <C>
                                                                                                         $'000'S
                                                                                            $'000'S    (UNAUDITED)
CURRENT ASSETS:
  Cash..................................................................................   $   4,586    $  31,240
  Accounts receivable, net of allowance for doubtful accounts of $452,000 and $504,000
    respectively........................................................................      18,357       19,007
  Deposits..............................................................................          49           50
  Inventories...........................................................................      11,852       14,205
  Prepaid expenses......................................................................       1,835        2,141
  Income taxes receivable...............................................................          17           17
  Other current assets..................................................................         219          342
                                                                                          -----------  -----------
    Total current assets................................................................      36,915       67,002
 
PROPERTY AND EQUIPMENT, net.............................................................       2,855        3,099
 
INTANGIBLE ASSETS, net..................................................................      16,935       15,977
 
DEFERRED INCOME TAX.....................................................................       2,402        1,705
 
OTHER ASSETS............................................................................         101           85
                                                                                          -----------  -----------
TOTAL ASSETS............................................................................   $  59,208    $  87,868
                                                                                          -----------  -----------
                                                                                          -----------  -----------
</TABLE>
 
     SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
                                       1
<PAGE>
                   4FRONT TECHNOLOGIES, INC. AND SUBSIDIARIES
 
                     CONDENSED CONSOLIDATED BALANCE SHEETS
 
                      LIABILITIES AND STOCKHOLDERS' EQUITY
 
<TABLE>
<CAPTION>
                                                                                          JANUARY 31,   JULY 31,
                                                                                             1998         1998
                                                                                          -----------  -----------
<S>                                                                                       <C>          <C>
                                                                                                         $'000'S
                                                                                            $'000'S    (UNAUDITED)
CURRENT LIABILITIES:
  Accounts payable......................................................................   $  16,279    $  15,650
  Accrued liabilities...................................................................       4,027        3,816
  Stockholder advances..................................................................          18           18
  Lines of credit-bank..................................................................       2,309       --
  Notes payable.........................................................................       2,858        2,478
  Capital lease obligations, current portion............................................         482          479
  Income taxes payable..................................................................       1,273        1,868
  Deferred revenue......................................................................       8,728        7,260
                                                                                          -----------  -----------
    Total current liabilities...........................................................      35,974       31,569
 
CAPITAL LEASE OBLIGATIONS,
  less current portion..................................................................         497          450
  long term liabilities.................................................................       1,143          369
                                                                                          -----------  -----------
TOTAL LIABILITIES.......................................................................      37,614       32,388
                                                                                          -----------  -----------
COMMITMENTS AND CONTINGENCIES:
 
STOCKHOLDERS' EQUITY:
  Preferred stock, par value $.001, 5,000,000 shares authorized. No shares issued or
    outstanding.........................................................................      --           --
  Common stock, par value $.001, 30,000,000 shares authorized 7,051,317 and 10,593,067
    shares issued and outstanding, respectively.........................................           7           11
  Additional paid-in capital............................................................      24,870       56,561
  Accumulated (deficit).................................................................      (3,154)        (826)
  Cumulative foreign currency translation adjustment....................................        (129)        (266)
                                                                                          -----------  -----------
    Total stockholders' equity..........................................................      21,594       55,480
                                                                                          -----------  -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..............................................   $  59,208    $  87,868
                                                                                          -----------  -----------
                                                                                          -----------  -----------
</TABLE>
 
     SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
                                       2
<PAGE>
                   4FRONT TECHNOLOGIES, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                           FOR THE THREE MONTHS ENDED   FOR THE SIX MONTHS ENDED
                                                           --------------------------  --------------------------
                                                             JULY 31,      JULY 31,      JULY 31,      JULY 31,
                                                               1997          1998          1997          1998
                                                             $`000'S       $`000'S       $`000'S       $`000'S
                                                           ------------  ------------  ------------  ------------
<S>                                                        <C>           <C>           <C>           <C>
                                                           (UNAUDITED)   (UNAUDITED)   (UNAUDITED)   (UNAUDITED)
REVENUES
Services.................................................   $    8,313    $   16,677    $   16,509    $   33,114
Products.................................................       10,507        10,738        20,935        21,005
                                                           ------------  ------------  ------------  ------------
                                                                18,820        27,415        37,444        54,119
                                                           ------------  ------------  ------------  ------------
Cost of Services.........................................        3,789         7,671         7,937        15,300
Cost of Products.........................................        8,933         8,920        17,814        17,454
                                                           ------------  ------------  ------------  ------------
                                                                12,722        16,591        25,751        32,754
                                                           ------------  ------------  ------------  ------------
GROSS PROFIT
Services.................................................        4,524         9,006         8,572        17,814
Products.................................................        1,574         1,818         3,121         3,551
                                                           ------------  ------------  ------------  ------------
                                                                 6,098        10,824        11,693        21,365
                                                           ------------  ------------  ------------  ------------
OPERATING EXPENSES
  Selling, general and administrative expenses...........        4,688         8,074         9,042        16,078
  Depreciation...........................................          222           292           417           586
  Amortization...........................................          230           428           441           850
                                                           ------------  ------------  ------------  ------------
  Total operating expenses...............................        5,140         8,794         9,900        17,514
                                                           ------------  ------------  ------------  ------------
INCOME BEFORE INTEREST, INCOME TAXES:                              958         2,030         1,793         3,851
  Interest income........................................           85           108           162           176
  Interest expense.......................................         (140)         (210)         (211)         (419)
                                                           ------------  ------------  ------------  ------------
INCOME BEFORE INCOME TAXES:                                        903         1,928         1,744         3,608
INCOME TAXES                                                       226           693           436         1,281
                                                           ------------  ------------  ------------  ------------
NET INCOME                                                  $      677    $    1,235    $    1,308    $    2,327
                                                           ------------  ------------  ------------  ------------
NET INCOME PER COMMON SHARE (BASIC)                         $     0.10    $     0.15    $     0.20          0.30
NET INCOME PER COMMON SHARE (DILUTED)                       $     0.10    $     0.12    $     0.19    $     0.25
</TABLE>
 
     SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
                                       3
<PAGE>
                   4FRONT TECHNOLOGIES, INC. AND SUBSIDIARIES
 
                CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
 
                              STOCKHOLDERS' EQUITY
 
<TABLE>
<CAPTION>
                                                                                               FOREIGN
                                                        COMMON STOCK                          CURRENCY
                                                 ---------------------------   ACCUMULATED   TRANSLATION
                                                    SHARES        AMOUNT        (DEFICIT)    ADJUSTMENT       TOTAL
                                                 ------------  -------------  -------------  -----------  --------------
<S>                                              <C>           <C>            <C>            <C>          <C>
BALANCE, JANUARY 31, 1998......................     7,051,317  $  24,877,386  $  (3,153,766) $  (129,437) $   21,594,183
Net income for period (unaudited)..............       --            --            1,092,118      --            1,092,118
Share options exercised........................       100,000        400,000       --            --              400,000
Foreign currency translation adjustment........       --            --             --            (77,705)        (77,705)
                                                 ------------  -------------  -------------  -----------  --------------
BALANCE, APRIL 30, 1998 (UNAUDITED)............     7,151,317     25,277,386     (2,061,648)    (207,142)     23,008,596
                                                 ------------  -------------  -------------  -----------  --------------
Net income for period (unaudited)..............       --            --            1,235,273      --            1,235,273
Share options exercised........................       486,458      2,062,207       --            --            2,062,207
Net proceeds from issuance of Common Stock.....     2,955,292     29,232,116       --            --           29,232,116
Foreign currency translation adjustment........       --            --             --            (58,650)        (58,650)
                                                 ------------  -------------  -------------  -----------  --------------
BALANCE, JULY 31, 1998 (UNAUDITED).............    10,593,067  $  56,571,709  $    (826,375) $  (265,792) $   55,479,542
                                                 ------------  -------------  -------------  -----------  --------------
                                                 ------------  -------------  -------------  -----------  --------------
</TABLE>
 
     SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
                                       4
<PAGE>
                   4FRONT TECHNOLOGIES, INC. AND SUBSIDIARIES
 
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                                         FOR THE SIX MONTHS ENDED
                                                           FOR THE THREE MONTHS ENDED   ---------------------------
                                                           ---------------------------                   JULY 31,
                                                           JULY 31, 1998  JULY 31,1997  JULY 31, 1998      1997
                                                           -------------  ------------  -------------  ------------
<S>                                                        <C>            <C>           <C>            <C>
                                                            (UNAUDITED)   (UNAUDITED)    (UNAUDITED)   (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income...............................................    $     677     $    1,235     $   1,308     $    2,327
Adjustments to reconcile net income to net cash provided
  (used) by operating activities
  Depreciation...........................................          222            292           418            586
  Amortization...........................................          230            428           441            850
  Loss (gain) on disposal of fixed assets................            3             28           (20)            20
  Decrease in deferred income tax........................           27            374           163            697
  (Increase) decrease in accounts receivable.............         (427)         1,443         1,019           (650)
  Decrease (increase) in deposits........................       --                 (1)           (1)            (1)
  (Increase) decrease in inventories.....................           24         (1,017)         (670)        (2,235)
  (Increase) in prepaid expenses.........................         (142)          (155)         (290)          (306)
  Increase in income taxes...............................          173            353           247            595
  (Increase) decrease in other current assets............         (102)            17           (58)          (123)
  (Decrease) in accounts payable.........................         (698)          (797)       (1,317)          (294)
  (Decrease) in accrued liabilities......................         (157)          (487)         (551)          (211)
  Increase (decrease) in deferred revenue................          717         (1,196)         (891)        (1,651)
                                                                ------    ------------       ------    ------------
  Net cash provided (used) by operating activities.......          547            517          (202)          (396)
                                                                ------    ------------       ------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of equipment..................................         (373)          (230)         (596)          (631)
  Proceeds from disposal of equipment....................           64             40            90             48
  Acquisition of subsidiaries............................         (241)          (367)       (1,228)          (936)
  Investment in and advances to equity investee..........          145         --               143         --
  (Increase) decrease in other assets....................       --                  2            (2)            16
                                                                ------    ------------       ------    ------------
  Net cash used by investing activities..................         (405)          (555)       (1,593)        (1,503)
                                                                ------    ------------       ------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  (Decrease) increase in lines of credit-bank............         (935)        (3,762)        1,271         (2,309)
  Repayment of notes payable.............................       --               (374)       --               (379)
  Payments of capital lease obligations..................         (191)          (175)         (388)          (317)
  Net proceeds from issuance of common stock.............       --             29,232        --             29,232
  Net proceeds from exercise of warrants/options.........            6          2,062             6          2,462
                                                                ------    ------------       ------    ------------
  Net cash from (used by) financing activities...........       (1,120)        26,983           889         28,689
                                                                ------    ------------       ------    ------------
Effect of exchange rate changes on cash..................            5            (58)          (16)          (136)
NET (DECREASE) INCREASE IN CASH..........................         (973)        26,887          (922)        26,654
Cash at beginning of period..............................        6,704          4,353         6,653          4,586
                                                                ------    ------------       ------    ------------
Cash at end of period....................................    $   5,731     $   31,240     $   5,731     $   31,240
                                                                ------    ------------       ------    ------------
                                                                ------    ------------       ------    ------------
Cash paid for interest expense...........................    $     140     $      210     $     211     $      419
                                                                ------    ------------       ------    ------------
                                                                ------    ------------       ------    ------------
Cash paid for income taxes...............................    $  --         $   --         $  --         $   --
                                                                ------    ------------       ------    ------------
                                                                ------    ------------       ------    ------------
</TABLE>
 
     SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
                                       5
<PAGE>
                   4FRONT TECHNOLOGIES, INC. AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 1--NATURE OF BUSINESS
 
    4Front Technologies, Inc. and subsidiaries (the "Company" or "4 Front") is a
leading provider of information technology solutions, which consist of
specialized computer services and complementary products, primarily to blue chip
corporations and government authorities in the United Kingdom and, to a growing
extent, in Continental Europe. The Company's solutions include hardware
maintenance, help desk support, network servers, specialized software services
and products and the supply of high-end storage systems.
 
NOTE 2--BASIS OF PRESENTATION
 
    The accompanying interim unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements.
 
    In the opinion of management, the accompanying interim unaudited condensed
consolidated financial statements contain all material adjustments consisting
only of normal recurring adjustments necessary to present fairly the financial
condition, the results of operations, the changes in stockholders' equity and
cash flows of 4Front Technologies, Inc. for the interim periods presented.
 
    The results of the three and six months ended July 31, 1998 are not
necessarily indicative of the results of operations for the full year. These
interim unaudited condensed consolidated financial statements and related
footnotes should be read in conjunction with the financial statements and
footnotes thereto included in the Company's Form 10-K for the year ended January
31, 1998.
 
NOTE 3--ADOPTION OF NEW STANDARDS
 
    The Company adopted the provisions of SFAS No. 128, Earnings Per Share, in
January 1998. This Statement simplifies the standards for computing earnings per
share previously found in APB Opinion No. 15, Earnings per Share, and makes them
more comparable to international EPS standards. Statement 128 replaces the
presentation of primary EPS with a presentation of basic EPS. In addition, the
Statement requires dual presentation of basic and diluted EPS on the face of the
income statement for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS computation to
the numerator and denominator of the diluted EPS computation. Prior periods are
restated to conform to the new standard.
 
                                       6
<PAGE>
                   4FRONT TECHNOLOGIES, INC. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 3--ADOPTION OF NEW STANDARDS (CONTINUED)
 
<TABLE>
<CAPTION>
                                                        FOR THE THREE MONTHS ENDED    FOR THE SIX MONTHS ENDED
                                                        JULY 31, 1997  JULY 31, 1998  JULY 31,1997   JULY 31, 1998
                                                        -------------  -------------  -------------  -------------
<S>                                                     <C>            <C>            <C>            <C>
                                                         (UNAUDITED)    (UNAUDITED)    (UNAUDITED)    (UNAUDITED)
 
BASIC EARNINGS PER SHARE
 
Net income............................................  $     677,029  $   1,235,273  $   1,307,705  $   2,327,391
                                                        -------------  -------------  -------------  -------------
Weighted Average Number of Common Shares
  outstanding.........................................      6,514,747      8,248,129      6,514,747      7,650,276
                                                        -------------  -------------  -------------  -------------
Net income per Common Share Basic.....................  $        0.10  $        0.15  $        0.20  $        0.30
                                                        -------------  -------------  -------------  -------------
                                                        -------------  -------------  -------------  -------------
DILUTED EARNINGS PER SHARE
Net income............................................  $     677,029  $   1,235,273  $  13,705,705  $   2,327,391
                                                        -------------  -------------  -------------  -------------
Weighted Average Number of Common Shares
  outstanding.........................................      6,514,747      8,248,129      6,514,747      7,650,276
Additional Shares to be Issued upon Assumed Exercise
  of Options and Warrants.............................      1,880,800      3,113,305        604,500      3,113,305
Shares Hypothetically Repurchased at the Average
  Market Price with the Proceeds of Exercise..........     (1,618,941)    (1,451,099)      (381,772)    (1,561,427)
                                                        -------------  -------------  -------------  -------------
Adjusted Shares for Dilution..........................      6,776,606      9,910,335      6,737,475      9,202,154
                                                        -------------  -------------  -------------  -------------
Net income per Common Share Diluted...................  $        0.10  $        0.12  $        0.19  $        0.25
                                                        -------------  -------------  -------------  -------------
                                                        -------------  -------------  -------------  -------------
</TABLE>
 
NOTE 4--INVENTORIES
 
    Inventories consist of the following:
 
<TABLE>
<CAPTION>
                                                                                      JANUARY 31,      JULY 31,
                                                                                         1998            1998
                                                                                    ---------------  ------------
<S>                                                                                 <C>              <C>
                                                                                                     (UNAUDITED)
Computer hardware.................................................................     $  11,702      $   14,094
Computer software.................................................................            20               9
Work in progress..................................................................           130             102
                                                                                         -------     ------------
                                                                                       $  11,852      $   14,205
                                                                                         -------     ------------
                                                                                         -------     ------------
</TABLE>
 
                                       7
<PAGE>
                   4FRONT TECHNOLOGIES, INC. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 5--INCOME TAXES
 
    The Company files a separate U.S. federal income tax return for its domestic
operations and a UK income tax return for its foreign operations. The United
Kingdom subsidiaries compute taxes at rates in effect in that country and become
payable when assessed by the Inland Revenue. Deferred federal income taxes are
not provided on the undistributed earnings of its foreign subsidiaries to the
extent the Company intends to permanently reinvest such earnings in the United
Kingdom.
 
    The Company has provided income tax for the six months ended July 31, 1998
of $1.3 million on the profits of its operations, and for the six months to July
31, 1997 $435,901.
 
NOTE 6--COMPREHENSIVE INCOME
 
    The Company has adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income," which establishes standards for the reporting
and presentation of comprehensive income and its components in a full set of
financial statements. Comprehensive income-(loss) generally encompasses all
changes in shareholders' equity (except those arising from transactions with
owners) and includes net income/(loss), net unrealized capital gains or losses
on available for sale securities and foreign currency translation adjustments.
The Company's comprehensive income was $1,296,912 and $2,191,036 for the six
months ended July 31, 1997 and 1998, respectively.
 
                                       8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS
 
OVERVIEW
 
    The Company is a leading provider of information technology solutions, which
consist of specialized computer services and complementary products primarily to
blue chip corporations and government authorities in the United Kingdom and, to
a growing extent, in Continental Europe. The Company's solution include hardware
maintenance, help desk support, network services, specialized software services
and products and the supply of high-end storage systems.
 
    The Company has grown rapidly due, in large part, to acquisitions. K2
Systems Plc, Xanadu Systems Ltd ("Xanadu"), and CI Support Limited, were
acquired in fiscal 1995, Compass Computer Group ("Compass") was acquired in
fiscal 1996, Hammer Distribution Limited ("Hammer") and Datapro Computers Group
Limited ("Datapro") were acquired in fiscal 1997 and Firstpoint Limited
("Firstpoint") and Eurosystems France S.A. ("Eurosystems") were acquired in
fiscal 1998. These acquisitions have been accounted for under the purchase
method of accounting and on a consolidated basis in the Company's financial
statements for periods ending after the effective date of such acquisitions.
 
    Because of the effect upon the Company's results of operations for the year
ended January 31, 1998 of acquisitions made during that period, direct
comparison of the Company's results of operations for the periods ended July 31,
1997 and July 31, 1998 will not, in the view of management of the Company, prove
meaningful. Instead, a summary of the elements which management of the Company
believes essential to an analysis of the results of operations for such periods
is presented below.
 
RESULTS OF OPERATIONS
 
THREE MONTHS ENDED JULY 31, 1998 COMPARED WITH THE THREE MONTHS ENDED JULY 31,
  1997
 
REVENUES
 
    Revenues for the three months ended July 31, 1998 were $27.4 million, an
increase of $8.6 million, or approximately 45.7% compared to $18.8 million for
the three months ended July 31, 1997. This growth came from the acquisition of
Firstpoint and Eurosystems and from organic growth of the services business.
Revenues from services were $16.7 million, or 60.8% of the total revenue, with
revenues from the supply of products at $10.7 million, or 39.2% of the total
revenues. In the comparable period of the prior year, Service revenues were
44.2% of the total revenues and Products revenues were 55.8 % of total revenues.
 
GROSS PROFIT
 
    Gross profit for the three months ended July 31, 1998 was $10.8 million, an
increase of $4.7 million, or 77.5% compared to $6.1 million for the three months
ended July 31, 1997. This growth came from the acquisitions of Firstpoint and
Eurosystems and from organic growth of the services business. Gross margin
increased from 32.4% for the three months ended July 31, 1997 to 39.5% for the
three months ended July 31, 1998. Gross profit for services increased 99.0% from
$4.5 million for the three months ended July 31, 1997 to $9.0 million for the
three months ended July 31, 1998. Gross profit for products increased 15.5% from
$1.6 million for the three months ended July 31, 1997 to $1.8 million for the
three months to July 31, 1998.
 
SELLING, GENERAL AND ADMINISTRATIVE
 
    Selling, general and administrative expenses were $8.1 million, an increase
of $3.4 million, or 72.2% compared to $4.7 million for the three months ended
July 31, 1997. As a percentage of revenues, selling, general and administrative
expenses increased to 29.5% from 24.9% in the three months ended July 31, 1998.
Selling general and administrative expenses increased primarily as a result of a
growth in infrastructure necessary to support the expansion of the Company's
businesses.
 
                                       9
<PAGE>
DEPRECIATION AND AMORTIZATION
 
    Depreciation and amortization expense for the three months ended July 31,
1998 was $720,000, an increase of $270,000, or 59.7% compared to $452,000 for
the three months ended July 31, 1997. This increase arose principally from the
acquisitions of Firstpoint acquired in September 1997. Depreciation was
$292,000, an increase of $70,000 or 31.5%, from $222,000 for the prior period.
Amortization of goodwill from acquisitions was $428,000, an increase of
$198,000, or 86.1%, from $230,000 for the prior period. An amortization period
of between ten and fifteen years is utilized with respect to acquisitions.
 
INCOME (LOSS) BEFORE INTEREST INCOME AND EXPENSE AND INCOME TAXES
 
    Income before interest expense and income taxes ("IBIT") for the three
months ended July 31, 1998 was $2.0 million, an increase of $1.1 million, or
111.9%, as compared to $958,000 for the three months ended July 31, 1997. As a
percentage of revenues, income before interest expense and income taxes
increased to 7.4% in the three months ended July 31, 1998 as compared to 5.1%
for the three months ended July 31, 1997.
 
    IBIT before depreciation and amortization ("IBITDA") increased for the three
months ended July 31, 1998 to $2.75 million from $1.41 million for the three
months ended July 31, 1997 an increase of $1.34 million or 95.0%. As a
percentage of revenues, IBITDA increased to 10.0% for the three month period
ended July 31, 1998 from 7.5% for the comparable period ended July 31, 1997.
 
INTEREST
 
    Interest expense for the three months ended July 31, 1998 was $210,000, an
increase of $70,000 or 50% compared to $140,000 for the three months ended July
31, 1997, arising from higher utilization of bank lines of credit during the
period. Interest income increased from $85,000 for the three months ended July
31, 1997 to $108,000 an increase of $23,000, arising from higher cash balances
on hand during the quarter.
 
SIX MONTHS ENDED JULY 31, 1998 COMPARED WITH THE SIX MONTHS ENDED JULY 31, 1997
 
REVENUES
 
    Revenues for the six months ended July 31, 1998 were $54.1 million, an
increase of $16.7 million, or approximately 44.5% compared to $37.4 million for
the six months ended July 31, 1997, this growth came from the acquisitions of
Firstpoint and Eurosystems and the remainder from organic growth of the services
business. Revenues from services were $33.1 million, or 61.1% of the total
revenue, with revenues from the supply of products at $21.0 million, or 38.9% of
the total revenues. In the comparable period of the prior year, Service revenues
were 44.1% of the total revenues and supply of products were 55.9% of the total
revenues.
 
GROSS PROFIT
 
    Gross profit for the six months ended July 31, 1998 was $21.4 million, an
increase of $9.7 million, or 82.7% compared to $11.7 million for the six months
ended July 31, 1997, this growth came from the acquisitions of Firstpoint and
Eurosystems and from organic growth of the services business. Gross margin
increased from 31.2% for the six months ended July 31, 1997 to 39.5% for the six
months ended July 31, 1998. Gross profit for services increased 107.8% from $8.6
million for the six months ended July 31, 1997 to $17.8 million for the six
months to July 31, 1998. Gross profit for products increased 13.8% from $3.1
million for the six months ended July 31, 1997 to $3.6 million for the six
months ended July 31, 1998.
 
                                       10
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE
 
    Selling, general and administrative expenses were $16.1 million, an increase
of $7.0 million, or 77.8% compared to $9.1 million for the six months ended July
31, 1997. As a percentage of revenues, selling, general and administrative
expenses increased to 29.7% from 24.1% in the six months ended July 31, 1997.
Selling general and administrative expenses increased primarily as a result of
the acquisition of Firstpoint and Eurosystems.
 
DEPRECIATION AND AMORTIZATION
 
    Depreciation and amortization expense for the six months ended July 31, 1998
was $1.4 million, an increase of $578,000, or 67.4% compared to $858,000 for the
six months ended July 31, 1997. This increase arose principally from the
acquisitions of Firstpoint and Eurosystems. Depreciation was $586,000, an
increase of $169,000 or 40.5%, from $417,000 for the prior period. Amortization
of goodwill from acquisitions was $850,000, an increase of $409,000, or 92.7%,
from $441,000 for the comparable period. An amortization period of ten years is
utilized with respect to acquisitions.
 
INCOME BEFORE INTEREST EXPENSE AND INCOME TAXES
 
    Income before interest expense and income taxes ("IBIT") for the six months
ended July 31, 1998 was $3.9 million, a increase of $2.1 million, or 114.8%, as
compared to $1.8 million for the six months ended July 31, 1997, the majority of
this growth came from the acquisitions of Firstpoint and Eurosystems and the
remainder from organic growth of the services business. As a percentage of
revenues, IBIT increased to 7.1% in the six months ended July 31, 1998 as
compared to 4.8% for the six months ended July 31, 1997.
 
    IBIT before depreciation and amortization increased for the six months ended
July 31, 1998 to $5.3 million from $2.7 million for the six months ended July
31, 1997 an increase of $2.6 million or 99.4%, the majority of this growth came
from the acquisitions of Firstpoint and Eurosystems and the remainder from
organic growth of the services business. As a percentage of revenues, IBITDA
increased to 9.8% for the six month period ended July 31, 1998 from 7.1% for the
comparable period ended July 31, 1997.
 
INTEREST
 
    Interest expense for the six months ended July 31, 1998 was $419,000, an
increase of $208,000 or 98.6% compared to $211,000 for the six months ended July
31, 1997, arising from higher utilization of bank lines of credit during the
period. Interest income increased from $162,000 for the six months ended July
31, 1997 to $176,000.
 
LIQUIDITY AND CAPITAL RESOURCES
 
    On July 2, 1998, the Company completed a secondary public offering (the
"Offering") of 3,425,000 shares of the Company's Common Stock at a price of
$11.00 per share. As a result of this offering the Company raised net proceeds
of $31.3 million.
 
    As of July 31, 1998, the Company had lines of credit with UK, French and
Belgian banks in the amount of L2.6 million ($4.3 million). As of July 31, 1998,
these facilities were not utilized by the Company. The Company repaid $3.8
million of utilized funding during the three months ended July 31, 1998 from
proceeds from the Offering.
 
    The outstanding credit facilities are secured by the assets of the Company
and are periodically reviewed by the issuing institution. Management expects to
be able to maintain these credit arrangements for the foreseeable future,
although no assurance can be given.
 
    The Company maintains a facility with a UK factoring company, pursuant to
which it borrows against eligible trade receivables. The Company pays the
factoring company an administrative fee of 0.075% of
 
                                       11
<PAGE>
eligible trade receivables and interest of 9% per annum. At July 31, 1998, $2.5
million under this agreement was outstanding.
 
    Outstanding advances from stockholders are shown on the Company's balance
sheet as stockholder advances. Outstanding advances as of July 31, 1998 were
$18,000. These outstanding advances do not bear interest, and are payable on
demand.
 
    The Company's working capital increased from $1.0 million at January 31,
1998 to $35.4 million at July 31, 1998. $31.7 million of this increase arose
from the funds from the Offering, together with the cash received from exercises
of options. The remaining $3.7 million arose from the Company's profitability
during the period.
 
    Net cash used by operating activities during the six months ended July 31,
1998 was $396,000, which reflected the net effect of an increase in net accounts
payable, accrued liabilities, and inventories and a decrease in deferred
revenues. Net cash used by investing activities was $1.5 million, for the six
months ended July 31, 1998, primarily reflecting cash used for the purchase of
equipment and the payment of deferred consideration on the acquisition of
Firstpoint. Net cash provided by financing activities was $28.7 million for the
six months ended July 31, 1998, resulting primarily from decrease of bank lines
of credit and payments of outstanding obligations and the receipts from the
Offering and stock options which were exercised during the period.
 
    The Company believes that the net cash flows from operations and borrowing
availability under its credit facilities and net cash proceeds of the Company's
recent offering, will satisfy the Company's anticipated working capital
requirements through at least the next twelve months. To the extent the Company
raises additional capital by issuing equity or convertible debt securities,
ownership dilution to the Company's stockholders will result. In the event that
adequate funds are not available, the Company's business may be adversely
affected.
 
INFLATION
 
    Inflation has not had a material effect upon the Company's results of
operations to date. In the event the rate of inflation should accelerate in the
future, it is expected that costs in connection with the provision by the
Company of its services and products will increase, and, to the extent such
increased costs are not offset by increased revenues, the operations of the
Company may be adversely affected.
 
                                       12
<PAGE>
                           PART II--OTHER INFORMATION
 
<TABLE>
<S>        <C>
Item 1.    Legal Proceedings
           Not Applicable
 
Item 2.    Change In Securities
           Not Applicable
 
Item 3.    Defaults Upon Senior Securities
           Not Applicable
 
Item 4.    Submission of Matters to a Vote of Security Holders
           Not Applicable
 
Item 5.    Other Information
           Not Applicable
 
Item 6.    Exhibits and Reports on Form 8-K
 
             (a) Exhibit 27
 
             (b) Reports on Form 8-K
                Not Applicable
</TABLE>
 
                                       13
<PAGE>
                   4FRONT TECHNOLOGIES, INC. AND SUBSIDIARIES
                                   SIGNATURES
 
    Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned,
thereunto duly authorized.
 
<TABLE>
<S>                             <C>  <C>
                                4FRONT TECHNOLOGIES, INC.
 
                                By:            /s/ STEPHEN MCDONNELL
                                     -----------------------------------------
                                                 Stephen McDonnell
                                              CHIEF FINANCIAL OFFICER
</TABLE>
 
September 2, 1998
 
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