<PAGE>

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

                       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, 1997

                                       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 SOFTWARE INTERNATIONAL, 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)               (Zip Code)

       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 September 10, 1997 was 6,517,747 shares of Common Stock, no par value.

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

<PAGE>

ITEM 1.        FINANCIAL STATEMENTS


              4FRONT SOFTWARE INTERNATIONAL, INC. AND SUBSIDIARIES

                 SIX AND THREE MONTH PERIODS ENDED JULY 31, 1997


                                TABLE OF CONTENTS


                                                                         Page
                                                                        Number
                                                                        ------

CONSOLIDATED FINANCIAL STATEMENTS

     Condensed Consolidated Balance Sheets as of January 31, 1997
     and July 31, 1997 (unaudited)                                         1

     Condensed Consolidated Statements of Operations for the
     six and three month periods ended July 31, 1996 and 1997
     (unaudited)                                                           3

     Condensed Consolidated Statements of Changes in Stockholders'
     Equity for the six months ended July 31, 1997 (unaudited)             4

     Condensed Consolidated Statements of Cash Flows for the
     six and three month periods ended July 31, 1996 and 1997
     (unaudited)                                                           5

     Notes to the Condensed Consolidated Financial Statements              6

<PAGE>

              4FRONT SOFTWARE INTERNATIONAL, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS


                                     ASSETS

                                                      JANUARY 31,    JULY 31,
                                                         1997          1997
                                                      -----------   -----------
                                                                    (UNAUDITED)

CURRENT ASSETS:
     Cash                                            $  6,652,888  $  5,731,147
     Accounts receivable, net of allowance
       for doubtful accounts of $273,205 and
       $333,102 respectively                           15,365,270    14,346,307
     Deposits                                              30,843        31,575
     Inventories                                        7,132,470     7,802,373
     Prepaid expenses                                     904,838     1,194,676
     Income taxes receivable                               32,122        26,479
     Other current assets                                 230,410       289,100

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

             Total current assets                      30,348,841    29,421,657

PROPERTY AND EQUIPMENT, net                             2,050,485     2,158,594

INVESTMENT IN AND ADVANCES
TO EQUITY INVESTEE                                        143,422             -

RECEIVABLE, RELATED PARTY                                 644,356       644,356

INTANGIBLE ASSETS, net                                  7,777,448     7,692,646

DEFERRED INCOME TAX                                       973,511       810,870

OTHER ASSETS                                               83,332        85,308

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

TOTAL ASSETS                                         $ 42,021,395  $ 40,813,431
                                                     ------------  ------------
                                                     ------------  ------------


           SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL
                                   STATEMENTS


                                      - 1 -

<PAGE>

              4FRONT SOFTWARE INTERNATIONAL, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS


                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                    JANUARY 31,     JULY 31,
                                                                       1997           1997
                                                                    -----------    -----------
                                                                                   (UNAUDITED)
<S>                                                                <C>            <C>
CURRENT LIABILITIES:
       Accounts payable                                            $ 13,057,511   $ 10,869,619
       Accrued liabilities                                            2,483,160      1,931,858
       Stockholder advances                                             504,105        504,105
       Lines of credit-bank                                           1,176,848      2,448,069
       Capital lease obligations, current portion                       545,903        323,944
       Income taxes payable                                             493,495        735,175
       Deferred revenue                                               6,503,043      5,612,469

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

              Total current liabilities                              24,764,065     22,425,239

CAPITAL LEASE OBLIGATIONS, less current
                           portion                                      488,795        322,411

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

TOTAL LIABILITIES                                                    25,252,860     22,747,650

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

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 6,514,747 and 6,517,747
         shares issued and outstanding, respectively                 22,988,088     22,994,088
       Accumulated (deficit)                                         (6,222,386)    (4,914,681)
       Cumulative foreign currency translation adjustment                 2,833        (13,626)

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

              Total stockholders' equity                             16,768,535     18,065,781

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

TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY                                                             $ 42,021,395   $ 40,813,431
                                                                   ------------   ------------
                                                                   ------------   ------------
</TABLE>


           SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL
                                   STATEMENTS


                                      - 2 -
<PAGE>

              4FRONT SOFTWARE INTERNATIONAL, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                        FOR THE THREE MONTHS ENDED    FOR THE SIX MONTHS ENDED
                                                        JULY 31, 1996 JULY 31, 1997  JULY 31, 1996  JULY 31, 1997
                                                        ------------- -------------  -------------  -------------
                                                         (UNAUDITED)   (UNAUDITED)    (UNAUDITED)    (UNAUDITED)
<S>                                                     <C>           <C>            <C>            <C>
REVENUES
Products                                                $ 6,867,120   $ 10,507,327   $ 14,195,459   $ 20,935,014
Services                                                  3,193,305      8,312,680      6,415,204     16,509,278
                                                          ---------      ---------      ---------     ----------
                                                         10,060,425     18,820,007     20,610,663     37,444,292
                                                         ----------     ----------     ----------     ----------

Cost of Products                                          5,451,628      8,932,880     11,454,423     17,813,749
Cost of Services                                          1,203,928      3,788,994      2,480,274      7,937,735
                                                          ---------      ---------      ---------      ---------
                                                          6,655,556     12,721,874     13,934,697     25,751,484
                                                          ---------     ----------     ----------     ----------
GROSS PROFIT
Products                                                  1,415,492      1,574,447      2,741,036      3,121,265
Services                                                  1,989,377      4,523,686      3,934,930      8,571,543
                                                          ---------      ---------      ---------      ---------
                                                          3,404,869      6,098,133      6,675,966     11,692,808
                                                          ---------      ---------      ---------     ----------
OPERATING EXPENSES
       Selling, general and administrative expenses       2,832,116      4,687,082      5,544,194      9,041,708
       Depreciation                                          73,437        222,524        154,396        417,690
       Amortization                                          61,870        230,611        123,740        441,092
                                                             ------        -------        -------        -------
       Total operating expenses                           2,967,423      5,140,217      5,822,330      9,900,490
                                                          ---------      ---------      ---------      ---------

INCOME BEFORE INTEREST, INCOME
TAXES, AND SHARE OF RESULTS IN
EQUITY INVESTEE:                                            437,446        957,916        853,636      1,792,318

       Interest income                                       77,747         84,566         81,588        162,210
       Interest expense                                     (25,322)      (139,777)      (128,936)      (210,922)
                                                            --------      ---------      ---------      ---------

INCOME BEFORE INCOME TAXES AND
SHARE OF RESULTS IN EQUITY
INVESTEE:                                                   489,871        902,705        806,288      1,743,606

SHARE OF OPERATING (LOSS) OF
EQUITY INVESTEE                                             (72,219)             -       (124,392)             -
                                                            --------       -------       ---------     ---------

INCOME BEFORE INCOME TAXES                                  417,652        902,705        681,896      1,743,606

INCOME TAXES                                                104,413        225,676        170,474        435,901
                                                            -------        -------        -------        -------

NET INCOME                                              $   313,239   $    677,029   $    511,422   $  1,307,705
                                                            -------        -------        -------      ---------

NET INCOME PER COMMON SHARE
IN ACCORDANCE WITH APB OPINION NO. 15
(NOTE 3)                                                $      0.06   $       0.10   $       0.12   $       0.19

NET INCOME PER COMMON SHARE (BASIC)
IN ACCORDANCE WITH SFAS NO. 128
(NOTE 4)                                                $      0.07   $       0.10   $       0.14   $       0.20

NET INCOME PER COMMON SHARE (DILUTED)
IN ACCORDANCE WITH SFAS NO. 128
(NOTE 4)                                                $      0.06   $       0.10   $       0.11   $       0.19
</TABLE>


           SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL
                                   STATEMENTS


                                      - 3 -
<PAGE>

              4FRONT SOFTWARE INTERNATIONAL, 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, 1997   6,514,747   $ 22,988,088   $ (6,222,386)   $   2,833       $ 16,768,535

Net income for
 period (unaudited)                 -              -        630,676            -            630,676
Foreign currency
 translation adjustment             -              -              -      (21,528)           (21,528)

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

Balance, April 30, 1997     6,514,747     22,988,088     (5,591,710)     (18,695)        17,377,683

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

Exercise of warrants            3,000          6,000              -            -              6,000
Net income for
 period (unaudited)                 -              -        677,029            -            677,029
Foreign currency
 translation adjustment             -              -              -        5,069              5,069

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

BALANCE, JULY 31, 1997      6,517,747   $ 22,994,088   $ (4,914,681)   $ (13,626)      $ 18,065,781
(UNAUDITED)                 ---------   ------------   ------------    ---------       ------------
                            ---------   ------------   ------------    ---------       ------------
</TABLE>


           SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL
                                   STATEMENTS


                                      - 4 -
<PAGE>

                 4FRONT SOFTWARE INTERNATIONAL, INC. AND SUBSIDIARIES

                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                      FOR THE THREE MONTHS ENDED     FOR THE SIX MONTHS ENDED
                                                     JULY 31, 1996  JULY 31, 1997   JULY 31,1996   JULY 31, 1997
                                                     -------------  -------------   ------------   -------------
                                                      (UNAUDITED)    (UNAUDITED)    (UNAUDITED)    (UNAUDITED)

<S>                                                 <C>            <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                          $    313,239   $    677,029   $    511,422   $  1,307,705
Adjustments to reconcile net income  to net cash
provided  (used) by operating activities
  Depreciation                                            73,437        222,524        154,396        417,690
  Amortization                                            61,870        230,611        123,740        441,092
  Share of operating loss of equity investee              72,219              -        124,392              -
  Loss (gain) on disposal of fixed assets                (17,234)         3,157        (36,682)       (19,595)
  (Increase) decrease in accounts receivable            (123,669)      (426,787)      (511,605)     1,018,963
  Decrease (increase)  in deposits                         4,194           (345)         7,280           (732)
  (Increase) decrease in inventories                    (259,159)        23,858       (758,102)      (669,903)
  (Increase) in prepaid expenses                        (114,570)      (141,895)       (33,050)      (289,838)
  Increase (decrease) in income taxes                   (161,839)       172,626       (108,372)       247,323
  (Increase) decrease in other current assets             12,204       (102,086)        (8,220)       (58,690)
  Decrease in deferred income tax                              -         26,820              -        162,641
  (Decrease) in accounts payable                      (2,329,560)      (697,601)    (1,946,946)    (1,316,556)
  (Decrease) in accrued liabilities                     (348,298)      (157,296)      (501,167)      (551,302)
  Increase (decrease) in deferred revenue                273,825        717,210       (153,284)      (890,574)
                                                    ------------   ------------   ------------   ------------
  Net cash provided (used) by operating activities    (2,543,341)       547,825     (3,136,198)      (201,776)
                                                    ------------   ------------   ------------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of equipment                                 (193,553)      (372,562)      (295,315)      (595,991)
  Proceeds from disposal of equipment                     82,920         64,009        111,814         89,787
  Acquisition of subsidiaries                                  -       (241,074)             -     (1,227,626)
  Investment in and advances to equity investee         (172,514)       145,221       (215,764)       143,422
  (Increase) in other assets                             (40,148)          (933)        (9,934)        (1,976)
                                                    ------------   ------------   ------------   ------------
  Net cash used by investing activities                 (323,295)      (405,339)      (409,199)    (1,592,384)
                                                    ------------   ------------   ------------   ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  (Decrease) increase in lines of credit-bank         (2,017,991)      (934,966)    (1,482,763)     1,271,221
  Repayment of notes payable                          (1,301,234)             -     (1,695,403)             -
  Decrease in deferred offering costs                    571,119              -        338,595              -
  Payments of capital lease obligations                  (39,291)      (191,389)       (62,850)      (388,343)
  Net proceeds from issuance of common stock          16,191,479              -     16,191,479              -
  Net proceeds from exercise of warrants                       -          6,000              -          6,000
  Net proceeds from exercise of stock options                  -              -            536              -
                                                    ------------   ------------   ------------   ------------

  Net cash from (used by) financing activities        13,404,082     (1,120,355)    13,289,594        888,878
                                                    ------------   ------------   ------------   ------------

Effect of exchange rate changes on cash                  100,114          5,069         63,129        (16,459)
                                                    ------------   ------------   ------------   ------------
NET (DECREASE) INCREASE IN CASH                       10,637,560       (972,800)     9,807,326       (921,741)
Cash at beginning of period                              561,410      6,703,947      1,391,644      6,652,888
                                                    ------------   ------------   ------------   ------------
Cash at end of period                               $ 11,198,970   $  5,731,147   $ 11,198,970   $  5,731,147
                                                    ------------   ------------   ------------   ------------
                                                    ------------   ------------   ------------   ------------
Cash paid for interest expense                      $     25,322   $    139,777   $    128,936   $    210,922
                                                    ------------   ------------   ------------   ------------
                                                    ------------   ------------   ------------   ------------
Cash paid for income taxes                          $    332,313   $          -   $    332,313   $          -
                                                    ------------   ------------   ------------   ------------
                                                    ------------   ------------   ------------   ------------
</TABLE>

SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL
                        STATEMENTS

                                      - 5 -

<PAGE>

                 4FRONT SOFTWARE INTERNATIONAL, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1  -   NATURE  OF BUSINESS

4Front Software International, Inc. and subsidiaries (the "Company" or "4Front")
is a UK-based specialized computer services company. The Company provides key
elements of distributed computing, including systems development and
integration, storage and client-server solutions and products, as well as
hardware and software support and help desk services.

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 Software International Inc. for the interim periods
presented.

The results of the six months ended July 31, 1997 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, 1997.

NOTE 3 -  EARNINGS PER SHARE

The computation of earnings per share is calculated based on the Treasury Stock
Method in accordance with APB Opinion No. 15.

For the three and six month periods to July 31, 1996 and 1997 the Treasury Stock
method of calculating earnings per share was utilized to reflect the dilutive
effect of stock options and warrants, there is no material difference between
diluted and primary earnings per share for the periods shown.
 
<TABLE>
<CAPTION>

                                        FOR THE THREE MONTHS ENDED     FOR THE SIX MONTHS ENDED
                                      JULY 31, 1996   JULY 31, 1997  JULY 31, 1996  JULY 31, 1997
                                      -------------   -------------  -------------  -------------
<S>                                   <C>             <C>            <C>            <C>
Weighted average number of
common shares outstanding               4,535,920      6,514,747      3,785,867      6,514,747

Net income per common share                 $0.06          $0.10          $0.12          $0.19

</TABLE>
 
NOTE 4 - ADOPTION OF NEW STANDARDS

SFAS No. 128, EARNINGS PER SHARE, was issued in February 1997.  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.  The Group has adopted Statement 128
for its financial statements for the year ended January 31, 1998, and has begun
disclosing its effects in each of the quarters of the year.

                                     - 6 -
<PAGE>

                 4FRONT SOFTWARE INTERNATIONAL, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 4 - ADOPTION OF NEW STANDARDS (CONTD)

The computation for basic earnings per share is based on the net income divided
by the weighted average number of common shares outstanding for the period.

The Computation for diluted earnings per share is based on the Treasury Stock
Method as per the requirements of SFAS No. 128.
 
<TABLE>
<CAPTION>

                                                       FOR THE THREE MONTHS ENDED    FOR THE SIX MONTHS ENDED
                                                      JULY 31, 1996  JULY 31, 1997  JULY 31,1996   JULY 31, 1997
                                                      -------------  -------------  ------------   -------------
                                                       (UNAUDITED)    (UNAUDITED)    (UNAUDITED)    (UNAUDITED)
<S>                                                    <C>           <C>            <C>             <C>
  BASIC EARNINGS PER SHARE

  Net income                                             313,239        677,029        511,422      1,307,705
                                                       ---------     ----------     ----------      ---------

  Weighted Average Number of Common Shares
    outstanding                                        4,535,920      6,514,747      3,785,867      6,514,747
                                                       ---------     ----------     ----------      ---------

  Net income per Common Share Basic                        $0.07          $0.10         $0.14           $0.20
                                                       ---------     ----------     ----------      ---------
                                                       ---------     ----------     ----------      ---------

  DILUTED EARNINGS PER SHARE

  Net income                                             313,239        677,029        511,422      1,307,705
                                                       ---------     ----------     ----------      ---------

  Weighted Average Number of Common Shares
    outstanding                                        4,535,920      6,514,747      3,785,867      6,514,747
  Additional Shares to be Issued upon Assumed
    Exercise of Options and Warrants                   2,941,850      1,880,800      2,941,850        604,500
  Shares Hypothetically Repurchased at the Average
    Market Price with the Proceeds of Exercise        (1,932,463)    (1,618,941)    (2,029,420)      (381,772)
                                                       ---------     ----------     ----------      ---------

  Adjusted Shares for Dilution                         5,545,307      6,776,606      4,698,297      6,737,475
                                                       ---------     ----------     ----------      ---------

  Net income per Common Share Diluted                      $0.06          $0.10          $0.11          $0.19
                                                       ---------     ----------     ----------      ---------
                                                       ---------     ----------     ----------      ---------
</TABLE>
 
NOTE 5 -  INVENTORIES

Inventories consist of the following:    JANUARY 31, 1997     JULY 31, 1997
                                         ----------------     -------------
                                                               (UNAUDITED)

    Computer hardware                     $  6,949,121        $  7,668,250
    Computer software                           83,097              31,493
    Work in progress                           100,252             102,630
                                          ------------        ------------
                                          $  7,132,470        $  7,802,373
                                          ------------        ------------
                                          ------------        ------------

                                     - 7 -
<PAGE>

                 4FRONT SOFTWARE INTERNATIONAL, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6 - 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, 1997 of
$435,901 on the profits of its operations, and for the six months to July 31,
1996 $170,474.

                                     - 8 -

<PAGE>

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

OVERVIEW

The Company is a UK-based specialized computer services company which provides a
wide range of high-end Information Technology solutions and services,
principally to Financial Times UK Top 500 companies and government authorities.
The Company provides key elements of distributed computing, including systems
development and integration, storage and client-server solutions and products,
as well as extensive hardware and software support, including help desk support
services.  The Company believes it has a competitive advantage as a single-
source, multivendor, multiple service solution provider to a broad range of
corporate computing needs.

On June 19, 1996, the Company completed a public offering (the "Offering") of
3,000,000 shares of the Company's Common Stock at a price of $5.75 per share.
On July 9, 1996, the Company completed the sale of a further 450,000 shares,
pursuant to the underwriters' over-allotment option.  As a result of this
offering the Company raised net proceeds of $16.0 million.

Effective August 15, 1996, the Company acquired Hammer Distribution Limited
("Hammer").  Hammer is a supplier of storage solutions and computer sub-systems.
The Company believes that the acquisition of Hammer will assist the Company in
consolidating a leading position within the UK market for high end storage
solutions and sub-systems.

Effective October 11, 1996, the Company acquired Datapro Computers Group Limited
("Datapro").  Datapro is a supplier of specialized services including systems
integration, hardware and software maintenance and systems support, and other
technology enabling services.  The Company believes that the acquisition of
Datapro will assist the Company in strengthening its position in the independent
hardware maintenance industry.

Effective September 8, 1997, the Company acquired Firstpoint Limited
("Firstpoint").  Firstpoint is a supplier of hardware maintenance and services.
The Company believes that the acquisition of Firstpoint strengthens its position
within the UK independent hardware maintenance industry.

RESULTS OF OPERATIONS

Because of the effect upon the Company's results of operations for the year
ended January 31, 1997 of acquisitions made during that period and restructuring
and reorganization, direct comparison of the Company's results of operations for
the periods ended July 31, 1996 and July 31, 1997 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.  The operations and results
of operations for both Hammer and Datapro were not included in the results for
the three and six month periods to July 31, 1996 as they were effective in the
third quarter of 1996.  The Hammer and Datapro acquisitions are now fully
integrated into the Company's operations and reflected as such in the
substantial growth of the Company's operations and results of operations for the
three and six month periods to July 31, 1997.


THREE MONTHS ENDED JULY 31, 1997 COMPARED WITH THE THREE MONTHS ENDED JULY 31,
1996


REVENUES

Revenues for the three months ended July 31, 1997 were $18.8 million, an
increase of $8.8 million, or approximately 87.1% compared to $10.0 million for
the three months ended July 31, 1996, the majority of this growth came from the
acquisitions of Hammer and Datapro and the remainder from organic growth of the
services business.  Revenues from products were $10.5 million, or 55.8% of the
total revenue, with revenues from the supply of services at $8.3 million, or
44.2% of the total revenues.  In the comparable period of the prior year,
Product revenues were 68.3% of the total revenues and supply of services were
31.7% of the total revenues.


                                      - 9 -

<PAGE>

GROSS PROFIT

Gross profit for the three months ended July 31, 1997 was $6.1 million, an
increase of $2.7 million, or 79.1% compared to $3.4 million for the three months
ended July 31, 1996, the majority of this growth came from the acquisitions of
Hammer and Datapro and the remainder from organic growth of the services
business.  Gross margin decreased from 33.8% for the three months ended July 31,
1996 to 32.4% for the three months ended July 31, 1997.  Gross profit for
products increased 11.2% from $1.4 million for the three months ended July 31,
1996 to $1.6 million for the three months to July 31, 1997.  Gross profit for
services increased 127.4% from $2.0 million for the three months ended July 31,
1996 to $4.5 million for the three months ended July 31, 1997.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative expenses were $4.7 million, an increase of
$1.9 million, or 65.5% compared to $2.8 million for the three months ended July
31, 1996.  As a percentage of revenues, selling, general and administrative
expenses decreased to 24.9% from 28.2% in the three months ended July 31, 1996.
Selling general and administrative expenses increased primarily as a result of
the acquisition of Hammer and Datapro.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization expense for the three months ended July 31, 1997
was $453,000, an increase of $318,000, or 234.9% compared to $135,000 for the
three months ended July 31, 1996.  This increase arose principally from the
acquisitions of Hammer and Datapro acquired in August 1996 and October 1996,
respectively.  Depreciation was $222,000, an increase of $149,000 or 203.0%,
from $73,000 for the prior period.  Amortization of goodwill from acquisitions
was $231,000, an increase of $169,000, or 272.7%, from $62,000 for the prior
period.  An amortization period of ten years is utilized with respect to
acquisitions.

INCOME BEFORE INTEREST EXPENSE, INCOME TAXES AND SHARE OF RESULTS IN EQUITY
INVESTEE

Income before interest expense, income taxes and share of results in equity
investee ("IBITI") for the three months ended July 31, 1997 was $958,000, a
increase of $520,000, or 119.0%, as compared to $438,000 for the three months
ended July 31, 1996, the majority of this growth came from the acquisitions of
Hammer and Datapro and the remainder from organic growth of the services
business.  As a percentage of revenues, IBITI increased  to 5.1% in the three
months ended July 31, 1997 as compared to 4.3% for the three months ended July
31, 1996.

IBITI before depreciation and amortization increased for the three months ended
July 31, 1997 to $1.4 million from $573,000 for the three months ended July 31,
1996 an increase of $838,000 or 146.4%, the majority of this growth came from
the acquisitions of Hammer and Datapro and the remainder from organic growth of
the services business.  As a percentage of revenues, IBITIDA increased to 7.5%
for the three month period ended July 31, 1997 from 5.7% for the comparable
period ended July 31, 1996.

EQUITY INVESTEE LOSS

Equity investee loss was $72,000 for the three months ended July 31, 1996
reflecting the Company's proportion attributable to the ActionTrac Joint
Venture. There was no such loss during the three months ended July 31, 1997 as
the Company ceased its participation in the ActionTrac Joint Venture due to the
bankruptcy of the other party to the Joint Venture.

INTEREST

Interest expense for the three months ended July 31, 1997 was $140,000 an
increase of $115,000 compared to $25,000 for the three months ended July 31,
1996, arising from higher utilization of bank lines of credit during the period.
Interest income increased from $78,000 for the three months ended July 31, 1996
to $85,000 an increase of $7,000, arising from larger cash balances on hand
during the quarter.


                                     - 10 -

<PAGE>

SIX MONTHS ENDED JULY 31, 1997 COMPARED WITH THE SIX MONTHS ENDED JULY 31, 1996


REVENUES

Revenues for the six months ended July 31, 1997 were $37.4 million, an increase
of $16.8 million, or approximately 81.7% compared to $20.6 million for the six
months ended July 31, 1996, the majority of this growth came from the
acquisitions of Hammer and Datapro and the remainder from organic growth of the
services business.  Revenues from products were $20.9 million, or 55.9% of the
total revenue, with revenues from the supply of services at $16.5 million, or
44.1% of the total revenues.  In the comparable period of the prior year,
Product revenues were 68.9% of the total revenues and supply of services were
31.1% of the total revenues.

GROSS PROFIT

Gross profit for the six months ended July 31, 1997 was $11.7 million, an
increase of $5.0 million, or 75.1% compared to $6.7 million for the six months
ended July 31, 1996, the majority of this growth came from the acquisitions of
Hammer and Datapro and the remainder from organic growth of the services
business.  Gross margin decreased from 32.4% for the six months ended July 31,
1996 to 31.2% for the six months ended July 31, 1997.  Gross profit for products
increased 13.9% from $2.7 million for the six months ended July 31, 1996 to $3.1
million for the six months to July 31, 1997.  Gross profit for services
increased 117.8% from $3.9 million for the six months ended July 31, 1996 to
$8.6 million for the six months ended July 31, 1997.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative expenses were $9.0 million, an increase of
$3.5 million, or 63.1% compared to $5.5 million for the six months ended July
31, 1996.  As a percentage of revenues, selling, general and administrative
expenses decreased to 24.1% from 26.9% in the six months ended July 31, 1996.
Selling general and administrative expenses increased primarily as a result of
the acquisition of Hammer and Datapro.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization expense for the six months ended July 31, 1997 was
$859,000, an increase of $581,000, or 208.8% compared to $278,000 for the six
months ended July 31, 1996.  This increase arose principally from the
acquisitions of Hammer and Datapro acquired in August 1996 and October 1996,
respectively.  Depreciation was $418,000, an increase of $264,000 or 170.5%,
from $154,000 for the prior period.  Amortization of goodwill from acquisitions
was $441,000, an increase of $317,000, or 256.5%, from $124,000 for the prior
period.  An amortization period of ten years is utilized with respect to
acquisitions.

INCOME BEFORE INTEREST EXPENSE, INCOME TAXES AND SHARE OF RESULTS IN EQUITY
INVESTEE

Income before interest expense, income taxes and share of results in equity
investee ("IBITI") for the six months ended July 31, 1997 was $1.8 million, a
increase of $939,000, or 110.0%, as compared to $854,000 for the six months
ended July 31, 1996, the majority of this growth came from the acquisitions of
Hammer and Datapro and the remainder from organic growth of the services
business.  As a percentage of revenues, IBITI increased  to 4.8% in the six
months ended July 31, 1997 as compared to 4.1% for the six months ended July 31,
1996.

IBITI before depreciation and amortization increased for the six months ended
July 31, 1997 to $2.7 million from $1.2 million for the six months ended July
31, 1996 an increase of $1.5 million or 134.2%, the majority of this growth came
from the acquisitions of Hammer and Datapro and the remainder from organic
growth of the services business.  As a percentage of revenues, IBITIDA increased
to 7.1% for the six month period ended July 31, 1997 from 5.5% for the
comparable period ended July 31, 1996.


                                     - 11 -

<PAGE>

EQUITY INVESTEE LOSS

Equity investee loss was $124,000 for the six months ended July 31, 1996
reflecting the Company's proportion attributable to the ActionTrac Joint
Venture. There was no such loss during the six months ended July 31, 1997 as the
Company ceased its participation in the ActionTrac Joint Venture due to the
bankruptcy of the other party to the Joint Venture.

INTEREST

Interest expense for the six months ended July 31, 1997 was $211,000 an increase
of $82,000 or 63.6% compared to $129,000 for the six months ended July 31, 1996,
arising from higher utilization of bank lines of credit during the period.
Interest income increased from $82,000 for the six months ended July 31, 1996 to
$162,000 an increase of $80,000, arising from larger cash balances on hand
during the quarter.

LIQUIDITY AND CAPITAL RESOURCES

From inception until June 1996, the Company's sources of capital had been cash
flows from operations, private placements of securities, primarily from its
controlling stockholders and related parties, and borrowings from banks.  On
June 19, 1996, the Company completed a public offering (the "Offering") of
3,000,000 shares of the Company's Common Stock at a price of $5.75 per share.
On July 9, 1996 the Company completed the sale of a further 450,000 shares,
pursuant to the underwriters' over-allotment option.  As a result of this
offering the Company raised net proceeds of $16.0 million.

As of July 31, 1997, the Company had lines of credit with UK banks in the amount
of L2.3 million ($3.8 million).  As of July 31, 1997 $2.4 million was
outstanding.

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.

Outstanding advances from stockholders are shown on the Company's balance sheet
as stockholder advances.  Outstanding advances as of July 31, 1997 were
$504,105.  These outstanding advances do not bear interest, and are payable on
demand.

The Company's working capital increased from $5.6 million surplus at January 31,
1997 to a surplus of $7.0 million at July 31, 1997.

Net cash used by operating activities during the six months ended July 31, 1997
was $202,000, which reflected the net effect of a decrease in accounts payable,
accrued liabilities, accounts receivable and deferred revenue and an increase in
inventories.  Net cash used by investing activities was $1.6 million, for the
six months ended July 31, 1997, primarily reflecting cash used for the payment
of contingent amounts due on the Hammer acquisition and for the purchase of
equipment.  Net cash provided by financing activities was $0.9 million for the
six months ended July 31, 1997, resulting primarily from increase of bank lines
of credit and payments of outstanding obligations.

The Company believes that the net cash flows from operations and borrowing
availability under its credit facilities, 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.

On September 8, 1997, the Company acquired all the shares of Firstpoint Limited
("Firstpoint") for a total consideration of approximately $6.1 million,
including the assumption of $1.4 million of inter-company debt.  $3.9 million
(from available cash resources of the Company), including repayment of the
inter-company debt, was paid upon completion of the acquisition and the
remaining balance of the consideration is to be paid in quarterly installments
over the next 18 months.  Firstpoint presently has no foreseeable significant
working capital funding requirements from the Company.


                                     - 12 -

<PAGE>

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.


                                     - 13 -

<PAGE>

          PART II - OTHER INFORMATION



Item 6.   Exhibits and Reports on Form 8-K

               (a)  The following exhibits are filed as part of this report.
                    27   Financial Data Schedule
               (b)  Reports on Form 8-K.
                    The company did not file any reports on Form 8-K during the
                    quarter for which this report is filed.

          All other items of this report are inapplicable.


                                     - 14 -

<PAGE>

              4FRONT SOFTWARE INTERNATIONAL, 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.



September 10, 1997                           4FRONT SOFTWARE
                                             INTERNATIONAL, INC.



                                             By: /s/ Stephen McDonnell
                                             -------------------------

                                             Stephen McDonnell
                                             Chief Financial Officer


                                     - 15 -