<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 April 30, 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 May 8, 1997 was 6,514,747 shares of Common Stock, no par value.

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



<PAGE>

ITEM 1.  FINANCIAL STATEMENTS


                 4FRONT SOFTWARE INTERNATIONAL, INC. AND SUBSIDIARIES

                       THREE MONTH PERIOD ENDED APRIL 30, 1997




                                  TABLE OF CONTENTS



                                                                         PAGE
                                                                        NUMBER

CONSOLIDATED FINANCIAL STATEMENTS

       Condensed Consolidated Balance Sheets as of January 31, 1997
       and April 30, 1997 (unaudited)                                      1

       Condensed Consolidated Statements of Operations for the
       three months ended April 30, 1996 and 1997 (unaudited)              3

       Condensed Consolidated Statements of Changes in Stockholders'
       Equity for the three months ended April 30, 1997 (unaudited)        4

       Condensed Consolidated Statements of Cash Flows for the
       three months ended April 30, 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,     APRIL 30,
                                                       1997           1997
                                                    -----------    -----------
                                                                   (UNAUDITED)


CURRENT ASSETS:
    Cash                                           $  6,652,888   $  6,703,947
    Accounts receivable, net of allowance
      for doubtful accounts of $273,205 and
      $309,211 respectively                          15,365,270     13,919,520
    Deposits                                             30,843         31,230
    Inventories                                       7,132,470      7,826,231
    Prepaid expenses                                    904,838      1,052,781
    Income taxes receivable                              32,122         26,190
    Other current assets                                230,410        187,014
                                                    -----------    -----------

         Total current assets                        30,348,841     29,746,913

PROPERTY AND EQUIPMENT,  net                          2,050,485      2,075,722

INVESTMENT IN AND ADVANCES
TO EQUITY INVESTEE                                      143,422        145,221

RECEIVABLE, RELATED PARTY                               644,356        644,356

INTANGIBLE ASSETS, net                                7,777,448      7,682,183

DEFERRED INCOME TAX                                     973,511        837,690

OTHER ASSETS                                             83,332         84,375
                                                    -----------    -----------

TOTAL ASSETS                                       $ 42,021,395   $ 41,216,460
                                                    -----------    -----------
                                                    -----------    -----------



        SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


                                        - 1 -


<PAGE>

                 4FRONT SOFTWARE INTERNATIONAL, INC. AND SUBSIDIARIES

                        CONDENSED CONSOLIDATED BALANCE SHEETS


                         LIABILITIES AND STOCKHOLDERS' EQUITY


                                                    JANUARY 31,      APRIL 30,
                                                        1997           1997
                                                    -----------    -----------
                                                                   (UNAUDITED)

CURRENT LIABILITIES:
    Accounts payable                               $ 13,057,511   $ 11,567,220
    Accrued liabilities                               2,483,160      2,089,154
    Stockholder advances                                504,105        504,105
    Lines of credit-bank                              1,176,848      3,383,035
    Capital lease obligations, current portion          545,903        416,411
    Income taxes payable                                493,495        562,260
    Deferred revenue                                  6,503,043      4,895,259
                                                    -----------    -----------

         Total current liabilities                   24,764,065     23,417,444

CAPITAL LEASE OBLIGATIONS, less current
    portion                                             488,795        421,333
                                                    -----------    -----------

TOTAL LIABILITIES                                    25,252,860     23,838,777
                                                    -----------    -----------

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 6,514,747
      shares issued and outstanding, respectively    22,988,088     22,988,088
    Accumulated (deficit)                            (6,222,386)    (5,591,710)
    Cumulative foreign currency translation
      adjustment                                          2,833        (18,695)
                                                    -----------    -----------

    Total stockholders' equity                       16,768,535     17,377,683
                                                    -----------    -----------

TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY                                             $ 42,021,395   $ 41,216,460
                                                    -----------    -----------
                                                    -----------    -----------



              SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL
                                      STATEMENTS


                                        - 2 -


<PAGE>

                 4FRONT SOFTWARE INTERNATIONAL, INC. AND SUBSIDIARIES

                   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

      FOR THE THREE MONTHS ENDED

                                              APRIL 30, 1996    APRIL 30, 1997
                                              ---------------   --------------
                                                (UNAUDITED)       (UNAUDITED)
REVENUES
Products                                        $ 7,328,339      $ 10,427,687
Services                                          3,221,899         8,196,598
                                                 ----------        ----------
                                                 10,550,238        18,624,285
                                                 ----------        ----------

Cost of Products                                  6,002,795         8,880,689
Cost of Services                                  1,276,346         4,148,921
                                                 ----------        ----------
                                                  7,279,141        13,029,610
                                                 ----------        ----------

GROSS PROFIT
Products                                          1,325,544         1,546,998
Services                                          1,945,553         4,047,677
                                                 ----------        ----------
                                                  3,271,097         5,594,675
                                                 ----------        ----------
OPERATING EXPENSES

     Selling, general and administrative
       expenses                                   2,712,078         4,354,626
     Depreciation                                    80,959           195,166
     Amortization                                    61,870           210,481
                                                 ----------        ----------
    Total operating expenses                      2,854,907         4,760,273
                                                 ----------        ----------

INCOME BEFORE INTEREST, INCOME
TAXES, AND SHARE OF RESULTS IN
EQUITY INVESTEE:                                    416,190           834,402

    Interest income                                   3,841            77,644
    Interest expense                               (103,614)          (71,145)
                                                 ----------        ----------

INCOME BEFORE INCOME TAXES AND
SHARE OF RESULTS IN EQUITY
INVESTEE:                                           316,417           840,901

SHARE OF OPERATING (LOSS) OF
EQUITY INVESTEE                                     (52,173)             -
                                                 ----------        ----------

INCOME BEFORE INCOME TAXES                          264,244           840,901

INCOME TAXES                                         66,061           210,225
                                                 ----------        ----------

NET INCOME                                        $ 198,183         $ 630,676
                                                 ----------        ----------

NET INCOME  PER COMMON SHARE (BASIC)              $    0.07         $    0.10

NET INCOME PER COMMON SHARE (DILUTED)             $    0.05         $    0.09


        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
(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
                                                       APRIL 30, 1996      APRIL 30, 1997
                                                       --------------      --------------
                                                         (UNAUDITED)         (UNAUDITED)
<S>                                                    <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                $ 198,183           $ 630,676
Adjustments to reconcile net income  to net cash
provided  (used) by operating activities
    Depreciation                                             80,959             195,166
    Amortization                                             61,870             210,481
    Share of operating loss of equity investee               52,173                   -
    Gain on disposal of fixed assets                        (19,448)            (22,752)
    (Increase) decrease in accounts receivable             (387,936)          1,445,750
    Decrease (increase)  in deposits                          3,086                (387)
    (Increase) in inventories                              (498,943)           (693,761)
    Decrease (increase) in prepaid expenses                  81,520            (147,943)
    Increase in income taxes                                 53,467              74,697
    (Increase) decrease in other current assets             (20,424)             43,396
    Decrease in deferred income tax                               -             135,821
    Increase (decrease) in accounts payable                 382,614            (618,955)
    (Decrease) in accrued liabilities                      (152,869)           (394,006)
    (Decrease) in deferred revenue                         (427,109)         (1,607,784)
                                                         ----------         -----------

    Net cash used by operating activities                  (592,857)           (749,601)
                                                         ----------         -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of equipment                                  (101,762)           (223,429)
    Proceeds from disposal of equipment                      28,894              25,778
    Acquisition of subsidiaries                                   -            (986,552)
    Investment in and advances to equity investee           (43,250)             (1,799)
    Decrease (increase) in other assets                      30,214              (1,043)
                                                         ----------         -----------

    Net cash used by investing activities                   (85,904)         (1,187,045)
                                                         ----------         -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Increase in lines of credit-bank                        535,228           2,206,187
    Repayment of notes payable                             (394,169)                  -
    (Increase) in deferred offering costs                  (232,524)                  -
    Payments of capital lease obligations                   (23,559)           (196,954)
    Net proceeds from exercise of share options                 536                   -
                                                         ----------         -----------

    Net cash from (used by) financing activities           (114,488)          2,009,233
                                                         ----------         -----------

Effect of exchange rate changes on cash                     (36,985)            (21,528)
                                                         ----------         -----------
NET (DECREASE) INCREASE IN CASH                            (830,234)             51,059
Cash at beginning of period                               1,391,644           6,652,888
                                                         ----------         -----------
Cash at end of period                                    $  561,410         $ 6,703,947
                                                         ----------         -----------
                                                         ----------         -----------
Cash paid for interest expense                           $  103,614         $    71,145
                                                         ----------         -----------
                                                         ----------         -----------

</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 three months ended April 30, 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 and its Annual Report to
Shareholders for the year ended January 31, 1997.

NOTE 3 - 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.

The Company has adopted SFAS 128 EARNINGS PER SHARE, and in accordance with that
standard is showing basic and fully diluted earnings per share.

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.



                                        - 6 -


<PAGE>

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

<TABLE>
<CAPTION>
 
NOTE 3 - ADOPTION OF NEW STANDARDS (CONTD)

                                                               FOR THE MONTHS ENDED
                                                               --------------------
                                                          APRIL 30, 1996   APRIL 30, 1997
                                                          --------------   --------------
                                                            (UNAUDITED)      (UNAUDITED)
<S>                                                       <C>              <C>
    BASIC EARNINGS PER SHARE

    Net income                                                 198,183          630,676
                                                             ---------        ---------

    Weighted Average Number of Common Shares
      outstanding                                            3,011,068        6,514,747
                                                             ---------        ---------

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

    DILUTED EARNINGS PER SHARE

    Net income                                                 198,183          630,676
                                                             ---------        ---------

    Weighted Average Number of Common Shares
      outstanding                                            3,011,068        6,514,747
    Additional Shares to be Issued upon Assumed
      Exercise of Options and Warrants                       2,941,850          487,000
    Shares Hypothetically Repurchased at the Average
      Market Price with the Proceeds of Exercise            (2,255,345)        (306,049)
                                                             ---------        ---------

    Adjusted Shares for Dilution                             3,697,573        6,695,698
                                                             ---------        ---------

    Net income per Common Share Diluted                          $0.05            $0.09
                                                             ---------        ---------
                                                             ---------        ---------


NOTE 4 -  INVENTORIES

Inventories consist of the following:                  JANUARY 31, 1997    APRIL 30, 1997
                                                       ----------------    --------------
                                                                             (UNAUDITED)

    Computer hardware                                      $ 6,949,121      $ 7,693,409
    Computer software                                           83,097           31,312
    Work in progress                                           100,252          101,510
                                                             ---------        ---------
                                                           $ 7,132,470      $ 7,826,231
                                                             ---------        ---------
                                                             ---------        ---------

</TABLE>


                                                                    - 7 -
<PAGE>

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


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 three months ended  April 30, 
1997 of $210,225 on the profits of its operations, and for the three months 
to  April 30, 1996 $66,061.


                                        - 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.

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.

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 April 30, 1996 and April 30, 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.

THREE MONTHS ENDED APRIL 30, 1997 COMPARED WITH THE THREE MONTHS ENDED 
APRIL 30, 1996


REVENUES

Revenues for the three months ended April 30, 1997 were $18.6 million, an 
increase of $8.0 million, or approximately 76.5% compared to $10.6 million 
for the three months ended April 30, 1996.   Revenues from products were 
$10.4 million, or 56% of the total revenue, with revenues from the supply of 
services at $8.2 million, or 44% of the total revenues.  In the comparable 
period of the prior year, Product revenues were 69.5% of the total revenues 
and supply of services were 30.5 % of the total revenues.

GROSS PROFIT

Gross profit for the three months ended April 30, 1997 was $5.6 million, an 
increase of $2.3 million, or 71.0% compared to $3.3 million for the three 
months ended April 30, 1996.  Gross margin decreased from 31.0% for the three 
months ended April 30, 1996 to 30.0% for the three months ended April 30, 
1997.  Gross profit for products increased 16.7% from $1.3 million for the 
three months ended April 30, 1996 to $1.5 million for the three months to 
April 30, 1997.  Gross profit for services increased 108.0% from $1.9 million 
for the three months ended April 30, 1996 to $4.0 million for the three 
months ended April 30, 1997.


                                        - 9 -

<PAGE>

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative expenses were $4.4 million, an increase 
of $1.7 million, or 60.5% compared to $2.7 million for the three months ended 
April 30, 1996.  As a percentage of revenues, selling, general and 
administrative expenses decreased to 23.4% from 25.7% in the three months 
ended April 30, 1996.  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.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization expense for the three months ended April 30, 
1997 was $406,000, an increase of $263,000, or 64.7% compared to $143,000 for 
the three months ended April 30, 1996.  This increase arose principally from 
the acquisitions of Hammer and Datapro acquired in August 1996 and October 
1996, respectively.  Depreciation was $195,000, an increase of $114,000 or 
141.1%, from $81,000 for the prior period.  Amortization of goodwill from 
acquisitions was $210,000, an increase of $148,000, or 240.2%, 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 April 30, 1997 was $834,000, a 
increase of $418,000, or 100.4%, as compared to $416,000 for the three months 
ended April 30, 1996.  As a percentage of revenues, IBITI increased  to 4.5% 
in the three months ended April 30, 1997 as compared to 3.9% for the three 
months ended April 30, 1996.

IBITI before depreciation and amortization increased for the three months 
ended April 30, 1997 to $1.24 million from $559,000 for the three months 
ended April 30, 1996 an increase of $681,000 or 121.8%.  As a percentage of 
revenues, IBITIDA increased to 6.6% for the three month period ended April 
30, 1997 from 5.3% for the comparable period ended April 30, 1996.

EQUITY INVESTEE LOSS

Equity investee loss was $52,000 for the three months ended April 30, 1996 
reflecting the Company's proportion attributable to the ActionTrac Joint 
Venture. There was no such loss during the three months ended April 30, 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 April 30, 1997 was $71,000 a 
decrease of $33,000 or 31.3% compared to $104,000 for the three months ended 
April 30, 1996, arising from lower utilization of bank lines of credit during 
the period. Interest income increased from $4,000 for the three months ended 
April 30, 1996 to $78,000 an increase of $74,000, 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 April 30, 1997, the Company had lines of credit with UK banks in the 
amount of L2.3 million ($3.8 million).  As of April 30, 1997 $3.4 million was 
outstanding.  


                                        - 10 -

<PAGE>

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 April 30, 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 $6.3 million at April 30, 1997.

Net cash used by operating activities during the three months ended April 30, 
1997 was $750,000, 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 $1.2 
million, for the three months ended April 30, 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 
$2.0 million for the three months ended April 30, 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.

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.

                                           
                                        - 11 -

<PAGE>

         PART II - OTHER INFORMATION


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

         (a)  The Annual Meeting of Stockholders was held on February 5, 1997

         (b)  The following directors were re-elected at the Annual Meeting of
              Stockholders:

              Anil Doshi
              Mark Ellis
              Kenneth Newell
              Craig Kleinman
              Arthur Keith Ross
              Brian V. Murray

         (c)  Such directors received the votes indicated:

                                          FOR           WITHELD
                                          ---           -------

              Anil Doshi               5,079,963         27,188
              Mark Ellis               5,079,965         27,186
              Kenneth Newell           5,084,965         22,186
              Craig Kleinman           5,083,965         23,186
              Arthur Keith Ross        5,084,928         22,223
              Brian V. Murray          5,084,922         22,229

              Approval of the Company's Re-Incorporation in Delaware was 
              approved by the vote  indicated:

               FOR                AGAINST              ABSTAIN         NOT VOTED
               ---                -------              -------         ---------

            3,644,010             234,019               1,552          1,227,570

              Approval of the Company's 1996 Equity Incentive Plan was approved
              by the vote indicated:

               FOR                AGAINST              ABSTAIN         NOT VOTED
               ---                -------              -------         ---------

            3,393,053             473,002              13,526          1,227,570

Item 5.  Other Information
         Not Applicable

Item 6.  Exhibits and Reports on Form 8-K

              (b)  Reports on Form 8-K
              Not Applicable


                                        - 12 -

<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.

May 10, 1997                                          4FRONT SOFTWARE
                                                      INTERNATIONAL, INC.



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

                                                      Stephen McDonnell
                                                      Chief Financial Officer



                                       - 13 -