<PAGE>   1
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)

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

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000

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


                         Commission File Number: 0-10902


                             INTERFACE SYSTEMS, INC.
             (Exact name of registrant as specified in its charter)

          MICHIGAN                                           38-1857379
(State or other jurisdiction of                           (I.R.S. Employer
 incorporation or organization)                          Identification No.)

                 5855 INTERFACE DRIVE, ANN ARBOR, MICHIGAN 48103
                    (Address of principal executive offices)

                                 (734) 769-5900
              (Registrant's telephone number, including area code)

         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. [ X ] Yes [ ] No

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:

         Common Stock, no par value, 4,686,432 shares as of April 30, 2000.








                                       1
<PAGE>   2


                             INTERFACE SYSTEMS, INC.

                                    FORM 10-Q

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                Page No.
                                                                                                --------
<S>                                                                                              <C>
PART I - FINANCIAL INFORMATION

         Item 1.  Financial Statements:

                  Consolidated Balance Sheets at March 31, 2000
                     and September 30, 1999                                                        3

                  Consolidated Statements of Operations for the Quarter
                     and Six Month Periods Ended March 31, 2000 and 1999                           4

                  Consolidated Statements of Cash Flows for the
                     Six Months Ended March 31, 2000 and 1999                                      5

                  Notes to Consolidated Financial Statements                                       6

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

         Item 3. Quantitative and Qualitative Disclosures
         About Market Risk                                                                         9


PART II - OTHER INFORMATION

         Item 4. Submission of Matters to a Vote of Security Holders                               9

         Item 5. Other Information                                                                 9

         Item 6. Exhibits and Reports on Form 8-K                                                 10


SIGNATURES                                                                                        10
</TABLE>





                                       2
<PAGE>   3


PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements

                    INTERFACE SYSTEMS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                         March 31,            September 30,
                                                                           2000                   1999
                                                                       -------------          ------------
                                                                        (unaudited)
                                              ASSETS
<S>                                                                    <C>                    <C>
Current assets:
   Cash and cash equivalents                                           $    931,201           $  1,575,139
   Accounts receivable, net                                               2,655,961              3,689,511
   Refundable income taxes                                                       --                  6,723
   Inventories                                                              527,499                915,977
   Current portion of note receivable                                         6,751                     --
   Prepaid expenses and other                                               311,172                303,676
                                                                       ------------           ------------
          Total current assets                                            4,432,584              6,491,026
Property and equipment, net                                               2,407,446              3,188,071
Goodwill, net                                                               696,266                789,140
Note Receivable                                                             262,972                     --
Other assets                                                                 32,713                 55,194
                                                                       ------------           ------------
                                                                       $  7,831,981           $ 10,523,431
                                                                       ============           ============

                               LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                                    $    877,718           $    912,018
   Accrued expenses                                                       1,132,866              1,140,155
   Deferred revenue                                                         472,027                431,252
   Current portion of long-term debt                                         50,200                 50,200
                                                                       ------------           ------------
          Total current liabilities                                       2,532,811              2,533,625

Long-term debt                                                               45,633                 70,633
Stockholders' equity:
   Common stock, no par value, 12,500,000 shares authorized;
     4,686,432 and 4,539,529 shares issued and outstanding at
     March 31, 2000 and September 30, 1999, respectively                 11,799,884             11,324,418
   Cumulative translation adjustment                                        (56,106)               (53,117)
   Accumulated deficit                                                   (6,490,241)            (3,352,128)
                                                                       ------------           ------------
          Total stockholders' equity                                      5,253,537              7,919,173
                                                                       ------------           ------------
                                                                       $  7,831,981           $ 10,523,431
                                                                       ============           ============
</TABLE>




The accompanying notes are an integral part of these consolidated financial
statements.





                                       3
<PAGE>   4



                    INTERFACE SYSTEMS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                   Quarter ended                 Six months ended
                                                      March 31,                       March 31,
                                                 2000          1999             2000             1999
                                                 ----          ----             ----             ----
                                                     (unaudited)                    (unaudited)

<S>                                         <C>             <C>             <C>             <C>
Net revenues                                $  2,975,201    $  4,862,042    $  6,394,575    $ 10,073,228
Cost of revenues                                 591,852       2,066,374       1,959,428       4,167,813
                                            ------------    ------------    ------------    ------------
       Gross profit                            2,383,349       2,795,668       4,435,147       5,905,415
Expenses:
   Product development                           752,175         400,734       1,436,844         804,320
   Selling, general and administrative         3,318,024       2,850,340       6,296,076       5,466,485
                                            ------------    ------------    ------------    ------------
       Operating loss                         (1,686,850)       (455,406)     (3,297,773)       (365,390)
Interest expense                                 (12,036)         (3,572)        (14,791)        (17,112)
Other income                                      23,836           8,233         181,175          70,855
                                            ------------    ------------    ------------    ------------
       Loss before income taxes               (1,675,050)       (450,745)     (3,131,389)       (311,647)

Income tax expense (benefit)                          --          (9,000)          6,723              --
                                            ------------    ------------    ------------    ------------
Net loss                                    $ (1,675,050)   $   (441,745)   $ (3,138,112)   $   (311,647)
                                            ============    ============    ============    ============

Basic and diluted loss per share            $      (0.36)   $      (0.10)   $      (0.68)   $      (0.07)
                                            ============    ============    ============    ============

Weighted average shares outstanding            4,652,387       4,469,626       4,607,993       4,463,867
                                            ============    ============    ============    ============
</TABLE>





The accompanying notes are an integral part of these consolidated financial
statements.






                                        4
<PAGE>   5



                    INTERFACE SYSTEMS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                             Six Months Ended March 31,
                                                               2000            1999
                                                               ----            ----
                                                                   (unaudited)
<S>                                                        <C>            <C>
Cash flows from operating activities:
    Net loss                                               $(3,138,112)   $  (311,647)
    Adjustments to reconcile net loss to net
     cash provided by (used in) operating activities:
      Gain on sale of IGK                                      (36,736)            --
      Depreciation and amortization                            403,464        558,040
      Change in operating assets and liabilities:
       Accounts receivable                                     633,608        809,432
       Refundable income taxes                                   6,723      1,459,874
       Inventories                                             (37,447)       577,523
       Prepaid expenses and other                              (27,427)       (54,354)
       Other assets                                             22,481          1,774
       Accounts payable                                        199,752       (121,881)
       Accrued expense                                         (44,479)      (530,461)
    Deferred revenue                                            40,775        (75,686)
                                                           -----------    -----------
    Net cash provided by (used in) operating activities     (1,977,398)     2,312,614
                                                           -----------    -----------


Cash flows from investing activities:
    Proceeds from sale of IGK                                1,078,556             --
    Proceeds received on Note issued on sale of IGK             80,277             --
    Additions to property and equipment                       (272,850)      (233,886)
                                                           -----------    -----------
    Net cash provided by (used in) investing activities        885,983       (233,886)
                                                           -----------    -----------

Cash flows from financing activities:
    Change in notes payable                                         --     (1,350,000)
    Proceeds from issuance of stock                            475,466         44,056
    Reduction of long-term debt                                (25,000)       (25,000)
                                                           -----------    -----------
     Net cash provided by (used in) financing activities       450,466     (1,330,944)
                                                           -----------    -----------

Effect of exchange rate changes on cash                         (2,989)        49,632
                                                           -----------    -----------

Net increase (decrease) in cash and cash equivalents          (643,938)       797,416
Cash and cash equivalents, beginning of period               1,575,139        301,206
                                                           -----------    -----------
Cash and cash equivalents, end of period                   $   931,201    $ 1,098,622
                                                           ===========    ===========

Supplemental disclosure of cash flow information:
    Cash paid for interest                                 $    14,791    $    17,112
                                                           ===========    ===========
    Cash refunded for income taxes                         $        --    $ 1,558,221
                                                           ===========    ===========
</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.




                                       5
<PAGE>   6



                             INTERFACE SYSTEMS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.  Basis of Presentation

The interim consolidated financial statements of Interface Systems, Inc. have
been prepared by the Company without audit pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. The information included in this report
should be read in conjunction with the financial statements for the year ended
September 30, 1999 and notes thereto included in the Company's Annual Report on
Form 10-K.

In the opinion of management, the accompanying interim consolidated financial
statements reflect all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the Company's financial
position, results of operations and cash flows for the periods presented. The
results for the quarter ended March 31, 2000 may not be indicative of the
results to be expected for future quarters or the fiscal year ending September
30, 2000.

For comparative purposes, certain amounts reported in prior years' financial
statements have been reclassified to conform to current year presentations.

2.  Line-of-Credit

In May 2000, the Company and it's bank entered into a commitment to renew the
credit facility expanding the borrowing capability from $3.5 to $5.0 million
with a maturity date of May 31, 2001. As of March 31, 2000, there were no
borrowings outstanding under its current $3.5 million facility. Advances bear
interest at the bank's prime rate (9.0% at March 31, 2000) plus 1%, are payable
on demand and are collateralized by substantially all of the Company's assets.
The amount available for borrowing at any time is based on borrowing base
formulae relating to levels of accounts receivable and other bank covenants.
Under such formulae, $4.2 million will be available to the Company upon renewal.

Under the terms of its existing credit agreement, the Company is required to
maintain certain minimum working capital, net worth, and other specific
financial ratios. In addition, the credit agreement prohibits the payment of
cash dividends and contains certain restrictions on the Company's ability to
borrow money or purchase assets or interests in other entities without the prior
written consent of the bank. The Company was in compliance with the bank
covenants prior to and upon renewal.

In connection with its renewal, the Company will issue the bank warrants to
purchase 20,000 shares of common stock at fair market value at the date of
issuance. The warrants will be fully exercisable and expire three years from the
date of issuance.

3.   Impact of Recently Issued Accounting Standards







                                       6
<PAGE>   7

The Financial Accounting Standards Board has issued SFAS No. 133 "Accounting for
Derivative Instruments and Hedging Activities." The Company is required to adopt
the provisions of SFAS No. 133 in its current fiscal year. The Company expects
the adoption will not affect results of operations or financial statements.

4.   Comprehensive Income

SFAS No. 130, "Reporting Comprehensive Income", establishes standards for
reporting and display of comprehensive income and its components in a full set
of financial statements. Comprehensive income is the total of net income and all
other non-owner changes in equity. The components of comprehensive income, are
as follows:


<TABLE>
<CAPTION>
                                                       Quarters ended March 31,           Six months ended March 31,
                                                       ------------------------           --------------------------
                                                         2000            1999              2000               1999
                                                         ----            ----              ----               ----
<S>                                                <C>             <C>                 <C>             <C>
Net Loss                                           $  (1,675,050)  $      (441,745)    $ (3,138,112)   $     (311,647)
Change in foreign currency translation                    16,883            28,329         (  2,989)           49,632
                                                   -------------   ---------------     --------------  --------------
Comprehensive Loss                                 $  (1,658,167)  $      (413,416)    $ (3,141,101)   $     (262,015)
                                                   ==============  ================    =============   ===============
</TABLE>


5.   Sale of Wholly Owned Subsidiary

On December 22, 1999, the Company sold its subsidiary, IGK Industries, Inc. for
$1,450,000, which resulted in a $37,000 gain. The purchaser acquired all assets
and assumed all current liabilities of IGK. Also included in the sale was the
building that housed IGK's operations, which was owned by the Company and leased
by IGK.

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

OPERATIONS

The Company is currently completing a transition plan that is focused on the
movement from the manufacturing of hardware (printers, circuit boards, and
peripheral equipment) to the development and marketing of higher margin and
higher growth software solutions. The progress related to the plan is evidenced
by the current structure of the Company. Currently, the Company is organized
around two software solutions groups: L2i(TM) (Legacy-to-Internet) and Cleo.

RESULTS OF OPERATIONS

Net Revenues. Revenues for the second quarter ended March 31, 2000 were $3.0
million, a decrease of 38.8% over revenues of $4.9 million for the second
quarter of fiscal 1999. Revenues for the first six months of fiscal 2000 were
$6.4 million, a decrease of 36.5% over revenues of $10.1 million for the same
period of fiscal 1999. The decrease for the quarter and the six-month period was
primarily due to the planned curtailment of the printer business, the sale of
IGK that occurred at the end of the first quarter, and decreased sales of the
Cleo solutions group. The above declines were partially offset by the increased
sales of the L2i solutions; MyCopy(TM), e-Bill Bridge(TM), Document Server, and
related






                                       7
<PAGE>   8

professional services.

Cost of Revenues. Cost of revenues were $592,000 and $2.1 million or 19.9% and
42.5% of net revenues for the quarters ended March 31, 2000 and 1999,
respectively; and $2.0 million and $4.2 million, or 30.6% and 41.4% of net
revenues for the first half of fiscal 2000 and 1999, respectively. The decrease
for the quarter and the six-month period resulted from a decline in overall
sales as well as a change in the sales mix from lower margin hardware products
to the more profitable L2i software solutions and consulting services.

Product Development Costs. Product development costs were $752,000 and $401,000,
or 25.3% and 8.2% of net revenues for the quarters ended March 31, 2000 and
1999, respectively; and $1.4 million and $804,000, or 22.5% and 8.0% of net
revenues for the first half of fiscal 2000 and 1999, respectively. The increase
for the quarter and six month periods was primarily due to the investment the
Company is making to enhance its L2i software solutions.

Selling, General, and Administrative Expenses. Selling, general, and
administrative expenses were $3.3 million and $2.9 million, or 111.5% and 58.6%
of net revenues for the quarters ended March 31, 2000 and 1999, respectively;
and $6.3 million and $5.5 million, or 98.5% and 54.3% of net revenues for the
first half of fiscal 2000 and 1999, respectively. The increase was primarily due
to the addition of sales and marketing staff located at the Company's
headquarters facility and the East Coast. Furthermore, the Company has invested
in the creation of a consulting team that has a broad array of technical
capabilities and is instrumental in the implementation of its L2i solutions.

Interest and Other Income. Interest and other income for the first half of
fiscal 2000 was mainly composed of the $37,000 gain on the sale of substantially
all assets of IGK Industries, Inc.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2000, the Company's primary sources of liquidity included cash and
cash equivalents of $931,000 and a short-term credit facility with a bank
providing for $3.5 million of borrowing prior to the renewal discussed below, of
which $1.3 million was available.

In May 2000, the Company and its bank entered into a commitment to renew the
credit facility expanding the borrowing capability from $3.5 to $5.0 million
with a maturity date of May 31, 2001. Advances bear interest at the bank's prime
rate (9.0% at March 31, 2000) plus 1%, are payable on demand and are
collateralized by substantially all of the Company's assets. The amount
available for borrowing at any time is based on borrowing base formulae relating
to levels of accounts receivable and other bank covenants. Under such formulae,
$4.2 million will be available to the Company upon renewal.

Under the terms of its existing credit agreement, the Company is required to
maintain certain minimum working capital, net worth, and other specific
financial ratios. In addition, the credit agreement prohibits the payment of
cash dividends and contains certain restrictions on the Company's ability to
borrow money or purchase assets or interests in other entities without the prior
written consent of the bank. The Company was in compliance with the bank
covenants prior to and upon renewal.

Cash provided by investing activities was $886,000 in the first half of fiscal
2000 primarily due to the proceeds received from the sale of IGK.

Cash provided by financing activities was $450,000 in the first half of fiscal
2000 and was primarily composed of the proceeds from the issuance of stock.








                                        8
<PAGE>   9

The Company believes that its existing cash balances, available credit facility
and future operating cash flows will be sufficient for near term operating
needs. The foregoing statements are "forward looking statements" within the
meaning of the Securities Exchange Act of 1934. The extent to which such sources
will be sufficient to meet the Company's anticipated cash requirements is
subject to a number of uncertainties including the ability of the Company's
operations to generate sufficient cash to support operations, and other
uncertainties described in "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Uncertainties Relating to Forward-Looking
Statements."

YEAR 2000

We have not experienced any known material adverse impacts on our products,
services, or systems as a result of the Year 2000 issue. The Company believes
that its efforts to address Year 2000 issues for which it is responsible have
been successful. However, we cannot be sure that various factors relating to the
Year 2000 compliance issues will not have a material adverse impact on our
business or operating results. The costs associated with our Year 2000 efforts
were not material.

UNCERTAINTIES RELATING TO FORWARD-LOOKING STATEMENTS

"Management's Discussion and Analysis of Results of Operations" contain
"forward-looking statements" within the meaning of the Securities Exchange Act
of 1934, as amended, based on current management expectations. Actual results
could differ materially from those in the forward-looking statements due to a
number of uncertainties, including, but not limited to, those discussed in this
section. Factors that could cause future results to differ from these
expectations include general economic conditions particularly related to demand
for the Company's products and services; changes in Company strategy; product
life cycles; competitive factors (including the introduction or enhancement of
competitive products); pricing pressures; the Company's success in and expense
associated with developing, introducing and shipping new products; software
defects and latent technological deficiencies in new products; changes in
operating expenses; inability to attract or retain consulting, sales and/or
engineering talent; changes in customer requirements; evolving industry
standards; and the impact of undetected errors or defects associated with the
Year 2000 date function on the Company's current products and internal systems.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company has no material market risk exposure.


PART II - OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company's Annual Meeting of Shareholders was held on February 18, 2000 in
Ann Arbor, Michigan. There was voting on the following three issues: election of
directors, approval to increase the authorized common shares from 12.5 to 25
million, and an amendment to the 1992 Stock Option Plan increasing the available
shares by 300,000. The following table sets forth the results of the voting.


ITEM 5. OTHER INFORMATION

Policy on Sale or Other Disposition of Shares by Officers and Directors

On February 18, 2000, the Board of Directors adopted a policy with respect to
the sale or other disposition of shares of the Company's common stock. Under
this policy, officers and directors of the Company are permitted annually to
sell or otherwise dispose of up to 10% of the Company's securities held by such
officer or director. Company securities includes all outstanding common stock of
the Company as well as options to acquire the Company's common stock (to the
extent such options are vested).

The Board of Directors has determined that it is in the best interest of the
Company's shareholders that officers and directors of the Company share in the
ownership of the Company's common stock. The Board believes that adoption of
this policy reaffirms that belief.





                                        9
<PAGE>   10

<TABLE>
<CAPTION>
      (1)  Name                              Votes For              Votes Withheld
           ----                              ---------              --------------
<S>                                     <C>                        <C>
          Garnel F. Graber                   3,873,907                  172,465
          Robert A. Nero                     3,875,407                  170,965
          Bruce E. Rhoades                   3,874,301                  172,071
          David C. Seigle                    3,872,114                  174,258
          Robert A. Seigle                   3,874,392                  171,980
          Lloyd A. Semple                    3,874,812                  171,560
          Thomas L. Thomas                   3,872,525                  173,847
</TABLE>


(2)            Approval to Increase the Number of Shares of Common Stock

<TABLE>
<CAPTION>
                  Votes For                 Votes Against              Votes Withheld
                  ---------                 -------------              --------------
<S>               <C>                       <C>                        <C>
                  3,744,412                    297,552                     4,408
</TABLE>


(3)            Amendment to 1992 Stock Option Plan

<TABLE>
<CAPTION>

                  Votes For                 Votes Against              Votes Withheld
                  ---------                 -------------              --------------
<S>               <C>                       <C>                        <C>
                  1,968,635                    255,864                    10,882
</TABLE>



ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits:

         27 Financial Data Schedule

(b)      No reports on Form 8-K have been filed during the quarter for which
         this report is filed.

                                   SIGNATURES

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


                                      INTERFACE SYSTEMS, INC.

Date:  May 15, 2000                   /S/ Brian D. Brooks
                                      -------------------
                                      Brian D. Brooks
                                      Vice President and Chief Financial Officer





                                       10
<PAGE>   11


                                 EXHIBIT INDEX
                                 -------------





Exhibit No.                        Description
-----------                        -----------

    27                             Financial Data Schedule