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



                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                           ---------------------------

                                   FORM 10-QSB

         (Mark One)

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

                  For the quarterly period ended June 30, 1997

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

             For the transition period from __________ to __________
                         Commission File Number 0-27438
                           ---------------------------

                            THE FOREFRONT GROUP, INC.
        (Exact name of small business issuer as specified in its charter)


          Delaware                                       76-0365256
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

                         1360 Post Oak Blvd., Suite 2050
                              Houston, Texas 77056
                    (Address of principal executive offices)
                    Issuer's telephone number: (713) 961-1101

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


         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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 of the issuer's Common Stock,  par value $.01 per
share, outstanding as of August 12, 1997: 6,480,727

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

<PAGE>



                            THE FOREFRONT GROUP, INC.

                                   FORM 10-QSB

                                  June 30, 1997

                                TABLE OF CONTENTS


PART I        FINANCIAL INFORMATION                                         Page

Item 1.       Consolidated Financial Statements:
                  Consolidated Balance Sheets..................................3
                  Consolidated Statements of Operations........................4
                  Consolidated Statements of Cash Flows........................5
                  Notes to Consolidated Financial Statements...................6

Item 2.       Management's Discussion and Analysis or Plan of Operation........7

PART II       OTHER INFORMATION

Item 1.       Legal Proceedings...............................................13
Item 2.       Changes in Securities...........................................13
Item 3.       Defaults Upon Senior Securities.................................13
Item 4.       Submission of Matters to a Vote of Security Holders.............13
Item 5.       Other Information...............................................14
Item 6.       Exhibits and Reports on Form 8-K................................14


SIGNATURES....................................................................15


                                        i

<PAGE>



                          PART I. FINANCIAL INFORMATION

Item 1.   Consolidated Financial Statements



                                       2

<PAGE>


                   THE FOREFRONT GROUP, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                          
                                                                                         
                                                                           December 31,               June 30,
ASSETS                                                                        1996                      1997
                                                                                                    (unaudited)
                                                                       ------------------       -------------------
<S>                                                                    <C>                      <C>
CURRENT ASSETS:                                                                                     
   Cash and cash equivalents.......................................... $        6,204,213       $         3,957,300
   Accounts receivable, net of allowance of $138,600
        and $278,850..................................................          1,450,241                 1,355,947
   Inventory, net.....................................................            340,163                   256,863
   Prepaid expenses and other ........................................            429,957                   335,393
                                                                       ------------------       -------------------

            Total current assets                                                8,424,574                 5,905,503

FURNITURE AND EQUIPMENT, net of
   accumulated depreciation of $346,726 and $496,891                            1,063,976                 1,009,008

OTHER ASSETS, net                                                                 145,384                   160,055
                                                                       ------------------       -------------------

            Total assets                                               $        9,633,934       $         7,074,566
                                                                       ==================       ===================

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable................................................... $          857,780       $           488,795
   Accrued liabilities................................................          1,393,519                 2,290,098
   Current portion of deferred revenue................................            349,391                   636,144
                                                                       ------------------       -------------------

            Total current liabilities                                           2,600,690                 3,415,037

DEFERRED REVENUE, NET OF CURRENT PORTION..............................             16,660                     6,908

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
   Preferred stock, $.01 par value, 5,000,000 shares
        authorized, none outstanding..................................                 --                        --
   Common stock, $.01 par value, 20,000,000
        shares authorized, 6,488,275 and 6,554,125 shares
        issued; 6,182,031 and 6,371,852 shares outstanding............             62,641                    64,539
   Additional paid-in capital.........................................         19,594,230                19,799,163
   Deferred compensation..............................................           (369,336)                 (142,181)
   Cumulative translation adjustment..................................                 --                    (5,546)
   Accumulated deficit................................................        (12,269,101)              (16,061,504)
   Treasury stock, 82,145 shares at cost..............................             (1,850)                   (1,850)
                                                                       ------------------       --------------------

            Total stockholders' equity                                          7,016,584                 3,652,621
                                                                       ------------------       -------------------

            Total liabilities and stockholders' equity                 $        9,633,934       $         7,074,566
                                                                       ==================       ===================
</TABLE>

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

                                        3

<PAGE>


                   THE FOREFRONT GROUP, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                For the Three Months Ended June 30,          For the Six Months Ended June 30,
                                                     1996                  1997                   1996                 1997
                                                --------------        --------------        --------------        --------------
<S>                                             <C>                   <C>                   <C>                   <C>
NET REVENUES:
   Licenses.................................... $    3,071,629        $    4,149,468        $    5,807,504        $    8,283,315
   Maintenance and services....................         38,992                17,279                56,280                35,339
                                                --------------        --------------        --------------        --------------

            Total revenues                           3,110,621             4,166,747             5,863,784             8,318,654

COST OF PRODUCT LICENSES                               565,241               823,427             1,071,328             1,706,711
                                                --------------        --------------        --------------        --------------

            Gross profit                             2,545,380             3,343,320             4,792,456             6,611,943

OPERATING EXPENSES:
   Research and development....................        624,184               503,956               986,160             1,191,578
   Selling and marketing.......................      1,883,080             3,079,367             3,318,450             6,471,772
   General and administrative..................        525,159             1,778,773               962,126             2,420,202
   Acquired research and development
        costs..................................      2,358,723              447,251              2,798,604               447,251
                                                --------------        -------------         --------------        --------------

             Operating loss                         (2,845,766)           (2,466,027)           (3,272,884)           (3,918,860)

OTHER INCOME...................................        155,915                58,246               320,632               126,457
                                                --------------        --------------        --------------        --------------

            Net loss                            $   (2,689,851)       $   (2,407,781)       $   (2,952,252)       $   (3,792,403)
                                                ==============        ==============        ==============        ==============

NET LOSS PER SHARE                              $         (.45)       $         (.38)       $         (.50)       $         (.61)
                                                ==============        ==============        ==============        ==============

SHARES USED IN COMPUTING                             
NET LOSS PER SHARE                                   5,927,509             6,317,153             5,857,083             6,260,162
                                                ==============        ==============        ==============        ==============
</TABLE>

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

                                        4

<PAGE>


                   THE FOREFRONT GROUP, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                          For the Six Months Ended June 30,
                                                                                             1996                    1997
                                                                                        --------------          --------------
<S>                                                                                     <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss ......................................................................... $   (2,952,252)         $   (3,792,403)
     Adjustments to reconcile net loss to net cash used by operating activities:
          Depreciation and amortization................................................         69,465                 295,203
          Non-cash acquired research and development costs.............................      2,798,604                 447,251
          Compensation expense and amortization of deferred
            compensation related to certain stock options..............................        123,191                  51,100
          Changes in operating assets and liabilities
          (Net of asset acquisitions):
            (Increase) decrease in receivables.........................................       (775,874)                 94,294
            (Increase) decrease in inventory...........................................        (36,597)                 83,300
            Increase in prepaid expenses...............................................        (49,194)                (30,436)
            Increase in other assets...................................................             --                 (99,191)
            Increase in accounts payable and accrued
              liabilities..............................................................        374,461                 360,404
            Increase in deferred revenue...............................................        135,261                 277,001
                                                                                        --------------          --------------

     Net cash used by operating activities.............................................       (312,935)             (2,313,477)
                                                                                        --------------          --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Net cash paid for Blue Squirrel asset acquisition.................................       (128,018)                     --
     Net cash received from BookMaker asset acquisition................................         77,234                      --
     Proceeds from sale of held to maturity securities.................................      7,998,417                      --
     Purchase of furniture and equipment...............................................       (482,770)                (95,197)
                                                                                        --------------          --------------

     Net cash provided (used) by investing activities..................................      7,464,863                 (95,197)
                                                                                        --------------          --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from issuance of common stock ...........................................         10,850                 167,307
     Distributions to stockholders.....................................................     (1,049,962)                     --
                                                                                        --------------          --------------

     Net cash provided (used) by financing activities..................................     (1,039,112)                167,307
                                                                                        --------------          --------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                                             --                  (5,546)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                         6,112,816              (2,246,913)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                             5,502,223               6,204,213
                                                                                        --------------          --------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                              $   11,615,039          $    3,957,300
                                                                                        ==============          ==============
</TABLE>

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

                                        5

<PAGE>


                            THE FOREFRONT GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1997
                                   (UNAUDITED)


NOTE 1.       BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
              POLICIES

          The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information,  and  pursuant  to  the  rules  and  regulations  of the
Securities and Exchange  Commission.  Certain  information and notes disclosures
normally  included  in annual  consolidated  financial  statements  prepared  in
accordance with generally accepted accounting  principles have been condensed or
omitted pursuant to those rules and  regulations,  although the Company believes
that the disclosures made herein are adequate to make the information  presented
not  misleading.  These  consolidated  financial  statements  should  be read in
conjunction  with the  consolidated  financial  statements  for the  year  ended
December 31, 1996 included in the  Company's  1996 Annual Report on Form 10-KSB.
All   intercompany   accounts  and   transactions   have  been   eliminated   in
consolidation.  The unaudited interim consolidated  financial statements reflect
all  adjustments  which are, in the opinion of management,  necessary for a fair
statement of results for the interim periods  presented and all such adjustments
are of a normal recurring nature. Interim results are not necessarily indicative
of results for a full year.

NOTE 2.       COMPUTATION OF NET LOSS PER SHARE AND COMMON EQUIVALENT
              SHARES

          The  Company's  net loss per  share is based on the  weighted  average
number of common shares  outstanding,  adjusted as described as follows.  Common
equivalent shares are excluded from the per share calculations, as the effect of
their inclusion is antidilutive.

          In  March  1997,  the  Financial  Accounting  Standards  Board  issued
Statement of Financial  Accounting  Standards No. 128, "Earnings Per Share". For
periods  ending  subsequent  to December  15,  1997,  the Company will adopt the
provisions of the new statement,  changing from its current method of accounting
for net loss per share as set forth in APB Opinion No. 15. Adoption of Statement
No.  128  will  require  retroactive  presentation  of net  loss  per  share  in
historical  consolidated financial statements.  The Company's net loss per share
presented in the accompanying  consolidated  financial  statements as calculated
under the  provisions of APB Opinion No. 15 is the same as if the basic net loss
per share under Statement No. 128 had been presented. Additionally, net loss per
share as presented  herein is also the same as if the diluted net loss per share
under  the  provisions  of  Statement  No.  128 had been  presented,  since  the
Company's  outstanding  stock  options  would  not  have  been  included  in the
calculation because their effect would have been anti-dilutive.

NOTE 3.       ACQUIRED RESEARCH AND DEVELOPMENT

          In May 1997,  the Company  entered into  Amendment  No. 1 to the Asset
Purchase  Agreement and Escrow Agreement  ("Purchase and Escrow Agreement") with
the  principals  of  and  successors  to  BookMaker  Corporation  ("BookMaker"),
terminating  the remaining  earnout  provisions of the Asset Purchase  Agreement
relating  to the  acquisition  of the  BookMaker  assets  by  the  Company,  and
releasing the escrow shares  (24,837  shares) to the  successors  and assigns of
BookMaker.  In connection therewith,  a total of 99,134 earnout shares deposited
in escrow at the closing were returned to the Company for  cancellation  and the
remaining  earnout  shares  (100,128)  will  continue to be held in escrow until
April 1998,  at which time they will be 

                                        6

<PAGE>



delivered to BookMaker's assigns. In connection with this Amendment, the Company
recorded a non-cash  charge of $447,251  for acquired  research and  development
costs  primarily  related to the  100,128  shares that will be released in April
1998.

NOTE 4.       RESTRUCTURING

          In April 1997, the Board of Directors  approved  management's  plan to
reorganize the Company into two divisions:  Technical  Professional Products and
Content Management  Products and to focus more of its resources on its Technical
Professional  Products  Division,  as well as its direct  sales  channels,  both
telemarketing  and online.  In connection with the  reorganization,  the Company
recorded a one-time  restructuring  charge of  approximately  $1,144,000  in the
second quarter of 1997. The restructuring charge includes approximately $814,000
in lease terminations,  relocation costs and severance and termination benefits.
Additional  costs of approximately  $330,000 relate to pre-existing  contractual
obligations  and  other  exit  costs  associated  with  the  Company's   Content
Management Products Division.

          During  the  second  quarter  of  1997,  the  Company's  CBT  products
accounted for 54% of the Company's  total  revenues  with  PC/Network  utilities
representing 28% of total revenues.  Recognizing the increasing  contribution of
the CBT products to the Company's  total  revenues and the rapid adoption of CBT
as the training  method of choice for technical  professionals  and corporate IT
departments,  the Company is targeting  opportunities in the CBT field and plans
to expand its CBT product  offering.  In furtherance of the  restructuring,  the
Company is actively  pursuing the divestiture  and/or  partnering of its Content
Management Products Division.

NOTE 5.       RELATED PARTY TRANSACTIONS

          In May 1997,  the Company issued a letter of credit for $75,000 to its
landlord  secured by a  certificate  of deposit  maturing in August 1998 for the
benefit of an unrelated  corporation (which is owned in part by a shareholder of
the Company),  in exchange for the corporation assuming the balance of the lease
for the Company's  former office space in Houston,  Texas.  The letter of credit
expires in June 1998.

Item 2.       Management's Discussion and Analysis or Plan of Operation.


          The  Quarterly   Report  on  Form  10-QSB   contains   forward-looking
statements  within the meaning of Section 27A of the  Securities Act of 1933, as
amended and  Section 21E of the  Securities  Exchange  Act of 1934,  as amended.
Prediction of future  results are  inherently  uncertain.  Actual  results could
differ  materially from those projected in the  forward-looking  statements as a
result of the risks set forth in the following  discussion,  and in  particular,
the risks discussed below under the caption  "Additional Risk Factors That Could
Affect Operating Results". Readers are also encouraged to refer to the Company's
1996  Annual  Report on Form  10-KSB for  further  discussion  of the  Company's
business and the risks and opportunities attendant thereto.

Overview

          The ForeFront Group, Inc.  ("ForeFront" or the "Company") is a leading
provider  of  high-quality,   cost-effective  Computer  Based  Training  ("CBT")
products and  PC/Network  utilities for technical  professionals.  The technical
professional  market is comprised of network and  personal  computer  engineers,
Information  Technology  (IT)  managers,  network  administrators,  and software
developers.

          ForeFront's    CBT   products   give   technical    professionals    a
high-retention,  comprehensive  and convenient method of preparing for technical
certification  exams.  These  certifications  enable technical  professionals to
advance in their careers and support overall quality  assurance within corporate
IT  

                                        7

<PAGE>



departments.  ForeFront's  current CBT titles include the MCSE Self-Study Course
and CNE Self-Study Course,  programs which provide training for certification to
manage  Microsoft  Windows NT and Novell  NetWare,  today's  dominant  operating
systems; and the A+ Certification Self-Study Course, which provides training for
the most-recognized certification for PC technicians.

          ForeFront's  PC/Network  utilities enable  technical  professionals to
diagnose problems,  manage systems,  and enhance the performance of networks and
personal  computers quickly and easily.  This line of more than a dozen products
includes The Troubleshooter,  a comprehensive  diagnostic tool for PC's and file
servers; Rescue Professional, a popular data recovery solution; and NetTUNE PRO,
a performance  and  availability  management  application for servers running on
Windows NT or NetWare.

          ForeFront  also  develops and markets a number of  innovative  Content
Management  Products,  which enable users to be more productive on the Internet.
This  product  line  includes  ClickBook  and  WebPrinter,  two unique  printing
technologies;  WebWhacker, the original off-line browsing utility;  WebSeeker, a
meta searching  utility;  and RoundTable,  a real-time  multimedia  conferencing
application.

          The Company derives the majority of its revenue from its telemarketing
operation in Clearwater  Florida,  which  currently  employs  approximately  120
commission-only sales representatives.  In addition,  ForeFront also distributes
its products through its proprietary  electronic  storefront system,  internally
referred to as InstantX, and other online resellers over the Internet,  original
equipment manufacturers ("OEMs"),  traditional retail distribution and catalogs.
The Company also  markets its Internet  products  through  alliances  with other
computer software  companies that incorporate  bundled versions of the Company's
Internet products with the products of such other companies.

          The Company's  product  strategy going forward will be largely focused
on CBT products for technical professionals. Historically, ForeFront has entered
into long-term (3-5 years) exclusive  agreements with authors of the products it
markets,  enabling close relationships for future development,  while mitigating
speculative research and development risks. As ForeFront solidifies its position
in the CBT  marketplace,  the Company  expects to bring more of the  development
in-house.  In addition,  the Internet and related online  technologies that have
been used to create  company-wide  intranets are radically altering the way that
certain  critical  computing  activities  are  performed.  As current  bandwidth
limitations  are  diminished,  ForeFront  anticipates  that the Internet will be
utilized to deliver  interactive  education.  ForeFront  plans to build upon its
existing expertise in Internet-based  collaboration (RoundTable),  to capitalize
on emerging Internet Based Training ("IBT") opportunities.

Six Months Ended June 30, 1996 and 1997

Results of Operations

          The Company's revenues increased  $2,454,870 or 42% from $5,863,784 in
the six months ended June 30, 1996 to $8,318,654 in the comparable  1997 period.
For the six months  ended June 30, 1996,  the  Company's  revenues  were derived
primarily through its direct telesales  channel and through OEM agreements.  For
the same  period in 1997,  revenues  were  generated  primarily  from the direct
telesales channel, the Company's electronic  storefront,  retail channels in the
United  States and Europe and through OEM  agreements.  Revenues from the direct
telesales channel increased approximately $2,287,000 or 49%, while revenues from
the remaining channels increased approximately $168,000 or 14%.

          The Company's research and development  expenses increased $205,418 or
21% from  $986,160 in the six months  ended June 30, 1996 to  $1,191,578  in the
comparable 1997 period. Expenses increased $325,646 in the first three months of
1997  due to  continued  research  and  development  in the  Content  Management
Products  Division but declined  $120,228 during the quarter ended June 30, 1997
due to the Company's  reorganization which included a reduction in personnel and
related expenses for the Company's

                                        8

<PAGE>



Content Management Products Division. The Company expects to decrease its future
research and development  expenses in the Content Management  Products Division,
but will incur  additional  research and  development  expenses in the Technical
Professional  Products  Division as needed in order to introduce  new  products,
primarily computer based training software applications.

          Selling  and  marketing  costs   increased   $3,153,322  or  95%  from
$3,318,450 in the six months ended June 30, 1996 to $6,471,772 in the comparable
1997 period.  The increase is primarily due to increased sales personnel,  sales
commissions, and advertising within the Technical Professional Products Division
as well as pre-committed  advertising  contracts  within the Content  Management
Products Division that were entered into prior to the Company's  reorganization.
Future  selling  and  marketing  costs  within the Content  Management  Products
Division will be reduced as a result of the Company's  reorganization;  however,
the  Company  expects to  increase  its sales and  marketing  staff and  related
expenses in the Technical  Professional Products Division in accordance with the
targeted revenue goals and expectations of management.

          General and  administrative  costs  increased  $1,458,076 or 152% from
$962,126 in the six months ended June 30, 1996 to $2,420,202  in the  comparable
1997 period.  Excluding the one time restructuring charge of $1,143,860 incurred
in connection  with the  Company's  reorganization,  general and  administrative
expenses  increased  $314,216 or 33% from  $962,126 in the six months ended June
30, 1996 to  $1,276,342.  The increase is primarily  due to increased  personnel
costs resulting from expanded operations throughout the Company.

          In May 1997,  the Company  executed the  Amendment  No. 1 to the Asset
Purchase  Agreement and Escrow  Agreement  with  BookMaker and agreed to release
100,128  shares of the Company's  Common Stock in April 1998.  As a result,  the
Company recorded  additional acquired research and development costs of $447,251
during the second quarter of 1997.

Three Months Ended June 30, 1996 and 1997

Results of Operations

          The Company's revenues increased  $1,056,126 or 34% from $3,110,621 in
the three  months  ended June 30,  1996 to  $4,166,747  in the  comparable  1997
period.  For the three months ended June 30, 1996,  the Company's  revenues were
derived   primarily  through  its  direct  telesales  channel  and  through  OEM
agreements.  For the same period in 1997, revenues were generated primarily from
the direct  telesales  channel,  the  Company's  electronic  storefront,  retail
channels in the United  States and Europe and through OEM  agreements.  Revenues
from the direct telesales  channel  increased  approximately  $1,297,000 or 55%,
while revenues from the remaining channels decreased  approximately  $241,000 or
32% primarily related to the lower sales within the Content Management  Products
Division.

          The Company's research and development  expenses decreased $120,228 or
19% from  $624,184  in the three  months  ended June 30, 1996 to $503,956 in the
comparable  1997  period.  The  decrease  is  primarily  due  to  the  Company's
reorganization  which included a reduction in personnel and related expenses for
the Company's  Content  Management  Products  Division.  The Company  expects to
decrease its future research and development  expenses in the Content Management
Products Division,  but will incur additional research and development  expenses
in the Technical  Professional Products Division as needed in order to introduce
new products, primarily computer based training software applications.

          Selling  and  marketing  costs   increased   $1,196,287  or  64%  from
$1,883,080  in the  three  months  ended  June  30,  1996 to  $3,079,367  in the
comparable  1997  period.  The  increase is  primarily  due to  increased  sales
personnel, sales commissions,  and advertising within the Technical Professional
Products  Division as well as  pre-committed  advertising  contracts  within the
Content  Management  Products  Division  that  were  entered  into  prior to the
Company's reorganization.  Future selling and marketing costs within the Content

                                       9

<PAGE>

Management  Products  Division  will be  reduced  as a result  of the  Company's
reorganization; however, the Company expects to increase its sales and marketing
staff and related expenses in the Technical  Professional  Products  Division in
accordance with the targeted revenue goals and expectations of management.

          General and  administrative  costs  increased  $1,253,614 or 239% from
$525,159 in the three months ended June 30, 1996 to $1,778,773 in the comparable
1997 period.  Excluding the one time restructuring charge of $1,143,860 incurred
in connection  with the  Company's  reorganization,  general and  administrative
expenses  increased $109,754 or 21% from $525,159 in the three months ended June
30, 1996 to $634,913. The increase is primarily due to increased personnel costs
resulting from expanded operations throughout the Company.

         In May 1997,  the Company  executed  the  Amendment  No. 1 to the Asset
Purchase  Agreement and Escrow  Agreement  with  BookMaker and agreed to release
100,128  shares of the Company's  Common Stock in April 1998.  As a result,  the
Company recorded  additional acquired research and development costs of $447,251
during the second quarter of 1997.

Liquidity and Capital Resources

          At June  30,  1997 the  Company  had  cash  and  cash  equivalents  of
$3,957,300  and  working  capital  of  $2,490,466.   The  Company  has  financed
approximately  $7.3  million  of cash  used in  operating  activities  from 1992
through March 1997, primarily through the issuance of approximately  $957,000 of
preferred  stock in 1992,  $1.6 million of common stock in 1993 and $1.6 million
of  preferred  stock  and  notes  payable  converted  into  preferred  stock and
$11,855,000 of common stock in 1995.

          The Company  believes that its  available  funds will be sufficient to
meet its cash  requirements  through  1998.  The  Company  may from time to time
consider the acquisition of complementary businesses,  products or technologies,
which may require additional financing.

Additional Risk Factors That Could Affect Operating Results

          In  addition  to the other  factors  identified  in this  report,  the
following  risk factors  could  materially  and  adversely  affect the Company's
future operating results and could cause actual events to differ materially from
those  predicted in the Company's  forward  looking  statements  relating to its
business.

Fluctuations in Operating Results

         The Company has in the past  experienced  fluctuations in its quarterly
operating results and anticipates that such fluctuations will continue and could
intensify  in the  future.  Fluctuations  in  operating  results  may  result in
volatility in the price of the Company's Common Stock. There can be no assurance
that the  Company  will  achieve  profitability  by the end of fiscal  1997,  as
predicted,  or that,  once  achieved,  such  profitability  will continue in the
future or that the levels of  profitability  will not vary  significantly  among
quarterly periods.  The Company's operating results may fluctuate as a result of
many factors,  including size and timing of orders and  shipments,  mix of sales
between products  developed solely by the Company and products developed through
development  and  marketing   alliances,   royalty  rates,   the   announcement,
introduction   and  acceptance  of  new  products,   product   enhancements  and
technologies  by the  Company  and its  competitors,  mix of sales  between  the
Company's  sales force,  its other direct sales  channels and its indirect sales
channels, competitive conditions in the industry, loss of significant customers,
delays in  availability  of existing or new products,  spending  patterns of the
Company's customers, currency fluctuations and general economic conditions.

         The  Company's  expense  levels  are based in  significant  part on its
expectations  regarding  future  revenues and are fixed to a large extent in the
short  term.  Accordingly,  the  Company  may be unable to adjust  

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<PAGE>

spending in a timely manner to compensate for any unexpected  revenue shortfall.
Any significant revenue shortfall would therefore have a material adverse effect
on the Company's results of operations. In addition, the Company has taken steps
to open a  telemarketing  operation in Dublin,  Ireland in the fourth quarter of
1997.  This  increase in expense  could have a negative  impact on the Company's
operating margins during 1997.

Competition

          The markets for CBT products and diagnostic network administration and
management  products  for  technical  professionals  is  highly  fragmented  and
competitive,  and the Company expects this competition to increase.  The Company
expects  that  because of the lack of  significant  barriers  to entry into this
market, new competitors may enter the market in the future. In addition,  larger
companies  are  competing  with the  Company in the IT  education  and  training
market,  and the Company  expects this trend to continue.  Such  competitors may
also include publishing companies and vendors of application software, including
those  vendors  with whom the Company may be  required to form  development  and
marketing alliances.

     In the CBT market,  the Company competes with third-party  suppliers of CBT
products,   instructor-led   IT  education  and  training,   internal   training
departments, consultants, value-added resellers and network integrators. Many of
the Company's current and potential competitors, including CBT Systems, Learning
Tree  International,   Gartner  Group,  and  Computer  Learning  Centers,   have
substantially  greater  financial,   technical,   sales,   marketing  and  other
resources,  as well as greater name recognition,  than the Company. In addition,
the IT education  and training  market is  characterized  by  significant  price
competition  and highly rapid change,  and the Company expects that it will face
increasing price pressures from competitors as IT managers demand more value for
their training budgets. Accordingly,  there can be no assurance that the Company
will be able to provide products that compare favorably with new  instructor-led
techniques or other interactive  training software or that competitive  pressure
will not require the Company to reduce its prices significantly.

Developing Market

          The market for IT education and training is new and rapidly  evolving.
As a result of the explosion in online  technologies,  new methods of delivering
interactive   education   software  are  being  developed  and  offered  in  the
marketplace,  including intranet and Internet deployment systems.  Many of these
new  delivery  systems  will  involve  new and  different  business  models  and
contracting mechanisms. In addition,  multimedia and other product functionality
features are being added to the educational software.

          Accordingly,  the  Company's  future  success will depend upon,  among
other    factors,    the   extent   to   which   the    Company   is   able   to
develop/license/acquire  and implement  products  which  address these  emerging
market  requirements.  Although the Company is actively  pursuing  opportunities
where it can leverage  its  existing  technologies  in online  content  sharing,
electronic software delivery, and electronic commerce to strengthen its position
in online education, there can be no assurance that ForeFront will be successful
in meeting these changing market needs.


                                       11

<PAGE>



Reliance on Third Party Developers and Exclusive Licenses

         The Company relies to a large extent on third party  developers for new
products  and  product  enhancements  in  its  Technical   Professional  Product
Division.  As a result,  the  Company has less  control  over the content of the
products in the Technical  Professional Products Division as well as its ability
to deliver  such new  products  and product  enhancements.  Although the Company
intends  to  develop  products  targeted  to the CBT  market  and the  Technical
Professional  Products Division  internally,  or acquire a development team with
experience  in  developing  such  products,  there can be no assurance  that the
Company will be able to achieve such objectives on favorable terms or at all. In
addition,  most of the Company's Technical Professional Products are licensed to
the Company on an exclusive  basis for a three to five year term, with an option
to extend the term for additional periods, in some cases. Although the contracts
usually provide for the Company to receive exclusive rights to modifications and
upgrades,  there is no  obligation  for the  developers  to produce  upgrades or
modifications,  on a timely basis or at all, nor is there  normally any right to
new  products.  In the event that the Company is unable to  develop,  license or
acquire  necessary  upgrades,  modifications  and new products in the  Technical
Professional  Products  Division on a timely basis and on reasonable  terms, the
Company's operating results could be materially and adversely affected.

Management of Expanding Operations and Acquisitions.

         The Company has recently experienced rapid expansion of its operations,
which has placed, and is expected to continue to place,  significant  demands on
the Company's  administrative,  operational and financial personnel and systems.
The Company's future operating results will substantially  depend on the ability
of its officers and key employees to manage changing business  conditions and to
implement and improve its operational,  financial control and reporting systems.
If the Company is unable to respond to and manage changing business  conditions,
its business and results of operations could be materially adversely affected.

         The Company regularly evaluates acquisition opportunities and is likely
to make  acquisitions  in the future.  Future  acquisitions by the Company could
result in potentially dilutive issuances of equity securities, the incurrence of
debt and contingent  liabilities and  amortization  expenses related to goodwill
and other  intangible  assets,  which  could  materially  adversely  affect  the
Company's  results of  operations.  Product and technology  acquisitions  entail
numerous  risks,   including   difficulties  in  the  assimilation  of  acquired
operations,  technologies and products,  diversion of management's  attention to
other business  concerns,  risks of entering markets in which the Company has no
or limited  prior  experience  and  potential  loss of key employees of acquired
companies.  The Company's  management has had limited experience in assimilating
acquired organizations and products into the Company's operations.  No assurance
can be given as to the  ability of the  Company to  integrate  successfully  any
operations,  personnel  or  products  that have been  acquired  or that might be
acquired  in the  future,  and the  failure of the Company to do so could have a
material adverse effect on the Company's results of operations.

                                       12

<PAGE>



                           PART II. OTHER INFORMATION

Item 1.       Legal Proceedings

              None.

Item 2.       Changes in Securities

              Not Applicable.

Item 3.       Defaults Upon Senior Securities

              Not Applicable.

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

              The Company  held its Annual  Meeting of  Stockholders  on May 27,
1997. During the Annual Meeting of Stockholders, the following four matters were
voted upon:  the  election of  directors,  a proposal to approve the Amended and
Restated  1996  Stock  Option  Plan,  an  amendment  to  the  1996  Non-Employee
Directors'  Stock Option Plan, and the  ratification  of the selection of Arthur
Andersen LLP as the Company's independent public accountants.  The following are
the results of the voting for these matters:

1.   Election of directors:        Shares For        Shares Against, or Withheld

      G. Anthony Gorry              5,056,216                  231,525
      David Sikora                  5,162,053                  125,688
      Terry W. Ward                 5,162,053                  125,688
      Stephen J. Banks              5,056,438                  231,303
      Grant Dove                    5,056,438                  231,303

2.   Proposal to Approve The ForeFront Group, Inc. Amended and Restated 1996 
Stock Option Plan.


Shares For               Shares Against, or Withheld              Abstentions
 3,073,807                         575,412                         1,527,168


3.   Proposal to Approve the First Amendment to the 1996 Non-Employee Directors'
Stock Option Plan.


Shares For               Shares Against, or Withheld               Abstentions
 4,376,961                         512,645                           275,527


4.   Selection of Arthur Andersen LLP as independent public accountants of the 
Company for fiscal year ending December 31, 1997.


Shares For               Shares Against, or Withheld               Abstentions
 5,255,461                              0                              697

                                       13
<PAGE>

Item 5.           Other Information

                  Not Applicable.

Item 6.           Exhibits and Reports on Form 8-K

                  (a) Exhibits

                  Number                             Exhibit
                  ------                             -------        

                  27                                 Financial Data Schedule

                  (b) Reports on Form 8-K

                  No  reports on Form 8-K were  filed  during  the three  months
ended June 30, 1997.

                                       14

<PAGE>


                                   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.

                                              THE FOREFRONT GROUP, INC.



Date: August 14, 1997                         By:  /s/ David Sikora
                                                 ------------------------------
                                                 David Sikora
                                                 President and Chief Executive 
                                                       Officer



Date: August 14, 1997                         By:   /s/ Ernest D. Rapp
                                                 ------------------------------
                                                 Ernest D. Rapp
                                                 Chief Financial Officer
                                                 (Principal Financial and
                                                       Accounting Officer)

                                       15