EXHIBIT 4.1

                        SETTLEMENT AND RELEASE AGREEMENT

         Thiso Settlement and Release Agreement (the "AGREEMENT") dated
effective as of January 30, 2004 (the "EFFECTIVE DATE") is between Andrew Vasko
("Vasko") Vasko Enterprises, Inc. ("VEI")and Front Porch Digital. Inc. ("FPD")
who shall collectively be referred to as the "PARTIES".

                                    RECITALS

         WHEREAS, Vasko and FPD are parties to a lawsuit captioned Drew Vasko v
Front Porch Digital. Inc., Case No. 02-MK-2288 (BNB) currently pending in the
United States District Court for the District of Colorado (the "Lawsuit"). In
the Lawsuit Vasko has brought claims against FPD for commissions, penalties and
attorneys fees under the Colorado Wage Act and for unjust enrichment; FPD has
brought claims against Vasko for tortuous interference with contract and
prospective business advantage, misappropriation of trade secrets and breach of
fiduciary duty.

         WHEREAS, the Parties wish to settle the Lawsuit and all claims therein;

         NOW THEREFORE, in consideration of the foregoing, the mutual promises
forth in this Agreement, and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the Parties agree as follows:

                                    AGREEMENT

         1.       SETTLEMENT CONSIDERATION. Upon full execution of this.
                  Agreement FPO shall pay VEI the Settlement Consideration
                  pursuant to the payment terms set forth in Exhibit A hereto.
                  Upon full payment of the Settlement Consideration as set forth
                  in Exhibit A: a) the parties shall cause the Lawsuit to be
                  dismissed with prejudice; and b) the releases set forth in
                  paragraph 2 below shall become effective.

         2.       RELEASES.

         A.       RELEASE BY VASKO AND VEI. Vasko, for himself and his heirs,
                  successors, representatives, agents, attorneys and assigns
                  (all of whom, for the purposes of this Section 2(A), are
                  collectively referred to as Vasko) and VEI for itself, its
                  affiliates, predecessors, successors, representatives,
                  directors, officers, employees, shareholders, agents,
                  attorneys and assigns (all of whom, for the purposes of this
                  Section 2(A), are collectively referred to as VEI) hereby
                  fully and forever release and discharge FPD, its affiliates,
                  predecessors, successors, representatives, directors,
                  officers, employees, shareholders, agents, attorneys and
                  assigns (all of whom, for the purposes of this Section 2(A),
                  are collectively referred to as FPD) of


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                  and from any and all actions, causes of action. claims,
                  obligations, demands, costs and expenses, including attorneys'
                  fees, compensation, commissions, damages, wages, penalties or
                  otherwise, of every kind and nature whatsoever, in law,
                  statute or equity, whether now known or unknown, that Vasko or
                  VEI may now have, or claim at any future time to have, against
                  FPD including but not limited to any claims based in whole or
                  in part upon, relating to, or arising from the claims raised
                  in the Lawsuit.

         B.       RELEASE BY FPD. FPD, for itself, its affiliates, predecessors,
                  successors, representatives, directors, officers, employees,
                  shareholders, agents, attorneys and assigns (all of whom, for
                  the purposes of this Section 2(8), are collectively referred
                  to as FPD) hereby fully and forever releases and discharges
                  Vasko and his heirs, successors, representatives, agents,
                  attorneys and assigns (all of whom, for the purposes of this
                  Section 2(B) are collectively referred to as Vasko) and VEI,
                  its affiliates, predecessors. successors, representatives,
                  directors, officers,, employees, shareholders, agents,
                  attorneys and assigns (all of whom, for the purposes of this
                  Section 2(B), are collectively referred to as VEI) of and from
                  any and all actions, causes of action, claims, obligations,
                  demands, costs and expenses, including attorneys' fees,
                  compensation, damages; wages, penalties or otherwise, of every
                  kind and nature whatsoever, in law; statute or equity, whether
                  now known or unknown, that FPD may now have, or claim at any
                  future time to have, against Vasko or VEI including but not
                  limited to any claims based in whole or in part upon, relating
                  to, or arising from the claims raised in the Lawsuit.

         3.       DENIAL OF LIABILITY. The Parties understand and agree that
                  this Agreement shall not be construed as an admission of
                  liability on the part of any person or entity, liability being
                  expressly denied.

         4.       AUTHORITY AND NONASSIGNMENT. The Parties warrant and represent
                  that each has authority to enter into this Agreement, and that
                  no Party has transferred, sold, assigned, or hypothecated any
                  part of their respective claims, actions, demands and/or
                  causes of action, if any. The Parties warrant and agree that
                  each will sign or execute any document that is necessary to
                  complete the obligations as set forth within this Agreement.

         5.       NONRELIANCE. Each Party understands and agrees that it assumes
                  all risk that the facts or law may be, or become, different
                  than the facts or law as believed by the Party at the time it
                  executes this Agreement. The Parties acknowledge that their
                  adversary relationship precludes any affirmative obligation of
                  disclosure, and expressly disclaim all reliance upon
                  information supplied or concealed by any adverse Party or its
                  counsel in connection with the negotiation and/or execution of
                  this Agreement.


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         6.       ADDITIONAL WARRANTY AND ACKNOWLEDGMENT. The Parties warrant
                  and represent that they have been offered no promise or
                  inducement except as expressly provided in this Agreement, and
                  that this Agreement is not in violation of or in conflict with
                  any other Agreement of any of the Parties.

         7.       CONFIDENTIALITY. The Parties warrant and represent to each
                  other that, other than to their shareholders, accountants
                  and/or counsel, the terms of this Agreement or the
                  circumstances under which the Lawsuit has been resolved have
                  not been disclosed. After the Effective Date, neither the
                  Parties, nor their counsel, nor their shareholders, nor any
                  other person under the Parties' control shall disclose any
                  term of this Agreement or the circumstances under which the
                  Lawsuit has been resolved, except that the Parties may
                  disclose such information as required by subpoena or court
                  order or to an attorney or accountant to the extent necessary
                  to obtain professional advice. The Parties shall not be
                  entitled to rely upon the foregoing exception for disclosures
                  pursuant to subpoena or court order unless the Parties. have
                  given each other written notice, within three business days
                  following service of the subpoena or court order.

         8.       SURVIVAL OF COVENANTS AND WARRANTIES. All covenants and
                  warranties contained in this Agreement are contractual and
                  shall survive the closing of this Agreement.

         9.       FEES AND COSTS. Except as expressly set forth herein, each
                  Party shall be responsible for its own attorneys' fees, costs
                  and expenses.

         10.      MISCELLANEOUS.

                  A.       SUCCESSORS AND ASSIGNS. This Agreement shall be
                           binding in all respects upon, and shall inure to the
                           benefit of, the Parties' successors and assigns.

                  B.       GOVERNING LAW/DISPUTES. This Agreement shall be
                           governed by the laws of the State of Colorado,
                           irrespective of the choice of law rules of any
                           jurisdiction. The Parties hereby consent to arid
                           submit to the jurisdiction of the federal and state
                           courts located in the State of Colorado. The Parties
                           shall not raise in connection with any such action or
                           suit, and hereby waive, any defenses based upon the
                           venue, the inconvenience of the forum, the lack of
                           personal jurisdiction, the' sufficiency of the
                           service pf process, or the like.

                  C.       SEVERABILITY. In the, event that a court of competent
                           jurisdiction enters a final judgment holding invalid
                           any provision of this


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                           Agreement, the remainder of this Agreement shall be
                           fully enforceable.

                  D.       INTEGRATION. This Agreement and Exhibit A hereto
                           constitute the entire agreement of the Parties and a
                           complete merger of prior negotiations and agreements.

                  E.       MODIFICATION. This Agreement shall not be modified
                           except in a writing signed by the Parties.

                  F        WAIVER. No term or condition of this Agreement shall
                           be deemed to have' been waived, nor shall there be an
                           estoppel against the enforcement of any provision of
                           this Agreement, except by a writing signed by the
                           Party charged with the waiver or estoppel. No waiver
                           of any breach of this Agreement shall be deemed. a
                           waiver of any later breach of the same provision or
                           any other provision of this Agreement.

                  G.       HEADINGS. Headings are intended solely as a
                           convenience and shall not control the meaning or
                           interpretation of any provision of this Agreement.

                  H.       CONSTRUCTION. The Parties acknowledge that they and
                           their respective counsel have reviewed this Agreement
                           in its entirety and `have had a full and fair
                           opportunity to negotiate its terms. Each Party
                           therefore waives all applicable rules of construction
                           that any provision of this agreement should be
                           construed against its drafter, and agrees that all,
                           provisions of this Agreement shall be construed as a
                           whole, according to the fair meaning of the language
                           used.

                  I.       COUNTERPARTS AND TELECOPIES. This Agreement may be
                           executed in counterparts, or by copies transmitted by
                           telecopier, all, of which shall be given the same
                           force and effect as the original.


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                                             FRONT PORCH DIGITAL, INC.
                                             By:/s/ Matthew Richman, CFO/COO
                                                --------------------------------
                                             Date: January 30, 2004
                                                   -----------------------------

                                             Andrew Vasko
                                             By: /s/ Andrew Vasko
                                                 -------------------------------
                                             Date: January 30, 2004
                                                   -----------------------------

                                             VASKO ENTERPRISES, INC.
                                             By: /s/ Andrew Vasko
                                                 -------------------------------
                                             Date: January 30, 2004
                                                   -----------------------------


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         FRONT PORCH DIGITAL, INC.
         DREW VASKO/VASKO ENTERPRISES SETTLEMENT SUMMARY --
         EXHIBIT A
         TO SETTLEMENT AGREEMENT DATED JANUARY 30, 2004

         SETTLEMENT TERMS AND CONDITIONS:

         1)       Settlement amount - $105,000 in value in freely-tradeable
                  common stock of Front Porch Digital Inc. ("FPDI"). The number
                  of Initial Shares ("Initial Shares") to be issued in
                  consideration for this amount will be determined by the
                  closing price of the common stock (as quoted on the exchange)
                  on the date the agreement is executed.

         2)       FPDI expects to issue these Initial Shares to Vasko
                  Enterprises. Inc. within 3 weeks of the date the agreements
                  are executed (expected to be Friday, January 30, 2004).

         3)       Any proceeds realized from the sale of the Initial Shares in
                  excess of the $105,000 will be retained by Vasko Enterprises,
                  Inc.

         4)       FPDI is guaranteeing the $105,000 to be realized through the
                  sale of its common stock to be issued to Vasko Enterprises,
                  Inc. It is the intent and meaning of this agreement to
                  guarantee that Vasko Enterprises, Inc. receives $105,000
                  (pretax) from the proceeds of the sale of the Initial Shares.
                  If Vasko Enterprises, Inc. does not realize the full $105,000
                  from the sale of the Initial Shares, FPDI will immediately
                  issue to Vasko Enterprises, Inc. additional shares of its
                  common stock ("Additional Shares") (number of shares to be
                  determined based upon the closing market price of the stock on
                  the date of issue) equal to the value shortfall below the
                  $105,000 agreed amount. The Additional Shares will be
                  immediately tradeable and the ability to realize the full
                  value would be certain. Technically, on the date the
                  Additional Shares are issued, Vasko Enterprises, Inc. can
                  execute a sell order in the amount of those Additional Shares
                  at that price and then cover the sale upon receipt of the
                  stock certificate within 1 business day of the issuance of the
                  Additional Shares. In the event that the realization from the
                  sale of the Additional Shares does not cover the shortfall the
                  process will be repeated by a second issuance of Additional
                  Shares, followed by additional issuances if necessary. EPO
                  may, at its election, provide any shortfall amount in cash
                  rather than stock.

         5)       Under this agreement all Initial Shares must be sold within
                  seven (7) trading days of the date of issuance. The proceeds
                  realized by Vasko Enterprises. Inc. will be reported to FPDI
                  upon the sate of the last of the Initial Shares. FPDI will
                  then make the determination of the Additional Shares that same
                  business day. The Additional Shares will be issued that day
                  and a stock certificate will be delivered to Vasko
                  Enterprises, Inc. the next business day.


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         6)       All obligations for taxes on this settlement are Vasko
                  Enterprises. Inc.'s sole responsibility.


         OTHER REPRESENTATIONS AND WARRANTIES:

         1)       FPDI represents that it will not declare bankruptcy or
                  initiate any type of disposition of the company's assets in a
                  fire/liquidation type sale prior to the realization of the
                  $105,000 in proceeds by Vasko Enterprises, Inc.

         2)       FPDI represents that it will not execute a reverse stock split
                  which could impair the value of the stock and thus the
                  proceeds to be realized by Vasko Enterprises, Inc.

         3)       FPDI represents that it has the authority to issue these
                  shares and will obtain formal Board of Directors approval
                  prior to the execution of the final agreements regarding this
                  settlement.

         4)       FPDI represents that will attempt to assist Vasko Enterprises,
                  Inc. in the timely disposition of these shares and the full
                  realization of the $105,000 from the sale of the Initial
                  Shares.

         5)       Vasko Enterprises, Inc. represents that it will use best
                  efforts in selling the Initial Shares within the time period
                  allotted for the maximum price per share using good reason and
                  judgment in selling the shares (i.e. Vasko Enterprises, Inc.
                  will not sell the entire block of stock in I transaction at a
                  price lower than the market price and thus cause FPDI to have
                  to issue Additional Shares).

         6)       Vasko Enterprises, Inc. represents that it wilt obtain
                  preapproval from the CEO of FPDI before selling any block of
                  stock that is 25,000 shares or more at a price less than the
                  market price at that time.


                                              VASKO ENTERPRISES, INC.

                                              /s/ Andrew Vasko
                                              ----------------------------------
                                              by: Andrew Vasko

                                              FRONT PORCH DIGITAL, INC.

                                              By: /s/ Matthew Richman
                                              ----------------------------------
                                              Its: CHIEF FINANCIAL OFFICER/CHIEF
                                              OPERATING OFFICER


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