<PAGE>


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

                                   FORM 10-QSB

[X]  Quarterly Report under Section 13 or 15d of the Securities Exchange Act
     of 1934 for the quarterly period ended: June 30, 1998

[ ]  Transition report pursuant to Section 13 or 15d of the Securities Exchange
     Act of 1934 For the Transition period from_____________ to____________

                         Commission file number: 1-12966


                                   INSCI Corp
             (Exact name of registrant as specified in its charter)

        Delaware                                       06-1302773
 ------------------------                 ------------------------------------
 (State of incorporation)                 (IRS employer identification number)

                          Two Westborough Business Park
                              Westborough, MA 01581
                    (Address of principal executive offices)

         Issuer's telephone number, including area code: (508) 870-4000

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 
    -----     -----

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

Title of Each Class                              Outstanding at June 30, 1998
-------------------                              ----------------------------
Common stock, par value $.01                              7,104,610

Transitional Small Business Disclosure Format (check one)
Yes      No   X
   -----    -----

<PAGE>

                                   INSCI Corp

                                      INDEX

PART I    FINANCIAL INFORMATION

Item 1.   Financial Statements

          Balance Sheet as of  June 30, 1998                             3
          Statements of Operations for the Three Months
          Ended  June 30, 1998 and 1997                                  4

          Statements of Cash Flows for the Three Months
          Ended June 30, 1998 and 1997                                   5

          Notes to Financial Statements                                  6

Item 2.   Management's Discussion and Analysis or Plan of Operation      8

PART II   OTHER INFORMATION

Item 5    Other Information                                             12

Item 6    Exhibits and Reports on Form 8-K                              12

          Signature                                                     13

<PAGE>

 PART I     FINANCIAL INFORMATION:

                                   INSCI Corp
                                  BALANCE SHEET
                                 (in thousands)
                                   (unaudited)
                                                                 JUNE 30,
 ASSETS                                                           1998
                                                                 -------
 Current assets:
      Cash and cash equivalents                                  $ 2,092
      Accounts receivable, net                                     2,866
      Inventory                                                        1
      Prepaid expenses and other                                     284
                                                                 -------
        Total current assets                                       5,243
 Property & equipment, net                                           635
 Capitalized software development costs,
   net of accumulated amortization of $662,000                       776
 Purchased software, net of accumulated 
   amortization of $1,133,000                                      1,525
 Other assets                                                        222
                                                                 -------
 Total assets                                                    $ 8,401
                                                                 =======

 LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities:
      Accounts payable                                               691
      Accrued compensation                                           280
      Accrued vacation                                               291
      Accrued commissions                                            141
      Accrued and other liabilities                                  698
      Deferred maintenance revenue                                   989
                                                                 -------
        Total current liabilities                                  3,090
                                                                 -------

 Stockholders' equity :
   Common stock                                                       71
   Preferred stock                                                    20
   Additional paid-in capital                                     26,334
   Accumulated deficit                                           (21,114)
                                                                 -------
        Total stockholders' equity                                 5,311
                                                                 -------
 Total liabilities and stockholders' equity                      $ 8,401
                                                                 =======

                             See accompanying notes


<PAGE>



                                   INSCI Corp
                            STATEMENTS OF OPERATIONS
                    (in thousands, except per share amounts)
                                   (unaudited)

                                                       THREE MONTHS ENDED
                                                           JUNE 30,
                                                        1998       1997
                                                      --------   --------
Revenue
    Product                                           $  1,765   $    758
    Services                                             1,448      1,045
                                                      --------   --------
       Total revenue                                     3,213      1,803
                                                      --------   --------
Cost of revenue
    Product                                                354        411
    Services                                               756        671
                                                      --------   --------
       Total cost of revenue                             1,110      1,082
                                                      --------   --------
Gross margin                                             2,103        721
                                                      --------   --------
Expenses
    Sales and marketing                                  1,053      1,008
    Product development                                    471        478
    General and administrative                             385        444
                                                      --------   --------
       Total expenses                                    1,909      1,930
                                                      --------   --------

Income (loss) from operations                              194     (1,209)
                                                      --------   --------
Interest income (expense)
    Interest income                                         25         47
    Interest expense                                         -         (1)
                                                      --------   --------
       Interest income (expense) net                        25         46
                                                      --------   --------
Net income (loss)                                          219     (1,163)
                                                      ========   ========

Preferred stock dividends                                 (163)      (244)
                                                      --------   --------

Net income (loss) applicable
    to common shares                                  $     56   $ (1,407)
                                                      ========   ========

Net income (loss) per common share                    $   0.01   $  (0.33)
                                                      ========   ========

Weighted average common
    shares outstanding                                   6,768      4,284
                                                      ========   ========



                             See accompanying notes


<PAGE>

                                   INSCI Corp
                            STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)
                                                            Three months ended
                                                                   June 30,
                                                             1998        1997
                                                           -------     -------
Cash flows from operating activities:
  Net income (loss)                                        $   219     $(1,163)
  Reconciliation of net income (loss) to net cash
  used in operating activities:
    Depreciation and amortization                               93          91
    Amortization of deferred software costs                    197         135
    Stock options granted for services                          30
    Changes in assets and liabilities:
      Accounts receivable                                       38         513
      Prepaid expenses and other current assets               (131)          4
      Accounts payable                                        (190)       (258)
      Accrued and other liabilities                           (333)       (192)
      Deferred maintenance revenue                              75        (108)
      Other assets                                             (80)         13
                                                           -------     -------
Net cash used in operating activities                          (82)       (965)
                                                           -------     -------
Cash flows from investing activities:
    Additions to capitalized software development costs       (137)       (172)
    Additions to purchased software costs                     (198)       (175)
    Capital expenditures                                       (89)        (54)
                                                           -------     -------
Net cash used in investing activities                         (424)       (401)
                                                           -------     -------
Cash flows from financing activities:
    Proceeds from exercise of stock options                      2          10
                                                           -------     -------
Net cash provided by financing activities                        2          10
                                                           -------     -------

Net change in cash and cash equivalents                       (504)     (1,356)
Cash and cash equivalents at beginning of period             2,596       5,068
                                                           -------     -------
Cash and cash equivalents at end of period                 $ 2,092     $ 3,712
                                                           =======     =======

                             See accompanying notes

<PAGE>
                                   INSCI Corp

                          Notes to Financial Statements
                                   (Unaudited)

BASIS OF PRESENTATION

         The financial statements included herein have been prepared by INSCI
Corp (the "Company" or "INSCI"), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission (the "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. However,
the Company believes that the disclosures contained herein are adequate to make
the information presented not misleading. The financial statements should be
read in conjunction with the financial statements and notes thereto included in
the Company's annual report on Form 10-KSB, filed on June 29, 1998, for the
fiscal year ended March 31, 1998, with the Company's definitive proxy statement
for its 1998 Annual Meeting of Stockholders filed with the Commission on July
29, 1998 and with additional definitive materials in conjunction with the
Company's 1998 Proxy filed with the Commission on August 7, 1998.

         In the opinion of the management of the Company, the accompanying
unaudited financial statements reflect all adjustments (of a normal and
recurring nature) which are necessary to present fairly the financial position
of the Company as of June 30, 1998 and the results of operations for the
quarters ended June 30, 1998 and 1997 and cash flows for the quarters ended June
30, 1998 and 1997.

         The financial statements included herein include consolidated results
for the Company's two wholly owned subsidiaries; (1) INSCI (UK) Limited, a
product development center located in the United Kingdom, and (2) INSCI
Philippines, Inc., a sales, support and product development center located in
the Philippines. During fiscal 1998, the Company's Board of Directors approved
closing the Philippine subsidiary. Neither of these subsidiaries are financially
significant to the consolidated results of the Company.

         The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

EARNINGS PER SHARE

         Basic earnings (loss) per share is computed by dividing net income
(loss) after preferred stock dividends by the weighted average number of common
shares outstanding during the period. Diluted earnings per share incorporates
the dilutive effect of common stock equivalents on an average basis during the
period. The Company's common stock equivalents include convertible preferred
stock and stock options and warrants. Dilutive earnings (loss) per share has not
been presented for the quarters ended June 30, 1998 and 1997 since the inclusion
of common stock equivalents would have been anti-dilutive.

CONTINGENCIES

         Registration Rights. On October 6,1997 the Securities and Exchange
Commission declared effective the Form S-1 Registration Statement (File Number
333-22187) that the Company filed with the Commission for 16,769,991 shares of
common stock, of which 4,000,000 are reserved for acquisitions, 2,860,565 for
selling shareholders and the balance of 9,909,426 for potential issuance
pursuant to rights granted to unit holders, convertible preferred stockholders,
and warrants and options issued by the Company. The registration includes
"piggyback" shares pursuant to rights that the Company has granted to the
holders of certain warrants and shares of the Company's stock. The Company did
not file its Registration Statement within the time specified within its
registration rights agreements and as a result, could be subject to claims by
security holders that they were unable to convert their securities into shares
of registered Common Stock.

          Legal Proceedings. The Securities and Exchange Commission issued an
order, dated April 13, 1995, authorizing a private investigation of Imtech
(INSCI's former majority shareholder) and INSCI, and its officers and directors
during the period from March, 1993 and continuing until April 13, 1995. The
order of investigation inquired into whether the Company and its then officers
and directors engaged in violations of Rule 10b-5 of the Securities Exchange Act
of 1934 (the "Exchange Act"); failed to file annual reports and other
information as required by the rules and regulations of the Commission. On
September 10, 1996 the Company was informed by the Commission that the staff
inquiry relating to these matters had been terminated and that no enforcement
action had been recommended at that time.

         A claim was asserted by holders of 187,500 Warrants, with respect to
the delay in the registration of the underlying shares related to the warrants.
The Company has agreed to resolve the claim by issuing an aggregate of 70,000
shares of its common stock in consideration of the warrant holders surrendering
their warrants for cancellation by the Company. The Company has not finalized
the settlement agreement.

CREDIT FACILITY

         On August 7, 1998, the Company and Silicon Valley Bank ("SVB")
finalized a bank line of credit Agreement ("Agreement"). The terms of this
Agreement provide for a $1,500,000 working capital credit facility for a term of
one year. The terms further provide for working capital advances up to seventy
five percent of the Company's eligible domestic accounts receivable under ninety
days from invoice date. Collateral for the line, which is secured by a lien, is
comprised of all Company assets. The rate of interest to be paid to SVB is prime
plus one percent. In order to borrow against the line, the Company is required
to meet certain covenants which include minimum tangible net worth of $2 million
and a quick ratio of 1:50 to 1. The Company, at its option, may terminate the
credit facility with SVB without penalty.

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

COMPARISON OF RESULTS OF OPERATIONS

         The following table sets forth, for the periods indicated, the
percentage relationship that certain items of the Company's results of
operations bear to total revenue:

                                            THREE MONTHS ENDED
                                                  JUNE 30,
                                               1998      1997
                                             --------   -------
Revenue                                         %          %
                                             --------   -------
    Product                                        55        42
    Services                                       45        58
                                             --------   -------
       Total revenue                              100       100
Cost of revenue
    Product                                        11        23
    Services                                       24        37
                                             --------   -------
       Total cost of revenue                       35        60
                                             --------   -------
Gross margin                                       65        40
Expenses
    Sales and marketing                            33        56
    Product development                            14        26
    General and administrative                     12        25
                                             --------   -------
       Total expenses                              59       106
                                             --------   -------

Income (loss) from operations                       6       (67)

Interest income (expense)                           1         2
                                             ========   =======
Net income (loss)                                   7       (65)
                                             ========   =======

THREE MONTHS ENDED JUNE 30, 1998 AS COMPARED TO THE THREE MONTHS ENDED JUNE 30,
1997:

REVENUE
         INSCI develops, sells, installs and supports electronic document
repository software with integrated Internet, imaging, workflow,
print-on-demand, electronic distribution and archive (COLD) software for the
enterprise level (high volume production) market. INSCI's software products
enable customers to improve their services through electronic access to
documents (e.g. invoices, statements, reports, etc.); provide financial savings
through elimination of paper and microfiche; and provide the foundation for the
digital document "back office" for electronic commerce applications. Sales to
end users generally include software, systems integration and consulting
services, installation, and training. Post-installation maintenance and customer
support is available under the terms of a separate contract at an additional
charge. INSCI sells its products through a combination of a direct sales force
and indirectly through VAR's, distributors and sales alliances with companies
including Unisys Corporation, Xerox Corporation and Moore Corporation. Revenue
is net of discounts and allowances given to third party VARs and distributors.


         Total revenue for the quarter ended June 30,1998 (the "current
quarter") was $3,213,000 and increased by 78% compared to revenue of $1,803,000
for the quarter ended June 30, 1997. Product revenue was $1,765,000 for the June
30, 1998 quarter and increased by 133% compared to product revenue of $758,000
for the same quarter last year. The increase in product revenues reflects the
impact of the Company's programs of introducing new products, increasing
utilization of indirect sales channels and increasing international presence.
Over 50% of the current quarter's product revenues were attributable to the
Company's new products, which include Windows NT and Web based products.
Revenues sold through indirect sales channels, which include Unisys, Xerox and
other third party selling partners, represented approximately 35% of the current
quarter revenues compared to 13% for the same quarter last year. International
revenues represented 24% of current quarter revenues compared to 8% for the same
quarter last year. A key indicator of the combined impact of these factors is
business from new customers revenues from new customers was 36% of the current
quarter's revenues compared to 19% for the same quarter last year. The Company
believes that it now has the products and channels to support increased product
revenue growth in future periods. However, the long sales cycle associated with
the Company's market combined with large orders that will impact total quarterly
revenues can result in quarter-to-quarter revenue volatility.

         Service revenues totaled $1,448,000 for the current quarter, and
increased by 39% compared to revenues of $1,045,000 for the same period last
year. Increased service revenues are primarily linked to increases in product
revenues. In many cases customers require the Company's systems integration and
training support in order to efficiently implement the Company's software
products. The Company expects services revenues to grow in relation to increases
in product revenue growth.

         For the quarter ended June 30, 1998, the Company received in excess of
ten percent of its total revenues from Unisys Corp and Xerox Corp, two of the
Company's strategic sales partners. A decline in revenues from these sales
partners in future quarters could materially effect the revenues and operating
results of the Company.

GROSS MARGIN AND COST OF REVENUE

         Gross margin for the quarter ended June 30, 1998 was $2,103,000 and
increased by 192% compared to gross margin of $721,000 for the same quarter last
year. Gross margin as a percent of revenues was 65% for the current quarter
compared to 40% for the same quarter last year. The increase in gross margin is
primarily the result of increased product revenue for the current quarter.

         Cost of product revenue as a percentage of product revenue was 20% in
the current quarter as compared to 54% for the same quarter last year. Cost of
services revenue was 52% in the current quarter as compared to 64% for the same
quarter last year. The decrease in cost of revenues as a percent of revenues in
the current quarter for both product and services revenues reflects the
relatively fixed nature of several of the costs associated with these revenue
categories including amortization of capitalized software expenses and the
non-variable organizational infrastructure of the services organization. To the
degree that the Company's revenues grow in future periods, cost of revenue as a
percent of revenue is expected to decrease as increased revenues are available
to absorb those costs that are relatively fixed in nature.

SALES AND MARKETING

         Sales and marketing expenses for the quarter ended June 30, 1998 were
$1,053,000 and increased by 4%, compared to expenses of $1,008,000 for the
quarter ended June 30, 1997. The expense increase reflects increases in
commissions related to revenue increases, partially offset by a reductions in
expenses of the Company's Philippine subsidiary, which is being closed. The
Company is in the process of completing arrangements with Unisys/Philippines, a
sales partner of the Company, who intends to hire the Company's key Philippine
employees. This arrangement is intended to provide for continuing sales and
technical support of the Company's products in the Far East.

PRODUCT DEVELOPMENT

         The Company's product development program has been directed toward
creating a suite of complementary products to meet customer and marketplace
requirements for a more complete electronic document management solution. This
development program includes enhancement of existing Unix based products
combined with development of new NT based products. During fiscal 1998, the
Company announced the addition of six new products to its offerings; WebCOINS,
an Internet product; COINSflow, a workflow product; Advanced COINSCAN, an
imaging product; Advanced COINSERV, a document archive and retrieval product;
COINS Demander, a database interface; and Setup Expert, an application set up
interface. The Company also released a major new product in October, 1997,
COINSERV for Windows NT, an electronic document repository with Internet access
and integrated imaging and workflow. This software product can archive and
retrieve high volumes of documents operating on the NT platform.

         The additions to INSCI's product offerings, along with enhancements to
existing products, have been funded by the Company's gross expenditures for
software products. Gross product development expenses for the quarter ended June
30, 1998 were $806,000 before capitalization of software expenses of $335,000,
for net product development expenses of $471,000. Gross product development
expenses for the quarter ended June 30, 1997 were $825,000, before
capitalization of software expenses of $347,000, for net product development
expenses of $478,000. Product development costs for the periods are
approximately the same as the Company continues its expenditures for fiscal 1999
at approximately the same levels as fiscal 1998, in order to add additional
products and enhance existing products.

GENERAL AND ADMINISTRATIVE

         General and administrative expenses were $385,000 for the quarter ended
June 30, 1998 and decreased by 13% compared to $444,000 for the same quarter
last year. This decrease reflects costs savings programs that the Company has
put into effect. A significant portion of the cost savings reflects decreases in
professional fees combined with increased utilization of the Company's internal
staff to perform functions that were performed by outside services in the prior
fiscal year.

INTEREST INCOME (EXPENSE)

         Net interest income for the quarter ended June 30, 1998 was $25,000
compared to $46,000 for the same quarter last year. The decrease reflects lower
cash balances in the current quarter with correspondingly lower interest income.

NET INCOME (LOSS)

         Net income for the quarter ended June 30, 1998 was $219,000 compared to
net loss of $1,163,000 for the quarter ended June 30, 1997. The profitability
for the current quarter is the result of revenue increases for the period.

YEAR 2000 COMPUTER SOFTWARE CONVERSION

         Many computer systems will experience problems handling dates beyond
the year 1999. Therefore, some computer hardware and software will need to be
modified prior to the year 2000 in order to remain functional. The Company is
assessing both internal readiness of its computer systems and the compliance of
its computer software sold to customers for its ability to process the year
2000. The Company expects to successfully implement the systems and programming
changes necessary to address the 2000 issues, and does not believe that the cost
of such actions will have a material effect on the Company's results of
operations or financial condition. There can be no assurance, however, that
there will not be a delay in, or increased costs associated with the
implementation of such changes. The Company's inability to implement such
changes could have an adverse effect on future results of operations.

FORWARD LOOKING COMMENTS

         During fiscal 1998, the Company's revenues were impacted by reduced
demand for its Unix based software products during the first and second fiscal
quarters. To offset this reduced demand and participate in the rapidly growing
Windows NT based market, the Company introduced a Windows NT based product in
October, 1997. In addition, during fiscal 1998, a significant portion of the
Company's sales and technical resources were directed toward increased support
of the Company's indirect sales channels, at the cost of reducing the Company's
direct sales activities. The Company believes that opportunities to increase
future revenues are best served by supporting these sales channels due to the
existing customer relationships that these channels have and the relatively
large number of sales personnel that the channels can direct to selling the
Company's products, as compared to much lower sales coverage of the Company's
internal direct sales force. The increase in revenues for the quarter ended June
30, 1998 compared to the same quarter last year reflects the positive impact on
revenues of the Company's new products and increased revenues through indirect
channels. The Company is not able to predict, however, when and to what degree
future revenue increases from its NT based products or increased use of sales
channels may occur.

LIQUIDITY AND CAPITAL RESOURCES

         As of June 30, 1998 the Company had $2,092,000 of cash and cash
equivalents and working capital of $2,153,000 in comparison to $3,712,000 of
cash and cash equivalents and working capital of $3,409,000 as of June 30, 1997.
The present cash reserves of the Company are believed to be sufficient to meet
the foreseeable needs of the Company. Accounts receivable were $2,866,000 with
weighted days outstanding of 57 as of June 30, 1998 compared to receivables of
$1,978,000 with weighted days outstanding of 56, as of June 30, 1997. The
Company targets collections of 45 days. The current quarter's collection days of
57 reflects extended payment terms that the Company has provided to a number of
its customers.


         The Company's cash flows are summarized below for the periods
indicated: (in thousands)

                                                Quarter ended June 30,
                                                 1998            1997
                                                ------         -------
Cash provided by (used in)
       Operating activities                     $  (82)        $  (965)
        Investing activities                      (424)           (401)
        Financing activities                         2              10
                                                ------         -------
           Increase(decrease) in cash and
             cash equivalents                   $ (504)        $(1,356)
                                                ======         =======
Cash and cash equivalents at end of period      $2,092         $ 3,712

         The Company used cash of $82,000 in operating activities for the
quarter ended June 30, 1998. Net cash used in investing activities was $424,000
for the current quarter, primarily from additions to capitalized and purchased
software. Cash provided by financing activities was minimal for the quarter, and
reflected the exercise of Company stock options.

         On August 7, 1998, the Company and Silicon Valley Bank ("SVB")
finalized a bank line of credit Agreement ("Agreement"). The terms of this
Agreement provide for a $1,500,000 working capital credit facility for a term of
one year. The terms further provide for working capital advances up to seventy
five percent of the Company's eligible domestic accounts receivable under ninety
days from invoice date. Collateral for the line, which is secured by a lien, is
comprised of all Company assets. The rate of interest to be paid to SVB is prime
plus one percent. In order to borrow against the line, the Company is required
to meet certain covenants which include minimum tangible net worth of $2 million
and a quick ratio of 1:50 to 1. The Company, at its option, may terminate the
credit facility with SVB without penalty.

"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT:

         With the exception of historical information, the matters discussed in
this report are "forward looking statements" as the term is defined in Section
21E of the Securities Exchange Act of 1934. While the Company believes that its
strategic plan is on target and the business outlook remains strong, several
important factors, many of which are beyond the control of the Company, have
been identified which could cause results to differ materially from historical,
planned, implied or predicted results of the Company. While the Company has
achieved an operating income in some past quarters, INSCI historically has been
unable to generate sales volumes necessary to achieve profitability on a
sustained basis. INSCI has experienced, and may in the future experience,
significant quarter to quarter fluctuations in revenues and the results of
operations. Such fluctuations may result in volatility in the market price of
the Company's Common Stock.

          Quarterly revenues and results of operations may fluctuate as the
result of a variety of factors, including the lengthy sales cycle for the
Company's products, the proportion of revenues attributable to software license
fees versus services, the amount of revenue generated by alliances with other
companies selling INSCI's products, demand for the Company's products, the size
and timing of individual license transactions, the introduction of new products
and product enhancements by the Company or its competitors, changes in customer
budgets, competitive conditions in the industry and general economic conditions.
Additionally, the sale of the Company's products generally involves a
significant commitment of capital by its customers and may be delayed due to
time consuming authorization procedures within an organization. Other factors
affecting the Company's operating results include INSCI's ability to design and
introduce on a timely basis new products which compete effectively on the basis
of price and performance and which address customer requirements, product
obsolescence, technological changes, competition and competitive pressures on
price, the ability to hire and retain qualified personnel and general economic
conditions affecting the investment by potential customers in peripheral
computer devices. There is no assurance that the Company can maintain or
increase its sales volume going forward or that it will be able to achieve a
profit in the marketing of its products.


PART II  OTHER INFORMATION

ITEM 5.  OTHER INFORMATION

         On August 7, 1998, the Company and Silicon Valley Bank ("SVB")
finalized a bank line of credit Agreement ("Agreement"). The terms of this
Agreement provide for a $1,500,000 working capital credit facility for a term of
one year. The terms further provide for working capital advances up to seventy
five percent of the Company's eligible domestic accounts receivable under ninety
days from invoice date. Collateral for the line, which is secured by a lien, is
comprised of all Company assets. The rate of interest to be paid to SVB is prime
plus one percent. In order to borrow against the line, the Company is required
to meet certain covenants which include minimum tangible net worth of $2 million
and a quick ratio of 1:50 to 1. The Company, at its option, may terminate the
credit facility with SVB without penalty.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (A)   EXHIBITS.
                  Exhibit 27, Financial Data Schedule

         (B)   REPORTS ON FORM 8-K.

               A report on Form 8-K, dated April 9, 1998, was filed by the
               Company on April 17, 1998, regarding the exercise and conversion
               of certain shares of the Company's Convertible Preferred Stock
               into Common Stock of the Company.

               A report on Form 8-K, dated April 9, 1998, was filed by the
               Company on April 17, 1998, regarding the extension of the
               expiration date of certain of the Company's outstanding Common
               Stock Purchase Warrants.

               A report on Form 8-K, dated June 18, 1998, was filed by the
               Company on June 24, 1998, regarding the resignation of three
               members of the Company's Board of Directors.


<PAGE>

                                    SIGNATURE

    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.

                                    INSCI Corp


Date:  August 10, 1998         By:  /S/ ROGER C. KUHN
                                    ------------------------------------------
                                    Roger C. Kuhn
                                    Vice President and Chief Financial Officer