<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: December 31, 2000

[ ] 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-STATEMENTS.COM, 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 February 9, 2001
-------------------                             ----------------------------
Common Stock, par value $.01                              16,029,735

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

                           INSCI-STATEMENTS.COM, CORP.

                                      INDEX

PART I  FINANCIAL INFORMATION

Item 1. Financial Statements

        Consolidated Balance Sheet as of December 31, 2000                     3

        Consolidated Statements of Operations for the Three Months
          and Nine Months Ended December 31, 2000 and 1999                     4

        Consolidated Statements of Cash Flows for the Nine Months              5
          Ended December 31, 2000 and 1999

        Notes to Financial Statements                                          7

Item 2. Management's Discussion and Analysis or Plan of Operation              9


PART II OTHER INFORMATION

Item 1. Legal Proceedings                                                     16

Item 2. Change in Securities                                                  16

Item 3. Defaults Upon Senior Securities                                       16

Item 4. Submission of Matters to a Vote of Security Holders                   16

Item 5. Other Information                                                     16

Item 6. Exhibits and Reports on Form 8-K                                      17

        Signature                                                             17
<PAGE>

 PART I     FINANCIAL INFORMATION:

                          INSCI-STATEMENTS.COM, CORP.
                           CONSOLIDATED BALANCE SHEET
                                 (in thousands)
                                   (unaudited)
                                                                    DECEMBER 31,
 ASSETS                                                                2000
                                                                    ------------
 Current assets:
      Cash and cash equivalents                                       $   712
      Accounts receivable, net                                          2,707
      Inventory                                                            95
      Prepaid expenses and other current assets                           159
                                                                      -------
        Total current assets                                            3,673
 Property & equipment, net                                                854
 Other assets                                                             709
                                                                      -------
 Total assets                                                         $ 5,236
                                                                      =======
 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
 Current liabilities:
      Bank lines of credit                                            $   812
      Accounts payable                                                  1,715
      Accrued expenses and other current liabilities                    2,541
      Current portion of capital lease obligations                        416
      Deferred revenue                                                  1,923
                                                                      -------
        Total current liabilities                                       7,407
                                                                      -------
 Convertible debt                                                       1,500
 Capital lease obligations, net of current portion                         86
 Other liabilities                                                        173

 Stockholders' equity (deficit):
   Common stock                                                           160
   Preferred stock                                                          7
   Additional paid-in capital                                          46,712
   Deferred compensation                                                  (29)
   Accumulated deficit                                                (50,719)
   Cumulative translation adjustment                                      (61)
                                                                      -------
        Total stockholders' equity (deficit)                           (3,930)
                                                                      -------
 Total liabilities and stockholders' equity (deficit)                 $ 5,236
                                                                      =======

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

                          INSCI-STATEMENTS.COM, CORP.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (in thousands, except per share amounts)
                                   (unaudited)

<TABLE>
<CAPTION>
                                               THREE MONTHS ENDED     NINE MONTHS ENDED
                                                  DECEMBER 31,           DECEMBER 31,
                                                 2000      1999         2000      1999
                                               --------  --------     --------  --------
<S>                                            <C>       <C>          <C>       <C>
Revenue
    Product                                    $  1,109  $  1,371     $  3,341  $  4,294
    Services                                      1,575     1,745        4,728     5,147
                                               --------  --------     --------  --------
      Total revenue                               2,684     3,116        8,069     9,441
                                               --------  --------     --------  --------
Cost of revenue
    Product                                         237       582          762     1,586
    Services                                        683       663        2,521     2,007
                                               --------  --------     --------  --------
      Total cost of revenue                         920     1,245        3,283     3,593
                                               --------  --------     --------  --------
Gross margin                                      1,764     1,871        4,786     5,848
                                               --------  --------     --------  --------
Expenses
    Sales and marketing                             668       990        2,683     2,964
    Product development                           1,104       651        4,858     2,034
    General and administrative                    1,029     1,314        3,377     3,575
    Non-recurring expenses:
      Restructuring and other charges                --        --        8,516        --
                                               --------  --------     --------  --------
      Total expenses                              2,801     2,955       19,434     8,573
                                               --------  --------     --------  --------

Loss from operations                             (1,037)   (1,084)     (14,648)   (2,725)
                                               --------  --------     --------  --------
Other income (expense)
    Interest income (expense), net                 (225)      (15)        (219)      (65)
    Other                                            --        (1)          12        (1)
    Acquisition costs                                --      (664)          --      (664)
                                               --------  --------     --------  --------
      Total other income (expense)                 (225)     (680)        (207)     (730)
                                               --------  --------     --------  --------
Net loss                                         (1,262)   (1,764)     (14,855)   (3,455)

Preferred stock dividends                           (70)   (1,168)        (207)   (1,471)
                                               --------  --------     --------  --------

Net loss applicable to common shares           $ (1,332) $ (2,932)    $(15,062) $ (4,926)
                                               ========  ========     ========  ========

Net loss per common share - basic and diluted  $  (0.09) $  (0.29)    $  (1.00) $  (0.54)
                                               ========  ========     ========  ========

Weighted average common
    shares outstanding - basic and diluted       15,655    10,211       15,086     9,191
                                               ========  ========     ========  ========
</TABLE>

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

<TABLE>
<CAPTION>
                          INSCI-STATEMENTS.COM, CORP.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                  (unaudited)
                                                        NINE MONTHS ENDED
                                                           DECEMBER 31,
                                                         2000      1999
                                                      --------- ----------
<S>                                                   <C>        <C>
Cash flows from operating activities:
  Net loss                                            $(14,855)  $(3,455)
  Reconciliation of net loss to net cash
    used in operating activities:
   Depreciation and amortization                         1,151       400
   Restructuring and other charges                       8,516        --
   Amortization of deferred software costs                  --     1,077
   Non cash stock compensation                             126       990
   Changes in assets and liabilities:
     Accounts receivable                                   (19)     (986)
     Inventory                                              27        --
     Prepaid expenses and other current assets            (124)      118
     Other assets                                          191        40
     Accounts payable                                      252      (623)
     Accrued expenses and other liabilities               (720)      (53)
     Deferred maintenance revenue                          777       (45)
                                                      --------- ----------
Net cash used in operating activities                   (4,678)   (2,537)
                                                      --------- ----------
Cash flows from investing activities:
   Additions to capitalized software development costs      --      (539)
   Additions to purchased software costs                    --      (613)
   Capital expenditures                                   (443)     (339)
   Cash acquired upon purchase of Lognet, net of
     acquisition costs                                   2,845        --
                                                      --------- ----------
Net cash provided by (used in) investing activities      2,402    (1,491)
                                                      --------- ----------
Cash flows from financing activities:
   Net repayments on bank line of credit                  (136)       50
   Repayments of capital lease obligations                (316)       --
   Payment of preferred dividend                           (70)       --
   Proceeds from convertible loans                       1,500        --
   Proceeds from issuance of common stock                   --     2,795
   Proceeds from exercise of options of common stock       160     1,427
                                                      --------- ----------
Net cash provided by financing activities                1,138     4,272
Effect of exchange rate changes on cash                    (61)       --
                                                      --------- ----------

Net increase (decrease) in cash and cash equivalents    (1,199)      244
Cash and cash equivalents at beginning of period         1,911     1,892
                                                      --------- ----------
Cash and cash equivalents at end of period            $    712  $  2,136
                                                      ========= ==========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid for interest                                $    108  $    108
Cash paid for income taxes                            $      8  $      7
</TABLE>


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

                           INSCI-STATEMENTS.COM, CORP.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)

SUPPLEMENTAL DISCLOSURE OF NON CASH FINANCING AND INVESTING ACTIVITIES:

      During the nine months ended December 31, 2000 and December 31, 1999,
INSCI issued 337,082 and 1,166,693 shares, respectively, of its common stock for
the conversion of its 8% and 10% convertible preferred stock.

      During the nine months ended December 31, 2000 and December 31, 1999,
INSCI issued 46,024 and 114,363 shares, respectively, of its 8% convertible
redeemable preferred stock in payment of the dividends due on this stock.

      During the nine months ended December 31, 2000, INSCI issued 2,500,000
restricted shares of its common stock to acquire all of the common shares of
Lognet 2000, Inc.

      During the nine months ended December 31, 2000 and December 31, 1999,
INSCI acquired property and equipment under capital leases with values of
$26,000 and $43,000, respectively.

      During the nine months ended December 31, 2000 and December 31, 1999,
INSCI acquired software program rights in exchange for 40,000 shares and 125,000
shares, respectively, of its common stock.

      During the nine months ended December 31, 2000, INSCI issued preferred
stock warrants which may be converted into 923,000 shares of INSCI's common
stock at $.72 per share as part of a convertible debenture financing.

      During the nine months ended December 31, 2000, INSCI issued 200,000
common stock warrants at an exercise price of $.72 per share in payment of
services rendered in connection with a convertible debenture financing.


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

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

BASIS OF PRESENTATION

      The financial statements included in this report have been prepared by
insci-statements.com, corp., ("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,
management 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:

1. Supplemental pro forma financial statements and notes thereto for the fiscal
   year ended March 31, 2000 included in INSCI's 8-K/A filing on August 7, 2000.
2. Financial statements and notes thereto included in INSCI's annual report on
   Form 10-KSB, filed on June 29, 2000, for the fiscal year ended March 31,
   2000, and
3. INSCI's definitive proxy statement for its 2000 Annual Meeting of
   Stockholders filed with the Commission on July 27, 2000.

      In the opinion of the management of INSCI, the accompanying unaudited
financial statements reflect all adjustments (of a normal and recurring nature)
which are necessary to present fairly the financial position of INSCI as of
December 31, 2000 and the results of operations for the three months and nine
months ended December 31, 2000 and 1999, and cash flows for the nine months
ended December 31, 2000 and 1999.

      The accompanying consolidated financial statements give effect to INSCI's
acquisition of Lognet 2000, Inc. ("Lognet") on May 24, 2000, which has been
accounted for by the purchase method of accounting. Accordingly, operating
results for the nine months ended December 31, 2000 and the Statements of Cash
Flows for the nine months ended December 31, 2000 include the results of Lognet
subsequent to the date of acquisition.

      Additionally, the accompanying consolidated financial statements give
retroactive effect to INSCI's acquisition of Internet Broadcasting Company, Inc.
("IBC") on December 10, 1999, which has been accounted for as a pooling of
interests. Accordingly, operating results for the nine months ended December 31,
1999 and the statement of cash flows for the nine months ended December 31, 1999
include the combined actual historical results of IBC and INSCI. IBC had
incurred losses prior to its acquisition by INSCI. These losses are included in
the consolidated statements of operations.

      The accompanying financial statements also include the operations of INSCI
and its wholly owned subsidiaries, InfiniteSpace.com, Corp. ("InfiniteSpace")
located in Westborough, MA, and INSCI (UK) Limited, a product development center
located in the United Kingdom. These two subsidiaries are no longer active and
their operations have been terminated. The INSCI (UK) Limited subsidiary has not
been financially significant to the consolidated results of INSCI. All
significant intercompany transactions and balances have been eliminated in the
preparation of these financial statements.

      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.

LOSS PER SHARE

      Basic net loss per common share is computed by dividing net loss
applicable to common shares by the weighted average number of common shares
outstanding during the period. Diluted net loss per share is the same as basic
net loss per share since the inclusion of stock options, warrants and
convertible securities would be antidilutive. For the nine months ended December
31, 2000 and December 31, 1999, 8,605,000 and 8,614,000 stock options, warrants
and convertible securities were excluded because their effect would be
antidilutive.

ISSUANCE OF COMMON STOCK

      On May 24, 2000, 2,500,000 restricted shares of common stock were issued
in exchange for all of the common stock of Lognet 2000, Inc.

      During the nine months ended December 31, 2000, options were exercised to
purchase 106,100 shares of common stock for $160,460. Additionally, 310,102
shares of preferred stock were converted into 337,082 shares of common stock.

CREDIT FACILITY AND CONVERTIBLE DEBT FINANCING

      On September 27, 2000, INSCI executed a one-year accounts receivable
financing agreement ("Agreement") with Silicon Valley Bank ("SVB"). The terms of
this Agreement provide for the purchase of up to $1,500,000 of our eligible
accounts receivables ("Purchased Receivables") at an advance rate not to exceed
80% of the eligible receivables. The annual rate of interest to be paid to SVB
on the average monthly Purchased Receivables outstanding is prime plus 3%.
Additionally, SVB is entitled to a handling fee of 0.75% of the Purchased
Receivables. Collateral for this Agreement was secured by a lien of all of
INSCI's assets. The Agreement has a covenant that requires INSCI to maintain a
minimum liquidity ("as defined") of $750,000 per month. INSCI had $159,000 of
borrowings outstanding against this credit facility at December 31, 2000.

      During November 2000, INSCI closed $2.0 million of convertible debt
financing with Totowa, NJ-based Selway Partners, LLC and CIP Capital L.P. of
Wayne, PA (the "Investors"). Selway is a technology holding company engaged in
building technology-oriented companies and is an existing INSCI shareholder. CIP
Capital is a venture capital firm that specializes in early and mid-stage
technology companies.

      The $2.0 million of convertible debt financing from the Investors is
convertible into an aggregate of approximately 1.5 million shares of INSCI
Series A Convertible Preferred Stock. The Convertible Preferred Stock is in turn
convertible on a one-for-two basis into shares of INSCI's Common Stock at a
price of $.65 per share. As part of the financing, the Investors have also been
granted warrants to purchase the equivalent of approximately 923,000 shares of
INSCI's common stock at $.72 per share (the closing market price of the Common
Stock on November 27, 2000). The investors have also been provided with an
option through the end of March 2001 to invest an additional $3.0 million under
the same terms and conditions as the $2.0 million convertible debt financing.

      As of December 31, 2000, $1.5 million in proceeds have been received from
the convertible debt financing. The remaining $500,000 was received during
January 2001. The convertible debt bears interest at prime plus 2 1/2 percent
payable in cash or in additional shares of INSCI's Convertible Preferred Stock,
at the option of the Investors, and is secured by a subordinated lien on all of
INSCI's assets. Unless previously converted into shares of Convertible Preferred
Stock, principal and interest are payable at maturity in five years or upon an
earlier redemption on or after two years at the option of the Investors. Selway
was also issued warrants to purchase 200,000 shares of common stock at $.72 per
share for services rendered in connection with the financing transaction. In
addition Selway Management, Inc., an affiliate of Selway, entered into a $20,000
per month management consulting agreement for a term of three years with INSCI.
The management fee is payable in either cash or shares of INSCI common stock at
INSCI's option. The total number of shares of Common Stock resulting from the
conversion of the convertible debt financing, the Convertible Preferred Stock
and the warrants may not exceed 19.9 percent of the total outstanding capital
stock of INSCI, unless INSCI has either obtained prior NASDAQ or shareholder
approval. This financing may result in dilution to INSCI's stockholders.

CONTINGENCIES

      INSCI has filed a registration statement with the SEC for certain shares
of our common stock, which INSCI has agreed to register as a result of certain
acquisitions. INSCI agreed to use our best efforts to file the registration
statement to register the shares of common stock by certain dates. Because of
material recent changes that have occurred within INSCI, we are required to file
an amendment to the registration statement to disclose certain information prior
to having the registration statement become effective. As a result, the
registration of the shares of common stock has been delayed. It is possible that
the holders of the shares may assert claims for damages in that INSCI should
have taken action to have the shares registered by a date certain.

RESTRUCTURING AND OTHER CHARGES

      As a result of our strategic redirection, we have discontinued
InfiniteSpace, IBC and our United Kingdom subsidiary ("UK"), reduced operating
expenses and have written-down our investment in Lognet. These charges and the
costs of closing InfiniteSpace, IBC and UK; along with other costs associated
with the realignment of INSCI's strategy, were charged to the operating results
for the quarter ended September 30, 2000. The major components of these charges
were as follows:

1. Write-down $6,048,000 of Lognet goodwill.
2. Provision in the amount of $2,468,000 for restructuring, which reflects
   future severance payments and other expenses associated primarily with the
   closure of InfiniteSpace and its data center.

      At December 31, 2000, the remaining accrual for restructuring costs was
$779,000 of which $460,000 was for severance costs.

SUBSEQUENT EVENTS

       As a result of our convertible debt financing, the Tail Wind Fund Ltd
notified us in January 2001, that they claimed that they are entitled to receive
additional shares of our common stock and a reduction in the exercise price of
common stock warrants granted to them in a December 1999 private placement. We
are contesting Tail Wind's claim to additional shares of common stock as well as
the reduction in the exercise price of their warrants. We do not believe that
our convertible debt financing has triggered a right for Tail Wind to receive
additional consideration. However, we cannot be sure that Tail Wind will not
institute a formal claim or that our position will prevail. We are attempting to
resolve the Tail Wind claim so that unnecessary legal expenses and company time
will not be expended

      During January 2001, we entered into an agreement with Peregine Asset
Management, Inc. to have them provide certain investor relations services. We
paid Peregine the sum of $10,000 and granted them warrants to purchase 210,000
shares of our stock at $.72 per share. Peregine cannot exercise their warrants
unless our share price is at least $1.00 per share.

      Although all of our office space rental obligations have been paid, our
landlord notified us in January 2001 that we are in default in the timely
payment of rent due under our office lease. Our landlord has claimed that even
though rent payments have been paid and accepted, to cure the claimed default,
our landlord requires additional security on our lease in the sum of an
additional $120,000. We believe that our landlord, by accepting our monthly rent
payment, will not be able to obtain a court judgment that we are in default
under our lease.

      In connection with the closing of InfiniteSpace, we received notice from a
leasing company that we are in default of monthly installment payments in the
sum of $142,000 on a total leasing obligation of $588,000, which will be due
unless the default is cured or we have settled the claim.

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

GENERAL

      During the second half of fiscal year 2000, we established
InfiniteSpace.com, Corp ("InfiniteSpace"), a business-to-business, electronic
statement presentment application service provider (ASP), as a separate wholly
owned subsidiary. The focus of InfiniteSpace was to provide electronic statement
presentment services to the financial services industry. We subsequently
completed two acquisitions to add to the resources of InfiniteSpace - the
Internet Broadcasting Company ("IBC") and Lognet 2000 ("Lognet").

      Since we were unable to secure the additional equity financing to support
the operations and business strategy of InfiniteSpace, effective with the close
of the second quarter ended September 30, 2000, we redirected our strategy,
discontinued the operations of InfiniteSpace, wrote-down certain assets related
to the two acquisitions completed to support the subsidiary's portal
services-based ASP strategy, and reduced our overall expenses. All charges
associated with those actions were recorded in the second quarter of fiscal year
2001.

      To implement our redirected strategy, on November 7, 2000 INSCI named
veteran document management software executive Lori R. Frank as President, Chief
Executive Officer, Chief Financial Officer, and Director, replacing E. Ted
Prince, Ph.D., who has since resigned all positions held with INSCI. In
addition, several other changes were made in INSCI's senior management and board
of directors. The new management team began refocusing INSCI by increasing the
emphasis on its traditional business of providing digital document repository
applications, which provide high-volume document capture, warehousing and
delivery functions to customers requiring on-site solutions, while also pursuing
the ASP market opportunity with a modified strategic approach. We have now
implemented an ASP-enabling strategy with a business model that is based on our
providing the software, services and expertise to enable our partners and
customers to build their own ASP operations and share with us a portion of the
revenue generated by those operations. We are no longer operating with a
business model based on our investing resources in the infrastructure and
personnel required to create and operate an ASP of our own. As a result, we have
eliminated the costs of hosting the applications in our own data centers.

      In late November 2000, we completed the final arrangements for $3.5
million in new financing, which included $2.0 million of convertible debt
("Convertible Debt) provided by Selway Partners LLC ("Selway"), a technology
holding company engaged in building technology-oriented companies, and CIP
Capital LP ("CIP"), a venture capital firm specializing in early and mid-stage
technology companies. The total financing package also included $1.5 million of
accounts receivable financing with Silicon Valley Bank, which was finalized
earlier in the third quarter. Selway and CIP have also been provided with an
option through the end of March 2001 to invest an additional $3.0 million in
INSCI under the same terms and conditions as the Convertible Debt. For further
discussion on financing see Liquidity and Capital Resources.

COMPARISON OF RESULTS OF OPERATIONS

      The following discussion should be read in conjunction with the financial
statements and notes thereto contained elsewhere in this document.

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

                           THREE MONTHS ENDED     NINE MONTHS ENDED
                              DECEMBER 31,          DECEMBER 31,
                              2000    1999          2000    1999
                             ------  ------        ------  ------

Revenue                           %       %             %       %
  Product                       41      44            41      45
  Services                      59      56            59      55
                             ------  ------        ------  ------
    Total revenue              100     100           100     100
Cost of revenue
  Product                        9      19             9      17
  Services                      25      21            31      21
                             ------  ------        ------  ------
    Total cost of revenue       34      40            40      38
                             ------  ------        ------  ------
Gross margin                    66      60            60      62
Expenses Sales and marketing    25      32            33      31
  Product development           41      21            60      22
  General and administrative    38      42            42      38
  Non-recurring expenses:
    Restructuring charge        --      --           106      --
                             ------  ------        ------  ------
    Total expenses             104      95           241      91
                             ------  ------        ------  ------
Income (loss) from operations  (38)    (35)         (181)    (29)
Other expense, net              (9)    (22)           (3)     (8)
                             ------  ------        ------  ------
Net income (loss)              (47)    (57)         (184)    (37)
                             ======  ======        ======  ======

REVENUE

      We develop, sell, install and support highly scalable digital document
repository solutions that provide high-volume document capture, warehousing and
delivery functions via a Local Area Network (LAN) or the Internet. Our products
bridge back-office with front-office mission critical and customer-centric
applications by web-enabling legacy-generated reports, bills, statements and
other documents.

        Sales to end-users generally include software, systems integration and
implementation services, and training. ASP-enabling sales of our software and
services also include integration and implementation services, and training with
the added opportunity to build a recurring revenue stream by sharing the
transaction revenue that our partners or customers generate from their ASP
operations. Post-installation maintenance and customer support is available
under the terms of a separate contract at an additional charge.

        We sell our products through a combination of a direct sales force and
indirectly through VARs, distributors and sales alliances with companies
including Bell & Howell, Unisys Corporation, Xerox Corporation and Moore
Corporation. Revenue is net of discounts and allowances given to third party
VARs and distributors.


THREE MONTHS ENDED DECEMBER 31, 2000 AS COMPARED TO THE THREE MONTHS ENDED
DECEMBER 31, 1999:

REVENUE

      Revenues for the three months ended December 31, 2000 (the "current
period") totaled $2,684,000 and decreased by 14% compared to revenues of
$3,116,000 for the three months ended December 31, 1999. Product revenue was
$1,109,000 for the current period and decreased by 19% compared to product
revenue of $1,371,000 for the same period last year. Services revenue totaled
$1,575,000 for the current period and decreased by 10% compared to $1,745,000
for the same period last year.

      Decreases in both product and services revenues for the current quarter
reflect the impact of transitioning selling efforts to our revised business
strategy. We are continuing to license our products directly to end-users and
through resellers. In addition, we are transitioning to becoming an enabler of
Application Software Providers (ASP), which involves the licensing of electronic
document repository software to enterprises that provide ASP services, and
sharing in future revenues with the enabler.

      For the quarter ended December 31, 2000, we received in excess of ten
percent each of our total revenues from Unisys Corporation and Xerox
Corporation, two of our strategic sales partners. A decline in revenues from
these sales partners in future quarters could materially affect the revenues and
operating results of INSCI.

GROSS PROFIT AND COST OF REVENUE

       Gross profit for the three months ended December 31, 2000 was $1,764,000
and decreased by 6%, compared to gross profit of $1,871,000 for the same period
last year. Gross profit as a percent of revenues was 66% for the current period,
compared to 60% for the same period last year. Last year's quarter included the
amortization of capitalized software development costs. Due to substantial
modifications, integration and revisions of developed and purchased software
previously capitalized; the related capitalized software development costs were
written off in the fourth quarter of fiscal 2000 as obsolete. No software
development costs were eligible for capitalization in fiscal 2001.

SALES AND MARKETING

      Sales and marketing expenses for the three months ended December 31, 2000
were $668,000 and decreased by 33%, compared to expenses of $990,000 for the
period ended December 31, 1999. This decline was primarily due to costs
associated with lower revenues, a reduction in trade show and promotional
spending and a reduction in sales personnel.

PRODUCT DEVELOPMENT

       Product development expenses for the three months ended December 31, 2000
were $1,104,000 and increased by 70% compared to $651,000 for the same period
last year. The increase reflects current period development expenses primarily
related to Lognet (acquired during May 2000). In addition, last year's expenses
were reduced by $390,000 due to the capitalization of software development
expenses. No software development expenses were eligible for capitalization in
the current quarter.

GENERAL AND ADMINISTRATIVE

       General and administrative expenses were $1,029,000 for the three months
ended December 31, 2000 and decreased by 22%, compared to $1,314,000 for the
same period last year. This decrease was primarily due to the fact that during
the fourth quarter of fiscal 2000, we determined that we would utilize the
Black-Scholes option pricing model to value the amount of compensation expense
to be recorded in connection with options granted to non-employees. These
options had been initially valued during the first three quarters of fiscal 2000
using the cash value as defined in the non-employee agreements. This change
resulted in an incremental non-cash charge of approximately $164,000 for the
three months ended December 31, 1999. The prior year's quarter also included
expenses associated with IBC whose operations have been discontinued in
conjunction with our revised business strategy.

OTHER INCOME (EXPENSE)

       Other expense for the three months ended December 31, 2000 was $225,000
compared to $680,000 for the same period last year. Other expense for the
current quarter includes $180,000 for non-cash interest charges related to the
issuance of warrants for the debt financing closed in the current quarter. Last
year's quarter included $664,000 for investment banking and other professional
expenses related to the acquisition of The Internet Broadcasting Company (IBC).

NINE MONTHS ENDED DECEMBER 31, 2000 AS COMPARED TO THE NINE MONTHS ENDED
DECEMBER 31, 1999:

REVENUE

       Revenues for the nine months ended December 31, 2000 (the "current
period") totaled $8,069,000 and decreased by 15%, compared to revenues of
$9,441,000 for the nine months ended December 31, 1999.

       Product revenue for the nine-month period was $3,341,000 and decreased by
22% compared to product revenue of $4,294,000 for the same period last year.
Services revenue totaled $4,728,000 for the current period and decreased by 8%,
compared to $5,147,000 for the same period last year. Decreases in both product
and services revenues reflect the impact on revenues of diverting selling
efforts to the start-up of InfiniteSpace during the first two quarters of this
year.

       For the nine months ended December 31, 2000 we received in excess of ten
percent each of our total revenues from Xerox Corporation and Unisys
Corporation, two of our strategic sales partners. A decline in revenues from
these sales partners in future quarters could materially affect the revenues and
operating results of INSCI.

GROSS PROFIT AND COST OF REVENUE

       Gross profit for the nine months ended December 31, 2000 was $4,786,000
and decreased 18% compared to gross profit of $5,848,000 for the same period
last year, primarily reflecting the 15% decrease in revenues for the period.
Gross profit as a percent of revenues was 60% for the current period compared to
62% for the same period last year. Last year's nine month period included the
amortization of capitalized software development costs. Due to substantial
modifications, integration and revisions of developed and purchased software
previously capitalized; the related capitalized software development costs were
written off in the fourth quarter of fiscal 2000. No software development costs
were eligible for capitalization in fiscal 2001.

SALES AND MARKETING

      Sales and marketing expenses for the nine months ended December 31, 2000
were $2,683,000 and decreased by 9%, compared to expenses of $2,964,000 for the
same period last year. . This decline was primarily due to costs associated with
lower revenues, a reduction in trade show and promotional spending and a
reduction in sales personnel. The decline was partially offset by start-up
staffing and marketing expenditures related to establishing InfiniteSpace in
fiscal year 2001. We have discontinued operations associated with InfiniteSpace.

PRODUCT DEVELOPMENT

       Product development expenses for the nine months ended December 31, 2000
were $4,858,000 and increased by 139% compared to $2,034,000 for the same period
last year. Expenditures for the nine months ended December 31, 2000 period
reflect product development expenses for InfiniteSpace in the amount of
$1,671,000 resulting from our acquisitions of IBC and Lognet. In addition,
expenses for last year were reduced by $1,364,000 due to the capitalization of
software development expenses. No software development expenses were eligible
for capitalization in fiscal 2001.

GENERAL AND ADMINISTRATIVE

      General and administrative expenses were $3,377,000 for the nine months
ended December 31, 2000 and decreased by 6%, compared to $3,575,000 for the same
period last year. This decrease was primarily due to the fact that during the
fourth quarter of fiscal 2000, we determined that we would utilize the
Black-Scholes option pricing model to value the amount of compensation expense
to be recorded in connection with options granted to non-employees. These
options had been initially valued during the first three quarters of fiscal 2000
using the cash value as defined in the non-employee agreements. This change
resulted in an incremental non-cash charge of approximately $790,000 for the
nine months ended December 31, 1999. The prior year's comparable period also
included expenses associated with IBC whose operations have been discontinued in
conjunction with our revised business strategy. The decrease was partially
offset by costs and expenses incurred for InfiniteSpace in fiscal 2001 which has
now been discontinued.

RESTRUCTURING AND OTHER CHARGES

      As a result of our strategic redirection, we have discontinued
InfiniteSpace, IBC and our United Kingdom subsidiary ("UK"), reduced operating
expenses and have written-down our investment in Lognet. These changes and the
costs of closing InfiniteSpace, IBC and UK; along with other costs associated
with the realignment of INSCI's strategy, have been charged to the operating
results for the quarter ended September 30, 2000. The major components of the
restructuring charge are as follows:

1. Write-down of $6,048,000 for Lognet goodwill.
2.Provision in the amount of $2,468,000 for restructuring, which reflects
  future severance payments and other expenses associated primarily with the
  closure of InfiniteSpace and its data center.

      At December 31, 2000, the remaining accrual for restructuring costs was
$779,000 of which $460,000 was for severance costs.

OTHER INCOME (EXPENSE)

      Other expense for the nine months ended December 31, 2000 was $207,000
compared to other expense of $730,000 for the same period last year. Other
expense for the current period includes $180,000 of non-cash interest charges
related to the issuance of warrants for the debt financing closed in the
December, 2000 quarter. Last year's expenses included $664,000 for investment
banking and other professional expenses related to the acquisition of IBC and
$90,000 of interest expense for IBC.

NET LOSS

      Net loss for the nine months ended December 31, 2000 was $14,855,000
compared to a net loss of $3,455,000 for the same period last year. The major
segments of the loss for the nine months ended December 31, 2000 are:

      INSCI net loss                              $ 2,953,000
      InfiniteSpace net loss                        3,386,000
      Restructuring and other charges               8,516,000
                                                  -----------
            Total                                 $14,855,000
                                                  ===========

LIQUIDITY AND CAPITAL RESOURCES

      At December 31, 2000, INSCI had $712,000 of cash and working deficit of
$3,734,000 in comparison to $2,136,000 of cash and working capital of $2,431,000
at December 31, 1999. Accounts receivable were $2,707,000 of December 31, 2000
compared to receivables of $4,024,000 as of December 31, 1999.

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

NINE MONTHS ENDED DECEMBER 31,
                                                   2000       1999
                                                   ----       ----
Cash provided by (used in)
       Operating activities                      $(4,678)   $(2,537)
       Investing activities                        2,402     (1,491)
       Financing activities                        1,138      4,272
       Effect of exchange rate changes               (61)         0
                                                 -------    -------
           Increase (decrease) in cash and
            cash equivalents                     $(1,199)   $   244
                                                 ========   =======

Cash and cash equivalents at end of period       $   712    $ 2,136
                                                 ========   =======

      On September 27, 2000 we executed a one-year accounts receivable financing
Agreement ("Agreement") with Silicon Valley Bank ("SVB") to replace the
revolving credit agreement executed in the previous year. The terms of this
Agreement provide for the purchase of up to $1,500,000 of our eligible accounts
receivables ("Purchased Receivables") at an advance rate not to exceed 80% of
the eligible receivables. The annual rate of interest to be paid to SVB on the
average monthly Purchased Receivables outstanding is prime plus 3%.
Additionally, SVB is entitled to a handling fee of 0.75% of the Purchased
Receivables. Collateral for this Agreement was secured by a lien of all of
INSCI's assets. The Agreement has a covenant that requires INSCI to maintain
minimum liquidity ("as defined") of $750,000 per month. We had $159,000 of
borrowings outstanding against this credit facility at December 31, 2000.

      During November 2000, we closed $2.0 million of convertible debt financing
with Totowa, NJ-based Selway Partners, LLC and CIP Capital L.P. of Wayne, PA
(the "Investors"). Selway is a technology holding company engaged in building
technology-oriented companies and is an existing INSCI shareholder. CIP Capital
is a venture capital firm that specializes in early and mid-stage technology
companies.

      The $2.0 million of convertible debt financing from the Investors is
convertible into an aggregate of approximately 1.5 million shares of INSCI
Series A Convertible Preferred Stock. The Convertible Preferred Stock is in turn
convertible on a one-for-two basis into shares of INSCI's Common Stock at a
price of $.65 per share. As part of the financing, the Investors have also been
granted warrants to purchase the equivalent of approximately 923,000 shares of
INSCI's Common Stock at $.72 per share (the closing market price of the Common
Stock on November 27, 2000). The investors have also been provided with an
option through the end of March 2001 to invest an additional $3.0 million under
the same terms and conditions as the $2 million convertible debt financing.

      As of December 31, 2000, $1.5 million in proceeds have been received from
the convertible debt financing. The remaining $500,000 was received during
January 2001. The convertible debt bears interest at prime plus 2 1/2 percent
payable in cash or in additional shares of INSCI's Convertible Preferred Stock,
at the option of the Investors, and is secured by a subordinated lien on all of
Company's assets. Unless previously converted into shares of Convertible
Preferred Stock, principal and interest are payable at maturity in five years or
upon an earlier redemption on or after two years at the option of the Investors.
Selway was also issued warrants to purchase 200,000 shares of common stock at
$.72 per share for services rendered in connection with the financing
transaction. In addition Selway Management, Inc., an affiliate of Selway,
entered into a $20,000 per month management consulting agreement for a term of
three years with INSCI. The management fee is payable in either cash or shares
of INSCI common stock at INSCI's option. The total number of shares of Common
Stock resulting from the conversion of the convertible debt financing, the
Convertible Preferred Stock and the warrants may not exceed 19.9 percent of the
total outstanding capital stock of INSCI, unless INSCI has either obtained prior
NASDAQ or shareholder approval. This financing may result in dilution to INSCI's
stockholders.

      We believe that these financings in addition to other working capital
measures, and our ability to negotiate either reductions in amounts outstanding
to vendors or extension of payment terms combined with the discontinuation of
InfiniteSpace, other expense reductions we have made and the sale of
non-strategic assets, may not provide sufficient cash to meet our foreseeable
working capital needs. In addition, over the past several weeks, we have
received a number of default notices on leases and payables related to
InfiniteSpace, which combined are material, and we are negotiating with the
parties involved to attempt to remedy the situations. Therefore, we are actively
seeking additional sources of funding. If additional funds are not available, we
will be required to significantly modify execution of our business plan. If
these actions do not provide sufficient funding, we may not be able to continue
as a going concern.

"FORWARD-LOOKING" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT:

      This Quarterly Report contains statements which constitute 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.
These statements appear in a number of places in this Quarterly Report and
include all statements that are not statements of historical fact regarding the
intent, belief or expectations of INSCI and its management. These statements are
based upon a number of assumptions and estimates, which are subject to
significant uncertainties, many of which are beyond our control. Words such as
"may," "would," "could," "will," "expect," "anticipate," "believe," "intend,"
"plan," and "estimate" are meant to identify such forward-looking statements.
Such forward-looking statements are not guarantees and actual results may differ
materially from those expressed or implied by such forward-looking statements.
Factors that could cause actual results to differ materially include, but are
not limited to: our ability to achieve or maintain growth or profitability; our
ability to execute our business strategy successfully; our ability to obtain
financing and to pay off our existing liabilities and fund our working capital
needs; our relationship with our existing lenders; our relationship with our
customers and suppliers; increased competition; possible system failures and
rapid changes in technology; and other factors discussed in this Quarterly
Report and in our other filings with the Securities and Exchange Commission,
including our registration statement on Form S-3 (No. 333-44836) as currently on
file with the SEC (filed August 30, 2000).

QUARTERLY RESULTS:

      Quarterly revenues and results of operations may fluctuate as the result
of a variety of factors, including the lengthy sales cycle for our products, the
proportion of revenues attributable to software license fees versus services,
the amount of revenue generated by alliances with other companies selling our
products, demand for our products, the size and timing of individual license
transactions, the introduction of new products and product enhancements by us or
our competitors, changes in customer budgets, competitive conditions in the
industry and general economic conditions. Additionally, the sale of our products
generally involves a significant commitment of capital by our customers and may
be delayed due to time-consuming authorization procedures within an
organization. Other factors affecting our operating results include our 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 we can maintain or
increase our sales volume going forward or that we will be able to achieve a
profit in the marketing of our products.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

      To the best of INSCI's knowledge, there are no material legal proceedings
pending against INSCI or any of its property, nor was any such proceeding
terminated during the nine months ended December 31, 2000.

ITEM 2. CHANGE IN SECURITIES

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        This item is not applicable.

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

        This item is not applicable.

ITEM 5. OTHER INFORMATION

      NASDAQ has notified us that we may be delisted from the NASDAQ SmallCap
Market, as our financial net tangible worth does not meet the financial criteria
set by NASDAQ. Additionally, we received a second notice from NASDAQ that the
closing bid price of our common stock has failed to be in excess of $1 for
thirty consecutive trading days. Unless the closing bid price of our common
stock is greater than $1 prior to April 9, 2001, we face having our common stock
delisted under NASDAQ regulations. We have retained an investment and market
relations' consultant, and while we are attempting to provide a plan to comply
with the NASDAQ financial requirements, we may not be able to meet the NASDAQ
SmallCap listing requirements. If we are delisted, we may only be able to list
our common stock for trading on the Over the Counter Bulletin Board Trading
System. We are considering every potential action to avoid being delisted.

      On  January  29,  2001,  Robert  F.  Little  a  member  of our  board of
directors,  resigned.  Mr.  Little  did not  have any  disagreements  with our
management or company policies.

      During December of 2000, INSCI discontinued its $6,000 per month
-consulting agreement with Emerging Technology Ventures, Inc. ("ETVI"). Francis
X. Murphy, the principal of ETVI, is a director of INSCI.

      In December of 2000, INSCI terminated its product consulting and
development agreement with eRrunway, Inc. of Westborough, MA. an independent
contractor. INSCI is currently doing all of its product development internally.

      During the three months ended December 31, 2000, INSCI's new management
team and Board of Directors commenced an independent internal review of the
former management's business practices and policies to assure that all material
transactions resulted in maximum shareholder value. This review is still on
going.

      INSCI has entered into a three year employment agreement with Lori Frank
to serve as President and Chief Executive Officer, and as a member of our board.
The agreement provides a base annual salary of $200,000, a bonus of up to
$50,000 and options to purchase up to 825,000 shares of INSCI common stock.
INSCI has not yet issued the stock options, as options under the INSCI Employee
Stock Option Plan are not currently available. INSCI may be required to amend
the stock option plan to make sufficient options available for Ms. Frank or to
make other arrangements for the issuances of the options. We are currently
reviewing this matter.

      An arrangement has been made with certain other new management team
members to either be employed directly by INSCI or serve on its Board of
Director Executive Committee. Under the arrangement it is anticipated that we
will issue to these individuals and Ms. Frank a total of 10 percent of the
outstanding common stock of INSCI on a fully diluted basis (including the
825,000 of options for Ms. Frank as stated above) with limited anti-dilution
rights at $.72 per share. As of the date of this Form 10Q certain other related
provisions are subject to final agreement.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(A)   EXHIBITS.

         Exhibit 10.64, Employment Agreement with Lori Frank

         Exhibit 27, Financial Data Schedule

(B)   REPORTS ON FORM 8-K.

            A report on Form 8-K dated November 29, 2000 was filed on December
         14, 2000 regarding a $2 million convertible debenture financing.

            A report on Form 8-K dated December 21, 2000 was filed on January 2,
         2001 regarding the resignation of Dr. E. Ted Prince as a member of the
         Board.


                                    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-STATEMENTS.COM, CORP

Date:  February 14, 2001             By:   /s/ Lori R. Frank
                                           ------------------------------------
                                           Lori R. Frank
                                           Chief Executive Officer, President
                                           and Chief Financial Officer