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, 2002

[ ]  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.
                     (FORMERLY 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 12, 2002
   ---------------------------               -----------------------------
   Common Stock, par value $.01                       52,761,299

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


<PAGE>

                                   INSCI CORP.

                                      INDEX

PART I  FINANCIAL INFORMATION

Item 1. Financial Statements

        Consolidated Balance Sheet as of December 31, 2002                  3

        Consolidated Statements of Operations for the Three Months and
            Nine Months Ended December 31, 2002 and 2001                    4

        Consolidated Statements of Cash Flows for the Nine Months
            Ended December 31, 2002 and 2001                                5

        Consolidated Statement of Stockholders' Deficit for the
            Nine Months Ended December 31, 2002                             6

        Notes to Financial Statements                                       7

Item 2. Management's Discussion and Analysis or Plan of Operation          12

PART II  OTHER INFORMATION

Item 1. Legal Proceedings                                                  16

Item 2. Change in Securities                                               17

Item 3. Defaults Upon Senior Securities                                    17

Item 4. Submission of Matters to a Vote of Security Holders                17

Item 5. Other Information                                                  17

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

        Signature                                                          17


                                       2
<PAGE>



                                   INSCI CORP.
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2002
                                   (UNAUDITED)
                    (in thousands, except per share amounts)

<TABLE>
<CAPTION>

<S>                                                                              <C>

ASSETS
  Current assets:
    Cash and cash equivalents                                                     $       1,608
    Accounts receivable, net of allowance for doubtful accounts of $37                    1,870
    Prepaid expenses and other current assets                                               203
                                                                                  -------------

        Total current assets                                                              3,681
  Property and equipment, net                                                               210
  Other assets                                                                              172
                                                                                  -------------

                                                                                  $       4,063
                                                                                  =============

LIABILITIES AND STOCKHOLDERS' DEFICIT
  Current liabilities:
    Accounts payable and accrued expenses                                         $       2,888
    Advances against receivables sold with recourse                                         824
    Deferred revenue                                                                      1,923
    Convertible debt                                                                      2,870
                                                                                  -------------

        Total current liabilities                                                         8,505
                                                                                  -------------
  Long term debt                                                                            150
                                                                                  -------------
  Commitments and contingencies
  Series A Convertible Redeemable Preferred Stock, $.01 par value,
    authorized 4,308 shares: issued none
                                                                                              -
  Series B Convertible Redeemable Preferred Stock, $.01 par value,
    authorized 100 shares: issued none
                                                                                              -
  Stockholders' deficit:
    Convertible Preferred Stock, $.01 par value, authorized 5,592 shares:
      8% Convertible Redeemable Preferred Stock, 74 shares issued and
        outstanding, no liquidation preference
                                                                                              1
    Common Stock, $.01 par value, authorized 185,000 shares: issued and
      Outstanding 52,761 shares                                                             527
    Additional paid-in capital                                                           47,018
    Accumulated deficit                                                                 (52,138)
                                                                                  -------------

      Total stockholders' deficit                                                       (4,592)
                                                                                  -------------

                                                                                  $       4,063
                                                                                  =============

</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

                                       3

<PAGE>



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

<TABLE>
<CAPTION>
                                                      Three months ended                        Nine months ended
                                                         December 31,                             December 31,
                                                   2002                 2001                2002                 2001
                                              ---------------      ---------------     ----------------     ---------------
<S>                                           <C>                  <C>                 <C>                  <C>
Revenue
  Product                                     $         1,191      $           582     $          3,005     $         2,362
  Services                                              1,340                1,391                4,076               4,319
                                              ---------------      ---------------     ----------------     ---------------
    Total revenue                                       2,531                1,973                7,081               6,681
                                              ---------------      ---------------     ----------------     ---------------
Cost of revenue
  Product                                                  24                   41                  111                 127
  Services                                                290                  399                  946               1,313
                                              ---------------      ---------------     ----------------     ---------------
    Total cost of revenue                                 314                  440                1,057               1,440
                                              ---------------      ---------------     ----------------     ---------------
Gross profit                                            2,217                1,533                6,024               5,241
                                              ---------------      ---------------     ----------------     ---------------

Expenses
  Sales and marketing                                     575                  469                1,601               1,572
  Product development                                     514                  382                1,429               1,376
  General and administrative                              527                  531                1,561               1,884
                                              ---------------      ---------------     ----------------     ---------------
                                                        1,616                1,382                4,591               4,832
                                              ---------------      ---------------     ----------------     ---------------
Operating income                                          601                  151                1,433                 409
Interest expense, net                                    (155)                 (71)                (463)               (287)
                                              ---------------      ---------------     ----------------     ---------------
Income before extraordinary item                          446                   80                  970                 122

Extraordinary item - Gain from
  extinguishment of certain debt                            -                    -                  192                   -
                                              ---------------      ---------------     ----------------     ---------------

Net income                                    $           446      $            80     $          1,162     $           122
                                              ===============      ===============     ================     ===============

Basic earnings (loss) per common share
  Income before extraordinary item            $         0.008      $         0.001     $          0.018     $        (0.003)
  Extraordinary item                                        -                    -                0.003                   -
                                              ---------------      ---------------     ----------------     ---------------
  Total                                       $         0.008      $         0.001     $          0.021     $        (0.003)
                                              ===============      ===============     ================     ===============
Diluted earnings (loss) per common share
  Income before extraordinary item            $         0.005      $         0.001     $          0.011     $        (0.003)
  Extraordinary item                                        -                    -                0.002                   -
                                              ---------------      ---------------     ----------------     ---------------
  Total                                       $         0.005      $         0.001     $          0.013     $        (0.003)
                                              ===============      ===============     ================     ===============
Weighted average shares outstanding:
  Basic                                                54,177               54,177               54,177              28,879
                                              ===============      ===============     ================     ===============
  Diluted                                             102,929               92,483               99,151              28,879
                                              ===============      ===============     ================     ===============

</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.


                                       4
<PAGE>

                                   INSCI CORP.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (UNAUDITED)
                    (in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                         Nine months ended
                                                                           December 31,
                                                                     2002                2001*
                                                                ---------------     ----------------

<S>                                                             <C>                 <C>
Cash flows from operating activities:
  Net income                                                    $         1,162     $            122
  Reconciliation of net income to net cash
    provided by (used in) operating activities:
    Depreciation and amortization                                           123                  260
    Convertible debentures issued for services                              130                  133
    Stock issued for services                                                 -                   20
    Gain from extinguishment of certain debt                               (192)                   -

    Changes in assets and liabilities:
      Accounts receivable                                                  (601)                  80
      Prepaid expenses and other current assets                             (77)                   -
      Other assets                                                            3                   61
      Accounts payable and accrued expenses                                (173)                (823)
      Deferred revenue                                                      440                   34
                                                                ---------------     ----------------
Net cash provided by (used in) operating activities                         815                 (113)
                                                                ---------------     ----------------
Cash flows from investing activities:
  Capital expenditures                                                      (76)                  (7)
  Proceeds from sale of fixed assets                                          -                   17
                                                                ---------------     ----------------
Net cash (used in) provided by investing activities                         (76)                  10
                                                                ---------------     ----------------
Cash flows from financing activities:
  Repayments on short term debt                                            (304)                (190)
  Repayments on long term debt                                              (14)                   -
  Net advances (repayments) from sale of receivables                        775                 (353)
  Proceeds from convertible debt                                              -                  427
                                                                ---------------     ----------------
Net cash provided by (used in) financing activities                         457                 (116)
                                                                ---------------     ----------------
Net increase (decrease) in cash                                           1,196                 (219)
Cash at beginning of period                                                 412                  460
                                                                ---------------     ----------------
Cash at end of period                                           $         1,608     $            241
                                                                ===============     ================

<FN>

  *  Reclassified for comparative purposes
</FN>
</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.


                                       5
<PAGE>

<TABLE>
<CAPTION>
                                   INSCI CORP.
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
                       NINE MONTHS ENDED DECEMBER 31, 2002
                                   (UNAUDITED)

                                                                                       Additional       Accum-
                                 Preferred Stock              Common Stock               Paid-in        ulated
                            Shares         Amount        Shares        Amount          Capital        Deficit         Total
                         --------------  -----------  --------------  -----------  --------------  --------------  ---------------
<S>                      <C>             <C>          <C>             <C>          <C>               <C>             <C>
BALANCE, MARCH 31, 2002              80  $         1          52,647  $       526  $       47,019  $      (53,300) $        (5,754)
  8% preferred stock
   conversion to
   common stock                      (6)           -             114            1              (1)              -                -

Net income                            -            -               -            -               -           1,162            1,162
                         --------------  -----------  --------------  -----------  --------------  --------------  ---------------
BALANCE,
DECEMBER 31, 2002                    74  $         1          52,761  $       527  $       47,018  $      (52,138) $        (4,592)
                         ==============  ===========  ==============  ===========  ==============  ==============  ===============
</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.


                                       6
<PAGE>


                                   INSCI CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


NATURE OF BUSINESS AND BASIS OF PRESENTATION

           The consolidated financial statements included in this report have
been prepared by INSCI Corp., (the "Company" or "INSCI"), without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission
regarding interim financial reporting. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States 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 for the fiscal year ended March 31, 2002.
The results of the three months and nine months ended December 31, 2002 may not
be indicative of the results that may be expected for the year ended March 31,
2003.

           INSCI Corp., formerly known as insci-statements.com, corp. ("INSCI")
develops and distributes application software for electronic document
distribution, storage and presentment.

           The accompanying consolidated financial statements have been prepared
in conformity with generally accepted accounting principles, which contemplate
continuation of the company as a going concern. The Company, however, has
sustained operating losses in prior years and has a working capital deficit and
an accumulated deficit as of December 31, 2002, which creates uncertainty about
the Company's ability to continue as a going concern. The Company's ability to
continue operations as a going concern and to realize its assets and to
discharge its liabilities is dependent upon obtaining additional financing
sufficient for continued operations, as well as the achievement and maintenance
of a level of profitable operations. Management believes that the current
business plan if successfully implemented may provide the opportunity for the
Company to continue as a going concern. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.

           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 December 31, 2002 and the results of operations and cash
flows for the three months and nine months ended December 31, 2002 and 2001.

           The accompanying consolidated financial statements for the three
months and nine months ended December 31, 2002 and 2001 include the operations
of INSCI and its wholly-owned subsidiary, Lognet 2000, Inc. ("Lognet"). The
consolidated financial statements also include the Company's wholly-owned
subsidiaries, InfiniteSpace.com, Corp. ("InfiniteSpace"), The Internet
Broadcasting Company, Inc. ("IBC"), and INSCI (UK) Limited which are no longer
active effective with the end of the second quarter of fiscal 2001. All
significant intercompany transactions and balances have been eliminated in the
preparation of these financial statements.

RECENTLY ISSUED ACCOUNTING STANDARDS

           In July 2001, the FASB issued SFAS No. 141, "Business Combinations,"
and SFAS No. 142, "Goodwill and Other Intangible Assets." Under these new
standards, all acquisitions subsequent to June 30, 2001 must be accounted for
under the purchase method of accounting, and purchased goodwill is no longer
amortized over its useful life. Rather, goodwill will be subject to a periodic
impairment test based upon its fair value. In fiscal 2002 the Company adopted
this statement which did not impact the consolidated results of operations,
financial position or cash flows.

                                       7
<PAGE>

           In June 2001, the FASB issued SFAS No. 143, "Accounting for Assets
Retirement Obligations" ("SFAS 143"). SFAS 143 established accounting standards
for recognition and measurement of a liability for the cost of asset retirement
obligations. Under SFAS 143, the costs of retiring an asset will be recorded as
a liability when the retirement obligation arises, and will be amortized to
expense over the life of the assets. The Company is required to adopt this
statement no later than January 1, 2003 and does not expect it to have a
material impact on its consolidated financial statements.

           In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment of Disposal of Long-Lived Assets ("SFAS 144"). SFAS 144 addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets and discontinued operations. The Company is currently evaluating the
impact of these pronouncements to determine the effect, if any, they may have on
the consolidated financial position and results of operations. The Company
adopted this statement on April 1, 2002 with no material impact on our
consolidated financial statements.

INCOME TAXES

           The Company has available net operating loss carryforwards, which are
available to reduce taxable income. The annual effective rate will be zero and
therefore, the Company did not provide for any income taxes. See Management's
Discussion and Analysis.

EARNINGS (LOSS) PER COMMON SHARE

           Basic earnings (loss) per common share was computed by dividing net
income (loss) applicable to common shares by the weighted average number of
common shares outstanding during the period. Diluted earnings (loss) per common
share was calculated by dividing net income by the sum of the weighted average
number of common shares outstanding plus all additional common shares that would
have been outstanding if potentially dilutive common shares had been issued. For
the three months and nine months ended December 31, 2002, approximately 7.4
million shares from stock options, warrants and convertible securities were
excluded because their exercise price exceeded market value. For the three
months ended December 31, 2001, approximately 9.5 million shares from stock
options, warrants and convertible securities were excluded because their
exercise price exceeded market value. For the nine months ended December 31,
2001, 48.0 million shares from stock options, warrants and convertible
securities were excluded due to their anti-dilutive effect.

<TABLE>
<CAPTION>

The income (loss) used in determining basic and diluted             THREE MONTHS ENDED                 NINE MONTHS ENDED
  earnings (loss) per share consisted of the following:                DECEMBER 31,                       DECEMBER 31,
                                                                  2002              2001             2002              2001
                                                              --------------    -------------    --------------    -------------
BASIC
<S>                                                           <C>               <C>              <C>               <C>
     Net income                                               $          446    $          80    $        1,162    $         122
     Preferred Stock Dividend                                              -                -                 -             (213)
                                                              --------------    -------------    --------------    -------------
                                                              $          446    $          80    $        1,162    $         (91)
                                                              ==============    =============    ==============    =============
DILUTED
     Net income                                               $          446    $          80    $        1,162    $         122
     Interest expense for Convertible debt with Series B
       Convertible Redeemable Preferred Stock                             33               16               114                -
     Preferred Stock Dividend                                              -                -                 -             (213)
                                                              --------------    -------------    --------------    -------------
                                                              $          479    $          96    $        1,276    $         (91)
                                                              ==============    =============    ==============    =============



                                       8
<PAGE>




A reconciliation from the number of shares used in
  the basic earnings (loss) per share computation to
  the number of shares used in the diluted earnings per
  share computation is as follows:

Weighted average shares of common stock outstanding
  during the period - Basic                                         54,177            54,177             54,177           28,879

Series A Convertible Redeemable Preferred Stock                          -                 -                  -                -

Weighted average common equivalent shares due to
  stock options and warrants                                             -                 1                  -                -

Convertible debt with Series A Convertible Redeemable
  Preferred Stock                                                        -                 -                  -                -

Convertible debt with Series B Convertible Redeemable
  Preferred Stock                                                     48,752           38,305            44,974                -
                                                              --------------    -------------    --------------    -------------
Weighted average shares of common stock outstanding
  during the period - Diluted                                        102,929           92,483            99,151           28,879
                                                              ==============    =============    ==============    =============
</TABLE>


SEGMENT REPORTING AND SIGNIFICANT CUSTOMERS

           For the nine months ended December 31, 2002, sales to three of our
customers represented 17%, 11% and 10% of total revenues. For the nine months
ended December 31, 2001, INSCI received 23% and 11% of its total revenues from
two of its customers. For the three months ended December 31, 2002, sales to two
of our customers represented 27% and 11% of total revenues. For the three months
ended December 31, 2001, INSCI received 23% and 10% of its total revenues from
two of its customers. Three of our customers accounted for 26%, 21% and 14% of
the Company's accounts receivable at December 31, 2002. A decline in revenues
from any of these customers in future quarters could materially affect the
revenues, operating results and liquidity of the Company.

The Company operates as a single reportable segment as a developer and seller of
software for electronic document distribution, storage and presentment.

Revenue was derived from customers in the following geographic areas
(in thousands)
<TABLE>
<CAPTION>
                   THREE MONTHS ENDED DECEMBER 31,      NINE MONTHS ENDED DECEMBER 31,
                      2002               2001              2002               2001
                  --------------     -------------     --------------     -------------
<S>               <C>                <C>               <C>                <C>
North America           $ 1,906           $ 1,453            $ 6,018           $ 5,522
Europe                      335               222                583               564
South America               198               175                317               404
Asia                         92               123                163               191
                  --------------     -------------     --------------     -------------
                        $ 2,531           $ 1,973            $ 7,081           $ 6,681
                  ==============     =============     ==============     =============
</TABLE>

ADVANCES AGAINST RECEIVABLES SOLD WITH RECOURSE

           During May 2002, the Company entered into an agreement with a
commercial financing company, which provides for the sale of all of the eligible
domestic accounts receivable of the Company with recourse. Pursuant to the terms
of the agreement, the Company will receive 80% of the face amount of the
accepted account and will be charged a commission equal to 2.25% of the accepted
amount. The Company granted to the financing company a security interest in all
of the Company's assets and accounts receivable. The Company agreed upon an
early termination arrangement of a prior financing agreement so that it could
enter into this new agreement.

           As part of this new financing arrangement, the Company retired its
loan in full with the Pennsylvania Business Bank in the sum of $285,000.



                                        9
<PAGE>


CONVERTIBLE DEBT

           During June 2001, the Company entered into an Investment Agreement
("Agreement") with Selway Partners, LLC ("Selway"), an affiliate of the Company.
The Agreement provides up to a sum of $700,000 of subordinated convertible
debentures (the "Debentures"). The Company has received $585,000 through
December 31, 2002. The Debentures bear an annual interest rate of 13 percent
payable in cash or in additional Debentures and are convertible into Series B
Convertible Redeemable Preferred Stock (the "Series B Preferred") at a price of
$10.00 per share which are convertible into shares of common stock of the
Company, as defined in the agreement. The Debentures are secured by a junior
lien on all of INSCI's assets. Unless previously converted into shares of Series
B Preferred, principal and interest on the Debentures are payable at the earlier
of June 15, 2002 or upon demand by the holder. Amendments to the Agreement
extend the maturity date of the Debentures to March 31, 2003.

           The independent members of the Board of Directors of the Company
authorized the Agreement, and the two Selway-designated Directors did not
negotiate the terms of the agreement or participate in the vote by the Company's
Board to proceed with the transaction.

           In connection with the Agreement, the Company amended its Management
Agreement with Selway Management, Inc. The amended management agreement reduced
the monthly management fee from $20,000 per month to $15,000 per month. The
monthly management fee is payable at the option of Selway in either cash or
additional subordinated convertible debentures ("Management Debentures"). The
Company satisfied $285,000 of management fees by the issuance of Management
Debentures to Selway Management, Inc. as of December 31, 2002. The Management
Debentures have terms similar to the Debentures except for the Series B
Preference Amount.

           The Convertible Debt has a number of covenant requirements and also
contains certain registration rights. The Company has not complied with certain
covenants pertaining to Selway's registration rights and may be deemed in
default. As of the date of these financial statements, the Investors have not
declared a default, but Selway has not waived its rights, and there can be no
assurance that the Company will not be declared in default in the future. In the
event a default was declared which was uncured, the Investors could accelerate
the principal and interest on the Convertible Debt and further assert a claim
against the security pledged by the Company. In the event of a default, the
entire $2,870,000 of convertible debt will be in default as to the terms of the
agreement. Accordingly, the Company has classified the principal as current in
the accompanying consolidated balance sheet.

           The Company is in the process of renegotiating the terms of the
convertible debt, see Management's Discussion and Analysis.

EXTRAORDINARY ITEM

           In September 2002, the Company agreed to a settlement of an action
for nonpayment pursuant to the terms of a capital lease. The equipment acquired
under the capital lease was written off as part of the restructuring charge in
the quarter ended September 30, 2000. The settlement resulted in an
extraordinary gain of $192,000 ($0.002 per share for the nine months ended
December 31, 2002). The Company has not provided any income taxes related to
this gain because of net operating loss carryforwards. The deferred tax asset
consisting of net operating loss carryforwards has been fully offset by a
valuation allowance for the same amount.

LONG TERM DEBT

           Pursuant to a settlement agreement, the Company incurred an
obligation to pay the sum of $225,000 over a 48 month term. As of December 31,
2002, future payments under the terms of the obligation are as follows:


                                       10
<PAGE>


           Fiscal year ending:

           March 31, 2003                     $ 14
           March 31, 2004                       56
           March 31, 2005                       56
           March 31, 2006                       56
           Thereafter                           24
                                         ---------

                                               206
           Less current portion                 56
                                         ---------

                                              $150
                                         =========

RELATED PARTY TRANSACTIONS

           The Company incurred $10,000 during the nine months ended December
31, 2002 in loan guarantee fees to Selway, a related party, in connection with
the loan from the Pennsylvania Business Bank ("Bank Loan"). As a result of the
repayment of the Bank Loan, the Company was able to discontinue its monthly
payment obligation in the sum of $5,000 per month to Selway. The Pennsylvania
Business Bank cancelled both the Selway guarantee and the personal guarantee of
the loan by the Company's Chairman, who had been a guarantor prior to his
affiliation with the Company.




SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

                                                         NINE MONTHS ENDED
                                                           DECEMBER 31,
                                                        2002          2001
                                                    ------------- --------------

Cash paid for interest                              $         168 $          114
Noncash financing activities:
  Common Stock issued for the conversion of 8%
    Convertible Redeemable Preferred Stock                    114         22,042
  8% Convertible Redeemable Preferred Stock
   issued as dividends                                          -          1,111
  Conversion of trade payable to long term debt               169              -

CONTINGENCIES

LEGAL PROCEEDINGS

           The Company was a defendant in an action commenced by one of its
vendors for non-payment in the aggregate amount of $588,000. In September 2002,
the action was settled for the sum of $390,000. The gain from extinguishment of
debt is reported as an extraordinary item on the Company's Consolidated
Statements of Operations. The settlement includes the sum of $165,000 paid on
execution of the settlement agreement and the balance of $225,000 is payable
over 48 months, of which the long term portion is reported as long term debt on
the Company's Consolidated Balance Sheet.

FINANCIAL STATEMENT PRESENTATION

           Certain amounts in the Statement of Cash Flows for the nine months
ended December 31, 2001 have been reclassified to conform to the presentation
for the nine months ended December 31, 2002.



                                       11
<PAGE>



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

           The following discussion of management's analysis of operations for
the three months ("Third Quarter of Fiscal 2003") and nine months ("First Nine
Months of Fiscal 2003") ended December 31, 2002 and the three months ("Third
Quarter of Fiscal 2002") and nine months ("First Nine Months of Fiscal 2002")
ended December 31, 2001, and discussion of financial condition at December 31,
2002, should be read in conjunction with the financial statements and notes
thereto contained elsewhere in this report.

           We develop, sell, install and support scalable digital document
storage solutions that provide capture, warehousing and delivery functions via
networks or the Internet. Our products bridge back-office functions with
front-office mission critical and customer-centric applications by displaying
legacy-generated reports, bills, on-line statements presentment, e-mail archives
and other documents.

              Sales to end-users generally include software, systems
integration, implementation and customization 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 distribute our products through a combination of a direct sales
force and through VARs, distributors and sales alliances with companies
including Unisys Corporation, Xerox Corporation, Fuji Xerox, Xenos and
Integrated Solutions, Inc. (ISI). Revenue is net of discounts and allowances
given to third-party VARs and distributors.

           Our revenues fluctuate because of a variety of factors including the
amount of revenue generated from our alliances with other companies selling our
products, the length of the sales cycle for our products, demand for technology
based solutions, competition and the introduction of new products and product
enhancements.

           The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the settlement
of liabilities and commitments in the normal course of business. As of December
31, 2002, the Company had an accumulated deficit of $52.1 million and a working
capital deficit of $4.8 million.

           Additional sources of capital, such as additional debt or equity
offerings, may be necessary to fund our currently proposed activities for future
periods. There can be no assurances, however, that we will be successful in
obtaining funds from such sources. There exists substantial doubt about the
Company's ability to continue as a going concern.



Income Taxes

           For the three months and nine months ended December 31, 2002, the
Company has available net operating loss carryforwards, which are available to
reduce taxable income. The annual effective rate will be zero and therefore, the
Company did not provide for any income taxes.

           For the year ended March 31, 2002, income taxes of $148,000 were
offset by net operating loss carryforwards. At March 31, 2002, INSCI has net
operating loss ("NOL") carryforwards of approximately $31,550,000, which expire
in various years through 2021, available to offset future taxable income. At
March 31, 2002, INSCI had a deferred tax asset amounting to approximately
$12,620,000. The deferred tax asset consists primarily of net operating loss
carryforwards. Realization of deferred tax assets is dependent on future
earnings, if any, the timing and amount of which is uncertain. Accordingly, the
deferred tax asset has been fully offset by a valuation allowance of the same
amount.

           Management believes that an "Ownership Change" occurred in January
1996 within the meaning of Section 382 of the Internal Revenue Code. Under an
ownership change, the Company will be permitted to utilize approximately
$13,000,000 in NOL carryforwards (available on the date of such change) in any
year thereafter to reduce its income to the extent that the amount of such
income does not exceed the product of (the "Section 382 limit")

                                       12


<PAGE>



the fair market value of its outstanding equity at the time of the ownership
change and the long-term tax exempt rate published by the IRS.

           In addition, the NOLs inherited through the Internet Broadcasting
Company acquisition will also be limited due to the ownership change, which
occurred on the acquisition date. The amount of the NOL, which will be subject
to the Section 382 limit, will be approximately $2,200,000.





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:
<TABLE>
<CAPTION>
                                                THREE MONTHS ENDED                NINE MONTHS ENDED
                                                   DECEMBER 31,                     DECEMBER 31,
                                               2002             2001            2002             2001
                                                 %               %               %                %
                                            ------------    ------------    ------------     ------------
Revenue
<S>                                         <C>             <C>             <C>              <C>
  Product                                             47              29              42               35
  Services                                            53              71              58               65
                                            ------------     -----------     -----------      -----------
    Total revenue                                    100             100             100              100
                                            ------------     -----------     -----------      -----------
Cost of revenue
  Product                                              1               2               2                2
  Services                                            11              20              13               20
                                            ------------     -----------     -----------      -----------
    Total cost of revenue                             12              22              15               22
                                            ------------     -----------     -----------      -----------
Gross profit                                          88              78              85               78
                                            ------------     -----------     -----------      -----------
Expenses
  Sales and marketing                                 23              24              23               23
  Product development                                 20              19              20               21
  General and administrative                          21              27              22               28
                                            ------------     -----------     -----------      -----------
    Total expenses                                    64              70              65               72
                                            ------------     -----------     -----------      -----------
Operating income                                      24               8              20                6

Interest expense, net                                 (6)             (4)             (7)              (4)
                                            ------------     -----------     -----------      -----------
Income before extraordinary item                      18               4              13                2

Extraordinary item                                     -               -               3                -
                                            ------------     -----------     -----------      -----------
Net income                                            18               4              16                2
                                            ============     ===========     ===========      ===========
</TABLE>

THIRD QUARTER OF FISCAL 2003 AS COMPARED TO THIRD QUARTER OF FISCAL 2002:

REVENUE

           We develop, sell, install and support electronic document repository
software with integrated internet, imaging, electronic distribution,
presentation and archive software for the enterprise level (high volume
production) market. Sales to end-users generally include software, systems
integration and consulting services including customization, installation, and
training. 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 Unisys Corporation and
Xerox Corporation. Revenue is net of discounts and allowances given to third
party VARs and distributors.

           Revenues for the Third Quarter of Fiscal 2003 totaled $2.5 million
and increased by $558,000 (28%) compared to revenues of $2.0 million for the
Third Quarter of Fiscal 2002. The increase in revenue is due to increased demand
for our products in both domestic and international markets and the increased
adoption of on-line statements as a business practice.

           For the Third Quarter of Fiscal 2003 we received 27% and 11% of our
total revenues from two of our customers. For the Third Quarter of Fiscal 2002
we received 23% and 10% of our total revenues from two of our




                                       13
<PAGE>



customers. A decline in revenues from any of these customers in future quarters
could materially affect the revenues, operating results and liquidity of the
Company.

GROSS PROFIT

           Gross profit for the Third Quarter of Fiscal 2003 was $2.2 million
and increased $684,000 (45%) compared to gross profit of $1.5 million for the
prior year period. Gross margin improved to 88% for the Third Quarter of Fiscal
2003 from 78% for the prior year period. The increase in gross profit is
primarily due to the increased portion of revenues attributable to product
sales, which have a lower cost of sale. The percentage of product sales
increased to 47% of total revenue in the current year period from 29% of total
revenue in the prior year period

SALES AND MARKETING

           Sales and marketing expenses for the Third Quarter of Fiscal 2003
were $575,000, an increase of $106,000 (23%) from the prior year period expenses
of $469,000. This increase is the result of higher commission payments and an
increase in sales personnel in the Third Quarter of Fiscal 2003.

PRODUCT DEVELOPMENT

           Product development expenses increased $132,000 (35%) from the Third
Quarter of Fiscal 2002 level of $382,000 to $514,000 in the current year period.
The increase reflects INSCI's continued focus on the development of new and
improved product offerings as part of the Company's growth strategies
implemented in the Second Quarter of Fiscal 2003.

GENERAL AND ADMINISTRATIVE

           General and administrative expenses were $527,000 for the Third
Quarter of Fiscal 2003, a decline of $4,000 (1%) from the prior year period
expenses of $531,000.
           .
INTEREST EXPENSE, NET

           Interest expense for the Second Quarter of Fiscal 2003 was $155,000,
an increase of $84,000 (118%) from the prior year period. This increase was due
to the higher level of borrowings in the current fiscal quarter and the effect
of compound interest payable on the convertible debentures issued pursuant to
the June 2001 Investment Agreement.

FIRST NINE MONTHS OF FISCAL 2003 AS COMPARED TO FIRST NINE MONTHS OF FISCAL
2002:

REVENUE

           Revenues for the First Nine Months of Fiscal 2003 totaled $7.1
million and increased by $400,000 (6%) compared to revenues of $6.7 million for
the First Nine Months of Fiscal 2002.

           For the First Nine Months of Fiscal 2003 the Company received 17%,
11% and 10% of our total revenues from three of our customers. For the First
Nine Months of Fiscal 2002 we received 23% and 11% of our total revenues from
two of our customers. A decline in revenues from any of these customers in
future quarters could materially affect the revenues, operating results and
liquidity of the Company.


GROSS PROFIT

           Gross profit for the First Nine Months of Fiscal 2003 was $6.0
million and increased $783,000 (15%) compared to gross profit of $5.2 million
for the prior year period. Gross margin improved to 85% for the First Nine
Months of Fiscal 2003 from 78% for the prior year period. The increase in gross
profit is due equally to the increased portion of revenues attributable to
product sales which have a lower cost of sale and to a reallocation of personnel
to focus on the development of new products as part of the Company's growth
strategies implemented in Fiscal 2003.



                                       14
<PAGE>


SALES AND MARKETING

           Sales and marketing expenses for the First Nine Months of Fiscal 2003
were $1.6 million, remaining at the same level as the prior year period
expenses. Cost reduction efforts enacted in Fiscal 2002 are offset by higher
commission payments and additional sales personnel during Fiscal 2003.

PRODUCT DEVELOPMENT

           Product development expenses for the First Nine Months of Fiscal 2003
were $1.4 million, remaining at the same level as the prior year period
expenses. INSCI's reduced reliance on outside consultants and professional
services, and the cost reduction efforts enacted during Fiscal 2002 are offset
by INSCI's focus on the development of additional product offerings for new
markets as part of the Company's growth strategies implemented in Fiscal 2003.

GENERAL AND ADMINISTRATIVE

           General and administrative expenses were $1.6 million for the First
Nine Months of Fiscal 2003, a decline of $323,000 (17%) from the prior year
period expenses of $1.9 million. The decline was primarily due to the reduced
reliance on outside consultants.

INTEREST EXPENSE, NET

           Interest expense for the First Nine Months of Fiscal 2003 was
$463,000, an increase of $176,000 (61%) from the prior year period expense of
$287,000. This increase was due to the higher level of borrowings in Fiscal 2003
and the effect of compound interest payable on the convertible debentures issued
pursuant to the June 2001 Investment Agreement.

LIQUIDITY AND CAPITAL RESOURCES

           At December 31, 2002, the Company had $1.6 million of cash and
working capital deficit of $4.8 million in comparison to $412,000 of cash and
working capital deficit of $6.2 million at March 31, 2002. Accounts receivable
were $1.9 million at December 31, 2002 and $1.3 million at March 31, 2002.

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

                                                NINE MONTHS ENDED DECEMBER 31,
                                                 2002                   2001
                                             ----------              ----------
Cash provided by (used in)
  Operating activities                       $      815              $     (113)
  Investing activities                              (76)                     10
  Financing activities                              457                    (116)
                                             ----------              ----------
    Net increase (decrease) in cash          $    1,196              $     (219)
                                             ==========              ==========
Cash at end of period                        $    1,608              $      241
                                             ==========              ==========

           In May 2002, we entered into a receivable financing arrangement with
Benefactor Funding Corp ("Benefactor"), whereas Benefactor agreed to finance all
eligible accounts receivable of the Company on a secured basis. Pursuant to the
terms of the agreement, the Company will receive 80% of the factored receivables
and be charged a commission of 2.25% of the factored invoice. The factoring
agreement is secured by the Company's assets and accounts receivable.

           Convertible debt totals $2,870,000 and consists of $870,000, which
maturity date has been extended to March 31, 2003, and $2,000,000, which became
subject to redemption after November 30, 2002. The independent board of the
Company is currently in the process of finalizing a restructuring of the
Company's existing convertible debt.



                                       15
<PAGE>


           As of December 31, 2002 we have $8.7 million in liabilities and $4.1
million in assets resulting in a shareholder deficit of $4.6 million. This
deficiency, unless remedied, can result in us not being able to continue our
business operations. We believe that our current business plan, if successfully
implemented, may provide the opportunity for the Company to continue as a going
concern. However, in the event that satisfactory arrangements cannot be made
with creditors, we may be required to seek protection under the Federal
Bankruptcy law.

           There can be no assurance, assuming that INSCI successfully raises
additional funds or enters into a business alliance, that it will continue to
maintain profitability and positive cash flow. If additional funds from such
activities are not available, we will be required to significantly modify the
implementation and execution of our business plan and may not be able to
continue as a going concern or may be required to seek protection under the
Federal Bankruptcy law. Our independent accountants issued an unqualified
opinion for our fiscal year ended March 31, 2002 with an explanatory paragraph
discussing the existence of substantial doubt about our ability to continue as a
going concern.

"FORWARD-LOOKING" STATEMENTS 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 Annual 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.

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 technology based investments. 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

           This item is not applicable.



                                       16
<PAGE>


ITEM 2.    CHANGE IN SECURITIES

           This item is not applicable.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

           This item is not applicable.

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

           On December 17, 2002, INSCI Corp held its Annual Meeting of
Shareholders, and the shareholders resolved the following:

     (1)  Election of Yaron I. Eitan, Henry F. Nelson, Francis X. Murphy, Derek
          Dunaway and Mitchell Klein to serve as directors until the next annual
          meeting.

     (2)  Appointment of Goldstein and Morris Certified Public Accountants as
          the independent public accountants for the Company's fiscal year ended
          March 31, 2002.

     (3)  An amendment to the Company's Amended Certificate of Incorporation to
          authorize a reverse stock split of the outstanding shares of Common
          Stock at the discretion of the Board of Directors.

ITEM 5. OTHER INFORMATION

        This item is not applicable.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(A) REPORTS ON FORM 8-K.

    A Current Report of Form 8-K was filed by the Company on October 2, 2002
    dated September 10, 2002 which reported the Company entering into a
    settlement agreement with Key Corporate Capital, Inc. f/k/a Leasetec
    Corporation to settle a pending legal action for breach of an equipment
    lease agreement.


                                    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: February 14, 2002        By: /s/ HENRY F. NELSON
                                   ---------------------------------------
                                   Henry F. Nelson
                                   Chief Executive Officer, President and
                                   Chief Financial Officer




                                       17

<PAGE>


                                   INSCI CORP.

                             CERTIFICATE PURSUANT TO
                         THE SARBANES-OXLEY ACT OF 2002


I, Henry F. Nelson, certify that:

1.    I have received this quarterly report on Form 10-QSB of INSCI Corp.;

2.    Based on my knowledge, this quarterly report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this quarterly report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this quarterly report, fairly present in all
      material respects the financial condition, results of operations and cash
      flows of the registrant as of, and for, the periods pursuant in this
      quarterly report;

4.    I am responsible for establishing and maintaining disclosure controls and
      procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
      registrant and I have:

a)    designed such disclosure controls and procedures to ensure that material
      information relating to the registrant, including its consolidated
      subsidiaries, is made known to us by others within those entities,
      particularly during the period in which this quarterly report is being
      prepared.

b)    evaluated the effectiveness of the registrant's disclosure controls and
      procedures as of a date within 90 days prior to the filing date of this
      quarterly report (the "Evaluation Date"); and

c)    presented in this quarterly report my conclusions about the effectiveness
      of the disclosure controls and procedures based on my evaluation as of the
      Evaluation Date.

5.    I have disclosed, based on my most recent evaluation, to the registrant's
      auditors and the audit committee of registrant's board of directors (or
      persons performing the equivalent function):

a)    all significant deficiencies in the design or operation of internal
      controls which could adversely affect the registrant's ability to record,
      process, summarize and report financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and

b)    any fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant's internal
      controls; and

6.    I have indicated in this quarterly report whether or not there were
      significant changes in internal controls or in other factors that could
      significantly affect internal controls subsequent to the date of our most
      recent evaluation, including any corrective actions with regard to
      significant deficiencies and material weaknesses.


Date: February 14, 2003
-----------------------
Henry F. Nelson
President

                                       18

<PAGE>