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:September 30, 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 NOVEMBER 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 September 30, 2002                 3

           Consolidated Statements of Operations for the Three Months
               and Six Months Ended September 30, 2002 and 2001                4


           Consolidated Statements of Cash Flows for the Six Months            5
               Ended September 30, 2002 and 2001

           Consolidated Statement of Stockholders's Deficit for the            6
               Six Months Ended September 30, 2002

           Notes to Financial Statements                                       7

Item 2.    Management's Discussion and Analysis or Plan of Operation          11


PART II    OTHER INFORMATION

Item 1.    Legal Proceedings                                                  15

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                                   16

           Signature                                                          16




                                      -2-
<PAGE>

<TABLE>
<CAPTION>



                                   INSCI CORP.
                           CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 2002
                                   (UNAUDITED)
                    (in thousands, except per share amounts)


ASSETS
  Current assets:
<S>                                                                         <C>
    Cash                                                                    $    679
    Accounts receivable, net of allowance for doubtful accounts of $37         1,757
    Prepaid expenses and other current assets                                    205
                                                                            --------

        Total current assets                                                   2,641
  Property and equipment, net                                                    230
  Other assets                                                                   172
                                                                            --------

                                                                            $  3,043
                                                                            ========

LIABILITIES AND STOCKHOLDERS' DEFICIT
  Current liabilities:
    Accounts payable and accrued expenses                                   $  2,946
    Advances against receivables sold with recourse                              428
    Deferred revenue                                                           1,703
    Convertible debt                                                           2,840
                                                                            --------

        Total current liabilities                                              7,917
                                                                            --------
  Long term debt                                                                 164
                                                                            --------
  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                                                      (52,584)
                                                                            --------

      Total stockholders' deficit                                             (5,038)
                                                                            --------

                                                                            $  3,043
                                                                            ========

</TABLE>






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



                                      -3-
<PAGE>
<TABLE>
<CAPTION>



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

                                           Three months ended      Six months ended
                                              September 30,          September 30,
                                             2002       2001        2002        2001
                                             ----       ----        ----        ----

Revenue
<S>                                        <C>         <C>         <C>         <C>
  Product                                  $  1,021    $    844    $  1,814    $  1,780
  Services                                    1,259       1,379       2,736       2,928
                                           --------    --------    --------    --------
    Total revenue                             2,280       2,223       4,550       4,708
                                           --------    --------    --------    --------

Cost of revenue
  Product                                        22          54          87          86
  Services                                      323         455         656         914
                                           --------    --------    --------    --------
    Total cost of revenue                       345         509         743       1,000
                                           --------    --------    --------    --------

Gross profit                                  1,935       1,714       3,807       3,708
                                           --------    --------    --------    --------

Expenses
  Sales and marketing                           516         480       1,026       1,103
  Product development                           468         401         915         994
  General and administrative                    497         550       1,034       1,353
                                           --------    --------    --------    --------
                                              1,481       1,431       2,975       3,450
                                           --------    --------    --------    --------

Operating income                                454         283         832         258
Interest expense, net                          (174)       (106)       (308)       (216)
                                           --------    --------    --------    --------

Income before extraordinary item                280         177         524          42
Extraordinary item - Gain from
  extinguishment of certain debt                192        --           192          --
                                           --------    --------    --------    --------

Net income                                 $    472    $    177    $    716    $     42
                                           ========    ========    ========    ========


Basic earnings (loss) per common share
  Income before extraordinary item         $  0.005    $  0.003    $  0.010    $ (0.011)
  Extraordinary item                          0.004         --        0.003          --
                                            --------    --------    --------    --------

  Total                                    $  0.009    $  0.003    $  0.013    $ (0.011)
                                           ========    ========    ========    ========

Diluted earnings (loss) per common share
  Income before extraordinary item         $  0.003    $  0.001    $  0.006    $ (0.011)
  Extraordinary item                          0.002          --       0.002          --
                                            --------    --------    --------    --------

  Total                                    $  0.005    $  0.001    $  0.008    $ (0.011)
                                           ========    ========    ========    ========

Weighted average shares outstanding:
  Basic                                      54,177      16,332      54,177      16,230
                                           ========    ========    ========    ========

  Diluted                                    95,713      53,325      94,533      16,230
                                           ========    ========    ========    ========

</TABLE>

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



                                      -4-
<PAGE>

<TABLE>
<CAPTION>


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

                                                              Six months ended
                                                                September 30,
                                                                2002     2001*
                                                                ----     ----

Cash flows from operating activities:
<S>                                                            <C>        <C>
  Net income                                                   $ 716      $  42
  Reconciliation of net income to net cash
    used in  operating activities:
    Depreciation and amortization                                 82        174
    Convertible debentures issued for services                   100         30
    Stock issued for services                                     --         20
    Gain from extinguishment of certain debt                    (192)        --
    Changes in assets and liabilities:
      Accounts receivable                                       (488)      (131)
      Prepaid expenses and other current assets                  (79)       (53)
      Other assets                                                 3         75
      Accounts payable and accrued expenses                     (115)      (710)
      Deferred revenue                                           220        247
                                                               -----      -----

Net cash provided by (used in) operating activities              247       (306)
                                                               -----      -----

Cash flows from investing activities:
  Capital expenditures                                           (55)        (5)
  Proceeds from sale of fixed assets                              --         17
                                                               -----      -----

Net cash (used in) provided by investing activities              (55)        12
                                                               -----      -----

Cash flows from financing activities:
  Repayments on short term debt                                 (304)      (170)
  Net advances (repayments) from sale of receivables             379        (48)
  Proceeds from convertible debt                                  --        315
                                                               -----      -----

Net cash provided by financing activities                         75         97
                                                               -----      -----

Net increase (decrease)  in cash                                 267       (197)
Cash at beginning of period                                      412        460
                                                               -----      -----

Cash at end of period                                          $ 679      $ 263
                                                               =====      =====

<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
                       SIX MONTHS ENDED SEPTEMBER 30, 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                               --          --         --         --         --           716         716
                                     --------    --------   --------   --------   --------    --------    --------

BALANCE, SEPTEMBER 30, 2002                74    $      1     52,761   $    527   $ 47,018    $(52,584)   $ (5,038)
                                     ========    ========   ========   ========   ========    ========    ========

</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 six months ended September 30, 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 provides 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 September 30, 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 September 30, 2002 and the results of operations and cash
flows for the three months and six months ended September 30, 2002 and 2001.

           The accompanying consolidated financial statements for the three
months and six months ended September 30, 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.

           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




                                      -7-
<PAGE>



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.

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 six months ended September 30, 2002, approximately 9.4
million shares from stock options, warrants and convertible securities were
excluded because their exercise price exceeded market value. For the three
months ended September 30, 2001, approximately 9.8 million shares from stock
options, warrants and convertible securities were excluded because their
exercise price exceeded market value. For the six months ended September 30,
2001, 46.8 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          SIX MONTHS ENDED
  earnings (loss) per share consisted of the following:                  SEPTEMBER 30,               SEPTEMBER 30,
                                                                     2002          2001          2002           2001
                                                                  ---------     ----------    ---------       ---------
BASIC
<S>                                                                 <C>           <C>            <C>            <C>
     Net income                                                     $ 472         $ 177          $ 716          $  42
     Preferred Stock Dividend                                        --            (124)          --             (213)
                                                                    -----         -----          -----          -----
                                                                    $ 472         $  53          $ 716          $(171)
                                                                    =====         =====          =====          =====

DILUTED
     Net income                                                     $ 472         $ 177          $ 716          $  42
     Interest expense for Convertible debt with Series B
       Convertible Redeemable Preferred Stock                          29          --               57           --
     Preferred Stock Dividend                                        --            (124)          --             (213)
                                                                    -----         -----          -----          -----
                                                                    $ 501         $  53          $ 773          $(171)
                                                                    =====         =====          =====          =====

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        16,332         54,177         16,230
Series A Convertible Redeemable Preferred Stock                      --          23,499          --               --
Weighted average common equivalent shares due to
  stock options and warrants                                         --            --            --               --
Convertible debt with Series A Convertible Redeemable
  Preferred Stock                                                    --            --            --               --
Convertible debt with Series B Convertible Redeemable
  Preferred Stock                                                  41,536        13,494         40,356            --
                                                                  -------       -------        -------         ------
Weighted average shares of common stock outstanding
  during the period - Diluted                                      95,713        53,325         94,533         16,230
                                                                  =======       =======        =======         ======
</TABLE>



                                      -8-
<PAGE>


SEGMENT REPORTING AND SIGNIFICANT CUSTOMERS

           For the six months ended September 30, 2002, sales to two of our
customers represented 14% and 11% of total revenues. For the six months ended
September 30, 2001, INSCI received 17% and 11% of its total revenues from two of
its customers. For the three months ended September 30, 2002, sales to one of
our customers represented 29% of total revenues. For the three months ended
September 30, 2001, INSCI received 15% and 13% of its total revenues from two of
its customers. One of these customers accounted for 39% of the Company's
accounts receivable at September 30, 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                   SIX MONTHS ENDED
                                  SEPTEMBER 30,                        SEPTEMBER 30,
                             2002               2001              2002               2001
                          ------------- --- -------------     -------------- --- -------------

<S>                            <C>                <C>               <C>               <C>
North America                  $ 2,069            $1,859            $ 4,111           $ 4,048
Europe                             148               170                248               343
South America                       30               153                120               248
Asia                                33                41                 71                69
                          -------------     -------------     --------------     -------------
                               $ 2,280           $ 2,223            $ 4,550           $ 4,708
                          =============     =============     ==============     =============
</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 was required
to payoff its loan in full to the Pennsylvania Business Bank in the sum of
$285,000.

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
September 30, 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 December 31, 2002.

           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





                                      -9-
<PAGE>



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 $255,000 of management fees by
the issuance of Management Debentures to Selway Management, Inc. as of September
30, 2002. The Management Debentures have terms similar to the Debentures except
for the Series B Preference Amount. The Management Debentures do not reduce the
total amount available to the Company under the Agreement.

           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 $2,840,000 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.

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 ($0.004 and $0.003 per share, respectively, for
the three months and six months ended September 30, 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 September 30,
2002, future payments under the terms of the obligation are as follows:

           Fiscal year ending:

           March 31, 2003                   $ 28
           March 31, 2004                     56
           March 31, 2005                     56
           March 31, 2006                     56
           Thereafter                         24
                                         --------

                                             220
           Less current portion               56
                                         --------

                                            $164
                                         ========

RELATED PARTY TRANSACTIONS

           The Company incurred $10,000 during the quarter ended June 30, 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.



                                      -10-
<PAGE>




SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>

                                                                       SIX MONTHS ENDED
                                                                         SEPTEMBER 30,
                                                                       2002          2001
                                                                   ------------- --------------

<S>                                                                       <C>            <C>
Cash paid for interest                                                    $ 128          $ 114
Noncash financing activities:
  Common Stock issued for the conversion of 8% Convertible
    Redeemable Preferred Stock                                              114             41
  8% Convertible Redeemable Preferred Stock issued as dividends               -            383
  Conversion of trade payable to long term debt                             169              -
</TABLE>

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
Statement 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 six months
ended September 30, 2001 have been reclassified to conform to the presentation
for the six months ended September 30, 2002.



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

           The following discussion of management's analysis of operations for
the three months ("Second Quarter of Fiscal 2003") and six months ("First Half
of Fiscal 2003") ended September 30, 2002 and the three months ("Second Quarter
of Fiscal 2002") and six months ("First Half of Fiscal 2002") ended September
30, 2001, and discussion of financial condition at September 30, 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, statements 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 and Xerox Corporation. Revenue is net of discounts
and allowances given to third-party VARs and distributors.





                                      -11-
<PAGE>


           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 our
products 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 September
30, 2002, the Company had an accumulated deficit of $52.6 million and a working
capital deficit of $5.3 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 any such sources or be qualified to draw down on the
convertible debt facility. There exists substantial doubt about the Company's
ability to continue as a going concern.

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                SIX MONTHS ENDED
                                           SEPTEMBER 30,                    SEPTEMBER 30,
                                       2002             2001            2002             2001
                                         %               %               %                %
                                     ----------- --- -----------     ----------- ---- -----------
Revenue
<S>                                        <C>               <C>            <C>               <C>
  Product                                  45                38             40                38
  Services                                 55                62             60                62
                                     -----------     -----------     -----------      -----------
    Total revenue                         100               100            100               100
                                     -----------     -----------     -----------      -----------
Cost of revenue
  Product                                    1                2               2                2
  Services                                  14               21              14               19
                                     -----------     -----------     -----------      -----------
    Total cost of revenue                   15               23              16               21
                                     -----------     -----------     -----------      -----------
Gross profit                                85               77              84               79
                                     -----------     -----------     -----------      -----------
Expenses
  Sales and marketing                       23               21              23               23
  Product development                       20               18              20               21
  General and administrative                22               25              23               29
                                     -----------     -----------     -----------      -----------
    Total expenses                          65               64              66               73
                                     -----------     -----------     -----------      -----------
Operating income                            20               13              18                6
Interest expense, net                       (8)              (5)             (6)              (5)
                                     -----------     -----------     -----------      -----------
Income before extraordinary item            12                8              12                1
Extraordinary item                           9                -               4                -
                                     -----------     -----------     -----------      -----------
Net income                                  21                8              16                1
                                     ===========     ===========     ===========      ===========
</TABLE>

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

REVENUE

           We develop, sell, install and support electronic document repository
software with integrated internet, imaging, electronic distribution,
presentation and archive (COLD) 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.




                                      -12-
<PAGE>


           Revenues for the Second Quarter of Fiscal 2003 totaled $2.3 million
and increased by $57,000 (3%) compared to revenues of $2.2 million for the
Second Quarter of Fiscal 2002.

           For the Second Quarter of Fiscal 2003 we received 29% of our total
revenues from one of our customers. For the Second Quarter of Fiscal 2002 we
received 15% and 13% 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 Second Quarter of Fiscal 2003 was $1.9 million
and increased $221,000 (13%) compared to gross profit of $1.7 million for the
prior year period. Gross margin improved from 77% for the Second Quarter of
Fiscal 2002 to 85% for the current year period. The increase in gross profit is
primarily due 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.

SALES AND MARKETING

           Sales and marketing expenses for the Second Quarter of Fiscal 2003
were $516,000, an increase of $36,000 (8%) from the prior year period expenses
of $480,000. This increase is the result of higher commission payments in the
Second Quarter of Fiscal 2003.

PRODUCT DEVELOPMENT

           Product development expenses increased $67,000 (17%) from the Second
Quarter of Fiscal 2002 level of $401,000 to $468,000 in the current year period.
The increase reflects INSCI's 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 $497,000 for the Second
Quarter of Fiscal 2003, a decline of $53,000 (10%) from the prior year period.
This decline was due to decreased reliance on outside consultants, offset by
management incentives earned on higher operating revenues in the Second Quarter
of Fiscal 2003

INTEREST EXPENSE, NET

           Interest expense for the Second Quarter of Fiscal 2003 was $174,000,
an increase of $68,000 (64%) from the prior year period. This increase was due
to the higher level of borrowings in the current fiscal quarter.

FIRST HALF OF FISCAL 2003 AS COMPARED TO FIRST HALF OF FISCAL 2002:

REVENUE

           Revenues for the First Half of Fiscal 2003 totaled $4.6 million and
decreased by $158,000 (3%) compared to revenues of $4.7 million for the First
Half of Fiscal 2002.

           For the First Half of Fiscal 2003 we received 14% and 11% of our
total revenues from two of our customers. For the First Half of Fiscal 2002 we
received 17% 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 Half of Fiscal 2003 was $3.8 million and
increased $99,000 (3%) compared to gross profit of $3.7 million for the prior
year period. Gross margin improved from 79% for the First Half of Fiscal 2002 to
84% for the current year period. The increase in gross profit is primarily due
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.



                                      -13-
<PAGE>


SALES AND MARKETING

           Sales and marketing expenses for the First Half of Fiscal 2003 were
$1,026,000, a decrease of $77,000 (7%) from the prior year period expenses of
$1,103,000. This decrease reflects various cost reduction efforts enacted in the
First Half of Fiscal 2002, offset by higher commission payments in the Second
Quarter of Fiscal 2003.

PRODUCT DEVELOPMENT

           Product development expenses decreased $79,000 (8%) from the First
Half of Fiscal 2002 level of $994,000 to $915,000 in the current year period.
The decline was due to INSCI's reduced reliance on outside consultants and
professional services, and the cost reduction efforts enacted during the First
Half of Fiscal 2002. The decline is offset by INSCI's focus on the development
of new and improved product offerings as part of the Company's growth strategies
implemented in the First Half of Fiscal 2003.

GENERAL AND ADMINISTRATIVE

           General and administrative expenses were $1,034,000 for the First
Half of Fiscal 2003, a decline of $319,000 (24%) from the prior year period. The
decline was primarily due to the reduced reliance on outside consultants.

INTEREST EXPENSE, NET

           Interest expense for the First Half of Fiscal 2003 was $308,000, an
increase of $92,000 (43%) from the prior year period. This increase was due to
the higher level of borrowings in Fiscal 2003.

LIQUIDITY AND CAPITAL RESOURCES

           At September 30, 2002, the Company had $679,000 of cash and working
capital deficit of $5.3 million in comparison to $412,000 of cash and working
capital deficit of $6.2 million at March 31, 2002. Accounts receivable were $1.8
million at September 30, 2002 and $1.3 million at March 31, 2002.

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

                                                SIX MONTHS ENDED SEPTEMBER 30,
                                                    2002                2001
                                                    ----                ----
Cash provided by (used in)
  Operating activities                           $  247              $ (306)
  Investing activities                              (55)                 12
  Financing activities                               75                  97
                                             ------------       -------------
    Net increase (decrease) in cash              $  267              $ (197)
                                             ============       =============

Cash at end of period                            $  679              $  263
                                             ============       =============

           In May 2002, we entered into a new 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.

           As of September 30, 2002 we have $8.0 million in liabilities and $3.0
million in assets resulting in a shareholder deficit of $5.0 million. This
deficiency, unless remedied, can result in us not being able to continue our






                                      -14-
<PAGE>

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

           The Company has settled an action commenced on May 17, 2002 by Key
Corporate Capital (formerly Leasetec) ("Leasetec") in Worcester Superior
Court, Docket No. 02-1047C. The Leasetec claim was for capital lease payments as
well as an action in replevin for the leased equipment. These claims were for
the sum of $588,000 plus attorneys' fees and interest. The action was settled on
September 10, 2002 for a total of $390,000, of which $165,000 was paid on
execution of the settlement agreement, the remaining $225,000 is payable in 48
monthly payments




                                      -15-
<PAGE>


of approximately $4,700. As collateral for the settlement, the Company signed an
Agreement for Judgment in the amount of $588,000, which will be held in escrow
by Leasetec's attorneys until the Company makes full payment. In the event the
Company does not comply with the agreement, all amounts paid would be credited
against the amount due. Upon the signing of the agreement, a Stipulation of
Dismissal without prejudice was entered by the Court.



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

           This item is not applicable.

ITEM 5.    OTHER INFORMATION

           This item is not applicable.

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

(A)        EXHIBITS.

                Exhibit 99.1, Certification pursuant to 18 U.S.C. Section 1350
                as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.

(B)        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: November 14, 2002           By:  /S/ HENRY F. NELSON
                                       -----------------------------------------
                                       Henry F. Nelson
                                       Chief Executive Officer, President and
                                       Chief Financial Officer



                                      -16-
<PAGE>