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, 2003

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

                         Commission file number: 1-12966

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

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

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

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

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

Yes   X     No
     ---        ---


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

TITLE OF EACH CLASS                     OUTSTANDING NOVEMBER 12, 2003
-------------------                     -----------------------------
Common Stock, par value $.01                     59,923,340


Transitional Small Business Disclosure Format (check one)

Yes        No X
     ---     ---



<PAGE>



                                   INSCI CORP.

                                      INDEX


                                                                            PAGE
                                                                            ----
PART I   FINANCIAL INFORMATION

Item 1.   Financial Statements

Consolidated Balance Sheet as of September 30, 2003                           3

Consolidated Statements of Operations for the Three Months and Six Months
     Ended September 30, 2003 and 2002                                        5

Consolidated Statements of Stockholders' Equity (Deficit) for the Six Months
     Ended September 30, 2003                                                 6

Consolidated Statements of Cash Flows for the Six Months
     Ended September 30, 2003 and 2002                                        7

Notes to Consolidated Financial Statements                                    8

Item 2.   Management's Discussion and Analysis or Plan of Operation          15

Item 3.   Controls and Procedures                                            26


PART II  OTHER INFORMATION

Item 1.   Legal Proceedings                                                  26

Item 2.   Change in Securities                                               27

Item 3.   Defaults Upon Senior Securities                                    28

Item 4.   Submission of Matters to a Vote of Security Holders                28

Item 5.   Other Information                                                  28

Item 6.   Exhibits and Reports on Form 8-K                                   29


Signature                                                                    29





                                       2

<PAGE>

<TABLE>
<CAPTION>

                                   INSCI CORP.
                           CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 2003
                                   (UNAUDITED)
                    (in thousands, except per share amounts)

                                     ASSETS

Current assets:
<S>                                                                  <C>
    Cash                                                                  $   365
    Accounts receivable, net of allowance for doubtful accounts of $25      1,893
    Prepaid expenses and other current assets                                 398
                                                                         --------

          Total current assets
                                                                            2,656

Property and equipment, net                                                   935
Goodwill                                                                    1,174
Other assets                                                                  141
                                                                          --------

                                                                          $ 4,906
                                                                          =======


</TABLE>








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



                                       3


<PAGE>


<TABLE>
<CAPTION>


                                   INSCI CORP.
                           CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 2003
                                   (UNAUDITED)
                    (in thousands, except per share amounts)


                      LIABILITIES AND STOCKHOLDERS' DEFICIT

<S>                                                                <C>
Current liabilities:
    Accounts payable                                                    $   870
    Accrued expenses                                                      1,357
    Advances against receivables sold with recourse                       1,027
    Deferred revenue                                                      1,895
    Convertible debt, current portion                                       577
    Capital leases, current portion                                         100
                                                                       ---------
          Total current liabilities                                       5,826
                                                                      ---------
Long term liabilities:
    Long term convertible debt, net of current portion                    1,297
    Capital leases, net of current portion                                   81
                                                                      ---------
          Total long term liabilities                                     1,378
                                                                      ---------
Commitments and contingencies

          Total liabilities                                               7,204
                                                                      ---------
Stockholders' deficit:
    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  200 shares: issued and outstanding 123                      1
    Series C Convertible Redeemable Preferred Stock, $.01 par value,
      authorized 2,300 shares: issued and outstanding 516, (subscribed
      1,031 shares, valued at $1.9396 per share)                              5
    8% Convertible Redeemable Preferred Stock, $.01 par value,
      authorized 3,192 shares: issued and outstanding 74                      1
    Common stock, $.01 par value, authorized 185,000 shares:
      issued and outstanding 59,923                                         599
    Additional paid-in capital                                           50,061
    Accumulated deficit                                                 (52,965)
                                                                      ----------

          Total stockholders' deficit                                    (2,298)
                                                                      ----------

                                                                      $   4,906
                                                                      ==========



</TABLE>








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




                                       4

<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,
                                              2003       2002        2003        2002
                                           ---------   ---------   --------    --------

Revenue
<S>                                      <C>         <C>         <C>         <C>
  Product                                  $    472    $  1,021    $  1,550    $  1,814
  Services                                    1,318       1,259       2,318       2,736
                                           --------    --------    --------    --------

    Total revenue                             1,790       2,280       3,868       4,550
                                           --------    --------    --------    --------

Cost of revenue
  Product                                        54          22          81          87
  Services                                      412         323         685         656
                                           --------    --------    --------    --------

    Total cost of revenue                       466         345         766         743
                                           --------    --------    --------    --------

Gross profit                                  1,324       1,935       3,102       3,807
                                           --------    --------    --------    --------

Expenses
  Sales and marketing                           638         516       1,294       1,026
  Product development                           700         468       1,310         915
  General and administrative                    527         497         874       1,034
  Non-recurring items                           380        --           380        --
                                           --------    --------    --------    --------

                                              2,245       1,481       3,858       2,975
                                           --------    --------    --------    --------

Operating income (loss)                        (921)        454        (756)        832

Interest expense, net                          (101)       (174)       (208)       (308)
                                           --------    --------    --------    --------

Income (loss) before extraordinary item      (1,022)        280        (964)        524

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

Net income (loss)                          $ (1,022)   $    472    $   (964)   $    716
                                           ========    ========    ========    ========

Basic earnings (loss) per common share
  Income (loss) before extraordinary item  $ (0.019)   $  0.005    $ (0.019)   $  0.010
  Extraordinary item                          0.000       0.004       0.000       0.003
                                           --------    --------    --------    --------

  Total                                    $ (0.019)   $  0.009    $ (0.019)   $  0.013
                                           ========    ========    ========    ========

Diluted earnings (loss) per common share
  Income (loss) before extraordinary item  $ (0.019)   $  0.003    $ (0.019)   $  0.006
  Extraordinary item                          0.000       0.002       0.000       0.002
                                           --------    --------    --------    --------

  Total                                    $ (0.019)   $  0.005    $ (0.019)   $  0.008
                                           ========    ========    ========    ========

Weighted average shares outstanding:
  Basic                                      54,785      52,761      53,779      52,761
                                           ========    ========    ========    ========

  Diluted                                    54,785      95,712      53,779      94,533
                                           ========    ========    ========    ========
</TABLE>

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





                                       5
<PAGE>




<TABLE>
<CAPTION>

                                   INSCI CORP.
            CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
                   FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2003
                                   (UNAUDITED)
                    (in thousands, except per share amounts)


                                                                                  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, 2003                 197    $      2      52,761   $    527   $ 48,338    $(51,917)   $ (3,050)

  Issuance of Series C preferred
    shares                              516           5        --         --          995        --         1,000
  Issuance of common shares for
    purchase of net assets of
    WebWare Corporation                --          --         7,162         72        728        --           800
  Series B preferred dividend          --          --          --         --         --           (81)        (81)
  Series C preferred dividend          --          --          --         --         --            (3)         (3)
  Net (loss)                           --          --          --         --         --          (964)       (964)
                                   --------    --------    --------   --------   --------    --------    --------
BALANCE, SEPTEMBER 30, 2003        $    713    $      7      59,923   $    599   $ 50,061    $(52,965)   $ (2,298)
                                   ========    ========    ========   ========   ========    ========    ========


</TABLE>








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


                                       6

<PAGE>


<TABLE>
<CAPTION>



                                   INSCI CORP.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  SIX MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
                                   (UNAUDITED)
                    (in thousands, except per share amounts)

                                                                             2003       2002
                                                                             ----       ----
Cash flows from operating activities:
<S>                                                                      <C>        <C>
  Net income (loss)                                                        $  (964)   $   716
  Reconciliation of net income (loss) to net cash (used in) provided by
    operating activities:
    Depreciation and amortization                                               71         82
    Non-cash restructuring and other charges                                  (180)      --
    Convertible debentures issued for services                                --          100
    Gain from extinguishment of certain debt                                  --         (192)

    Changes in assets and liabilities:
      Accounts receivable                                                      437       (488)
      Prepaid expenses and other current assets                                 21        (79)
      Other assets                                                              31          3
      Accounts payable and accrued expenses                                    252       (115)
      Deferred revenue                                                        (311)       220
                                                                           -------    -------

Net cash (used in) provided by operating activities                           (643)       247
                                                                           -------    -------

Cash flows from investing activities:
  Purchase of net assets of WebWare Corporation                               (627)      --
  Capital expenditures                                                         (77)       (55)
                                                                           -------    -------

Net cash used in investing activities                                         (704)       (55)
                                                                           -------    -------

Cash flows from financing activities:
  Proceeds from issuance of Series C preferred stock                         1,000       --
  Repayments on long term convertible debt                                    (144)      --
  Repayments on short term debt                                                --        (304)
  Net advances (repayments) from sale of receivables                           169        379
  Series B preferred dividends paid                                            (84)      --
                                                                           -------    -------

Net cash provided by financing activities                                      941         75
                                                                           -------    -------

Net (decrease) increase in cash                                               (406)       267
Cash, beginning of period                                                      771        412
                                                                           -------    -------

Cash, end of period                                                        $   365    $   679
                                                                           =======    =======

</TABLE>





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

                                       7

<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, 2003. The results of
the three months and six months ended September 30, 2003 may not be indicative
of the results that may be expected for the year ending March 31, 2004.


         INSCI Corp., formerly known as insci-statements.com, corp. ("INSCI")
develops and markets certain software and services for the enterprise content
management (ECM) market. The Company's products are distributed on an
international basis.


         In the opinion of the management of the Company, the accompanying
unaudited financial statements reflect all adjustments (of a normal and
recurring nature) that are necessary to present fairly the financial position of
the Company as of September 30, 2003 and the results of operations for the three
and six months ended September 30, 2003 and 2002 and cash flows for the six
months ended September 30, 2003.

         The accompanying consolidated financial statements for the three months
and six months ended September 30, 2003 and 2002 include the operations of INSCI
and its wholly-owned subsidiaries, WCORP, Inc. ("WCORP") and Lognet 2000, Inc.
("Lognet"). WCORP was established August 26, 2003 to acquire certain assets and
liabilities of WebWare Corporation ("WebWare"). WCORP acquired certain assets
and assumed certain liabilities of WebWare on September 5, 2003; and as such the
financial results of the Company include the results of WCORP from September 5,
2003 forward. Additional subsidiaries of the Company are InfiniteSpace.com,
Corp. ("InfiniteSpace"), The Internet Broadcasting Company, Inc. ("IBC") and
INSCI (UK) Limited, all of which are no longer active. All significant
intercompany transactions and balances have been eliminated in the preparation
of these financial statements.

RECENTLY ISSUED ACCOUNTING STANDARDS


         In January 2003, the Financial Accounting Standards Board ("FASB")
issued FASB Interpretation ("FIN") No. 46, CONSOLIDATION OF VARIABLE INTEREST
ENTITIES, which requires variable interest entities (commonly referred to as
SPEs) to be consolidated by the primary beneficiary of the entity if certain
criteria are met. FIN No. 46 is effective immediately for all new variable
interest entities created or acquired after January 31, 2003. The adoption of
this statement does not impact the Company's historical or present financial
statements, as the Company has not created or acquired any variable interest
entities, nor does it expect to in the future.

         In December 2002, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 148, ACCOUNTING FOR STOCK-BASED COMPENSATION, TRANSITION
AND DISCLOSURE. SFAS No. 148 provides alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation. SFAS No. 148 also required that disclosures of the pro
forma effect of using the fair value method of accounting for stock-based
employee compensation be displayed more prominently and in a tabular format.
Additionally, SFAS No. 148 required disclosure of the pro forma effect in
interim financial statements. The transition and annual disclosure requirements
of SFAS No. 148 are effective for fiscal years ended after December 15, 2002.


                                       8



<PAGE>



The interim disclosure requirements of SFAS No. 148 are effective for interim
periods beginning after December 15, 2002. The adoption of the provisions of
SFAS No. 148 did not have an impact on the Company's consolidated financial
statements. The Company has modified its quarterly reporting, commencing with
the quarter ended June 30, 2003, to disclose the pro forma effect of the fair
value of any stock-based employee compensation reportable in the periods
presented, as provided for in the new standard.

         In November 2002, the FASB's Emerging Issues Task Force ("EITF")
reached a consensus on EITF No. 00-21, REVENUE ARRANGEMENTS WITH MULTIPLE
DELIVERABLES. EITF No. 00-21 provides guidance on how to account for
arrangements that involve the delivery or performance of multiple products,
services and / or rights to use assets. The provisions of EITF No. 00-21 will
apply to revenue arrangements entered into in fiscal periods beginning after
June 15, 2003. The Company believes that its current accounting is consistent
with the provisions of EITF 00-21 and therefore does not expect that the
application of the provisions of EITF 00-21 will have a material impact on the
Company's consolidated financial statements.


         In November 2002, the EITF reached a consensus on EITF No. 02-16,
ACCOUNTING FOR CONSIDERATION RECEIVED FROM A VENDOR BY A CUSTOMER. EITF No.
02-16 provides guidance as to how customers should account for cash
consideration received from a vendor. EITF No. 02-16 presumes that cash received
from a vendor represents a reduction of the prices of the vendor's products or
services, unless the cash received represents a payment for assets or services
provided to the vendor or a reimbursement of costs incurred by the customer to
sell the vendor's products. The provisions of EITF No. 02-16 will apply to all
agreements entered into or modified after December 31, 2002. Management does not
expect the provisions of EITF No. 02-16 to have a material impact on the
Company's consolidated financial statements.


         In November 2002, the FASB issued FIN No. 45, GUARANTOR'S ACCOUNTING
AND DISCLOSURE REQUIREMENTS FOR GUARANTEES, INCLUDING INDIRECT GUARANTEES OF
INDEBTEDNESS OF OTHERS. FIN No. 45 requires that a liability be recorded in the
guarantor's balance sheet upon issuance of a guarantee. In addition, FIN No. 45
requires disclosures about the guarantees that an entity has issued, including a
reconciliation of changes in the entity's product warranty liabilities. The
initial recognition and initial measurement provisions of FIN No. 45 are
applicable on a prospective basis to guarantees issued or modified after
December 31, 2002, irrespective of the guarantor's fiscal year-end. The
disclosure requirements of FIN No. 45 are effective for financial statements of
interim or annual periods ending after December 15, 2002. The Company does not
guarantee the indebtedness of others, therefore, there will not be any impact on
the Company's consolidated financial statements and there was no need for the
Company to modify its disclosures herein as required.

         In July 2002, the FASB issued SFAS No. 146, ACCOUNTING FOR COSTS
ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES. SFAS No. 146 nullifies the
accounting for restructuring costs provided in EITF Issue No. 94-3, LIABILITY
RECOGNITION FOR CERTAIN EMPLOYEE TERMINATION BENEFITS AND OTHER COSTS TO EXIT AN
ACTIVITY (INCLUDING CERTAIN COSTS INCURRED IN A RESTRUCTURING). SFAS No. 146
requires that a liability associated with an exit or disposal activity be
recognized and measured at fair value only when incurred. In addition, onetime
termination benefits should be recognized over the period employees will render
service, if the service period required is beyond a minimum retention period.
SFAS No. 146 is effective for exit or disposal activities initiated after
December 31, 2002. Management does not expect that the application of the
provisions of SFAS No. 146 will have a material impact on the Company's
consolidated financial statements.

         In January 2002, the EITF reached a consensus on EITF No. 01-14, INCOME
STATEMENT CHARACTERIZATION OF REIMBURSEMENTS RECEIVED FOR "OUT-OF-POCKET"
EXPENSE. EITF No. 01-14 required that reimbursements received for out-of-pocket
expenses be classified as revenue on the income statement. This change has no
material impact on the Company's historical and present financial statements.






                                       9
<PAGE>


ACQUISITION

         On September 5, 2003, the Company's wholly owned subsidiary, WCORP,
acquired certain assets and assumed certain liabilities of WebWare Corporation
("WebWare") from Diablo Management Group, as assignee for the benefit of
creditors of WebWare. The total purchase price was $1.3 million. Additionally,
the Company incurred closing costs of $127,000. The Company paid cash of
$500,000 and issued 7,162,041 shares of its common stock valued at $800,000.
This transaction has been accounted for as a purchase and accordingly, the
operating results have been included in the Company's consolidated results of
operations from the date of acquisition. The allocation of the purchase price is
preliminary and subject to revision, which is not expected to be material, based
on of fair value of net assets acquired.

The components of the purchase price and allocation are as follows (in
thousands):
<TABLE>
<CAPTION>

PURCHASE PRICE:
<S>                                                                    <C>
      Cash                                                             $    500
      7,162,041 shares of INSCI common stock                                800
      Acquisition costs                                                     127
                                                                       ---------

           Total consideration plus acquisition costs                  $  1,427
                                                                       =========

ALLOCATION OF PURCHASE PRICE:
      Fair value of assets acquired, net of $739 in liabilities assumed $   253
      Purchase price in excess of fair value of net assets acquired
        allocated to goodwill                                             1,174
                                                                       --------

           Total                                                       $  1,427
                                                                       ========

</TABLE>

         Goodwill, in accordance with SFAS No. 142, will be tested for
impairment annually and whenever there is an impairment indicator.

         Unaudited proforma operating results for the six months ended September
30, 2003 and 2002 for the Company, assuming the purchase of the assets of
WebWare occurred on March 31, 2002, are as follows (in thousands):

                                                           SIX MONTHS ENDED
                                                             SEPTEMBER 30,
                                                            2003       2002
                                                       -----------   ---------

Revenue                                                $    4,457    $  4,805
Income (loss) from continuing operations                   (3,410)     (3,606)
Basic and diluted loss per share from continuing
  operations                                               (0.065)     (0.068)

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 (loss) 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.



                                       10

<PAGE>




         For the three months and six months ended September 30, 2003,
approximately 84.5 million and 72.8 million, respectively, of shares from stock
options, warrants and convertible securities were excluded due to their
anti-dilutive effect. Additionally, for the three months and six months ended
September 30, 2003, approximately 2.4 million shares from stock options and
warrants were excluded because their exercise price exceeded market value. 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.


<TABLE>
<CAPTION>

The income (loss) used in determining basic and
  diluted earnings per shares consisted of the                   THREE MONTHS ENDED             SIX MONTHS ENDED
  following:                                                        SEPTEMBER 30,                 SEPTEMBER 30,
                                                                 2003         2002            2003           2002
                                                              ------------ -----------    -----------      ----------
BASIC
<S>                                                          <C>             <C>            <C>            <C>
  Net income (loss)                                             $(1,022)        $   472        $ (964)        $   716
  Preferred Stock dividend                                          (43)            -             (84)            -
                                                              -----------    -----------    -----------    -----------

                                                                $(1,065)        $   472       $(1,048)        $   716
                                                              ===========    ===========    ===========    ===========

DILUTED
  Net income (loss)                                             $(1,022)        $   472        $ (964)        $   716
  Interest expense for Convertible debt with Series B
    Convertible Redeemable Preferred Stock                             -             29             -              57
  Preferred Stock dividend                                          (43)             -            (84)             -
                                                              -----------    -----------    -----------    -----------
                                                                $(1,065)       $    501       $(1,048)        $   773
                                                              ===========    ===========    ===========    ===========

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 (loss)           THREE MONTHS ENDED             SIX MONTHS ENDED
  per share computation is as follows:                              SEPTEMBER 30,                 SEPTEMBER 30,
                                                                 2003           2002           2003           2002
                                                              -----------   ------------    -----------   ------------
Weighted average shares of common stock
  outstanding during the period - Basic                          54,785         52,761         53,779         52,761
  8% Convertible Redeemable Preferred Stock                          -           1,415             -           1,415
  Convertible debt with Series B Convertible
    Redeemable Preferred Stock                                       -          41,536             -          40,357
                                                              -----------    -----------    -----------    -----------
                                                                 54,785         95,712         53,779         94,533
                                                              ===========    ===========    ===========    ===========
</TABLE>

MAJOR CUSTOMERS

         For the six months ended September 30, 2003, sales to two customers
accounted for approximately 17% and 12% of total revenue and accounted for 20%
and 25%, respectively, of the Company's accounts receivable at September 30,
2003. For the three months ended September 30, 2003, sales to one customer
represented approximately 26% of total revenue.

SEGMENT INFORMATION


         The Company operates as a single reportable segment as a developer and
distributor of software solutions for the enterprise content management (ECM)
market.


                                       11


<PAGE>



Revenue was derived from customers in the following geographic areas
(in thousands)

<TABLE>
<CAPTION>

                                 THREE MONTHS ENDED                  SIX MONTHS ENDED
                                    SEPTEMBER 30,                      SEPTEMBER 30,
                               2003               2002             2003             2002
                            -------------   --------------    -------------   --------------
<S>                      <C>               <C>              <C>             <C>
North America                    $ 1,545          $ 2,069          $ 3,381          $ 4,111
Europe                               111              148              230              248
Other                                134               63              257              191
                            -------------    -------------    -------------    -------------
                                 $ 1,790          $ 2,280          $ 3,868          $ 4,550
                            =============    =============    =============    =============
</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.

CONVERTIBLE DEBT

         The Series A Debentures bear an interest rate of 10% per annum with
principal and interest payments of $45,000 per month, $65,000 per month and
$80,000 per month in each successive twelve month period commencing December 1,
2002 and a final payment of approximately $308,000 due December 1, 2005. The
Series A Debentures are secured by a subordinated lien on all of the Company's
assets. Unless previously converted into shares of Series A Preferred, principal
and accrued interest on Convertible Debentures is payable by redemption at the
option of the investors at any time after March 31, 2004. As of September 30,
2003, the Convertible Debt is convertible into Series A Convertible Redeemable
Preferred Stock (the "Series A Preferred"), which is in turn convertible into
approximately 17.0 million shares of the Company's Common Stock at a price of
$.11 per share. This financing may result in dilution to INSCI's stockholders.


Long-term convertible debt as of September 30, 2003 is as follows (in
thousands):


Series A Convertible Debentures                               $1,874
Less: current portion                                            577
                                                     ----------------
                                                              $1,297
                                                     ================


Future payments required under the terms of the long-term convertible debt are
as follows (in thousands):


YEAR ENDING MARCH 31,
2004                                                          $ 312
2005                                                            730
2006                                                            832
                                                    ----------------
                                                             $1,874
                                                    ================


         The refinancing agreement finalized on March 31, 2003 required the
Company to file a registration statement prior to September 1, 2003. The rights
agreement entered into with SCP amends the refinancing agreement, calling for a
registration statement to be filed as reasonably practical by the Company.




                                       12

<PAGE>



SERIES C PREFERRED STOCK

         On September 5, 2003, the Company and SCP Private Equity Partners II,
LP ("SCP"), a private equity fund, entered into an agreement wherein SCP agreed
to purchase 1,546,711 shares of Series C Convertible Preferred Stock ("Series C
Preferred") in the Company at a price of $1.9396 per share for a total of $3
million. SCP purchased 515,571 shares on closing for the sum of $1 million. SCP
agreed to pay the balance of $2 million as follows: $500,000 paid for 287,785
shares on each of the dates falling 30, 60, 90 and 120 days from closing. Of
this additional $2.0 million, the Company has received $1.0 million and issued
575,570 shares of its Series C Preferred as of this date.

         Of the 515,571 shares purchased on September 5, 2003, 309,342 shares
were held in escrow until such time as the Company amends its agreements with
Selway Partners, LLC ("Selway") and CIP Capital LP ("CIP") with respect to the
rights associated with the Company's Series A and Series B convertible preferred
stock. As a part of the agreement with SCP for the purchase of the Series C
Preferred, Selway and CIP agreed to negotiate with the Company to modify certain
provisions of the Series A and Series B convertible preferred stock. Selway is
an affiliate of SCP in that SCP is the majority shareholder of Selway and CIP is
an affiliate of SCP in that Mr. Winston Churchill is a managing partner in both.

         The 1,546,711 shares of Series C Preferred is convertible on a 20:1
basis into 30,934,220 shares of common stock at the option of the holder. This
conversion may result in dilution to INSCI's stockholders. Series C Preferred
provides for annual cumulative dividends at 8% of the original issue price of
$1.9396 per share, payable semi-annually in cash or in additional shares of
Series C Preferred at the company's option.

         Holders of shares of Series C Preferred shall be entitled to vote
equally with the shares of the Company's common stock and not as a separate
class, at any annual or special meeting of stockholders of the Company on the
following basis: each holder of shares of Series C Preferred shall be entitled
to such number of votes as shall be equal to the number of shares of Common
Stock into which the holder's Series C Preferred shares would convert
immediately after the close of business on the record date fixed for such
meeting. In addition, the holders of shares of Series C Preferred shall be
entitled as a separate single class to elect two members to the Board at each
election of directors.

         In the event of any liquidation, whether voluntary of involuntary,
before any distribution or payment shall be made to any holders of any junior
stock, the holders of Series C Preferred shall be entitled to be paid out of the
assets of the Company an amount per share equal to the greater of (a) 200% of
the Series C original issue price plus an amount equal to all accrued and unpaid
dividends or (b) the price per share a holder of Series C Preferred would have
been entitled to receive had all shares of outstanding preferred stock been
converted into common stock immediately preceding such liquidation. The Series C
Preferred provides for anti-dilution protection. All outstanding shares of
Series C Preferred shares may be redeemed at the request of holders of a
majority in interest of the Series C Preferred on September 1, 2009.

RELATED PARTY TRANSACTIONS

         The Company incurred interest expense on its convertible debt during
the three months ended September 30, 2003 and 2002 of approximately $48,000 and
$87,000, respectively, and for the six months ended September 30, 2003 and 2002
in the amounts of approximately $97,000 and $177,000, respectively. This debt is
held by Selway and CIP, both related parties. Selway is a related party of INSCI
in that two of INSCI's five board of directors' members are affiliated with
Selway. CIP is a related party of INSCI in that it is an affiliate of SCP, which
is a related party of INSCI. Payments on the convertible debt during the three
months and six months ended September 30, 2003 totaled $90,000 and $225,000,
respectively, for principal and interest.





                                       13
<PAGE>



         The Company paid dividends in the amount of approximately $27,000 and
$68,000, respectively, to shareholders of its Series B Preferred during the
three months and six months ended September 30, 2003. The Series B Preferred is
held by Selway and Selway Management, Inc. and CIP, all related parties. The
Company accrued dividends of approximately $13,000 on its Series B Preferred for
the month of September 2003, which were paid on October 1, 2003. The Company
accrued dividends of $3,000 on its Series C Preferred, held by SCP, a related
party, for the quarter ended September 30, 2003. Accrued dividends are included
in accrued expenses as of September 30, 2003 in the accompanying consolidated
financials statements.

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

                                                                            SIX MONTHS ENDED
                                                                              SEPTEMBER 30,
                                                                         2003              2002
                                                                    ---------------- --------------

<S>                                                                      <C>             <C>
Cash paid for interest                                                   $  188          $  128
Noncash investing and financing activities:
  Common Stock issued in connection with the purchase of certain
    assets of WebWare                                                       800             -
  Capital lease obligations assumed with the purchase of certain
    assets of WebWare                                                       181             -
  Goodwill and other assets acquired in connection with the
    purchase of certain asseets of WebWare                                1,898             -
  Common Stock issued for the conversion of 8% Convertible
    Redeemable Preferred Stock                                               -              114
  Conversion of trade payable to long term debt                              -              169

</TABLE>

STOCK-BASED COMPENSATION

         The Company has elected to follow Accounting Principles Board Opinion
("APB") No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and related
interpretations in accounting for its employee stock options. Under APB No. 25,
when the exercise price of employee stock options is equal to or greater than
the market price of the underlying stock on the date of grant no compensation
expense is recorded. The Company discloses information relating to the fair
value of stock-based compensation awards in accordance with SFAS No. 123,
ACCOUNTING FOR STOCK-BASED COMPENSATION. No stock options or warrants were
granted to employees during the six months ended September 30, 2003 and 2002.

CONTINGENCIES

LEGAL PROCEEDINGS

         The Company is a defendant in an action commenced by one of its
customers for the return of certain pre-petition payments made prior to the
customer's bankruptcy petition in the amount of approximately $121,000. The
Company is contesting the action and is asserting a number of affirmative
defenses on its behalf. The outcome of these proceedings cannot be determined
with certainty. The Company does not believe that the resolution of this matter
will have a material adverse effect on the Company's consolidated financial
position or results of operations.


                                       14


<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 ("First Quarter of Fiscal 2004") and six months ("First Half of
Fiscal 2004") ended September 30, 2003 and the three months ("First Quarter of
Fiscal 2003") and six months ("First Half of Fiscal 2003) ended September 30,
2002, and discussion of financial condition at September 30, 2003, should be
read in conjunction with the financial statements and notes thereto contained
elsewhere in this report.


         INSCI is a leading provider of solutions to the enterprise content
management (ECM) market. INSCI's highly scalable solutions provide storage,
access and presentment for mission-critical documents, reports, statements,
e-mail and high value digital assets necessary for business functions or
regulatory compliance. The industry recognized highly scalable archive solution
supports high volume ingestion, digital asset preservation, and on-line
presentment and delivery functions via internal networks or via the World Wide
Web. With the addition of web-enabled capabilities, INSCI's customers can take
advantage of e-commerce to improve communication, customer satisfaction and
productivity while decreasing costs. For over ten years INSCI has been
recognized for its ability to capture and store high volumes of electronic
information. The Company recently acquired certain assets and liabilities of
WebWare, a leading provider of content management solutions for the digital
asset management (DAM) market. These advanced solutions offer broad management
capability for rich media content such as video, voice, audio, graphics and
related media.

         INSCI was originally founded to capture and preserve high volumes of
mission critical business information. The Company's product offering includes
web-based presentment capabilities for documents such as bank statements, 401(k)
statements, customer and vendor statements, explanation of benefits (EOB's) and
transaction confirmation documents. The Company has expanded its product
offerings to include e-mail archiving and notification capabilities as well as
the ability to capture, store and deliver high value digital assets such as
spreadsheets, word documents, presentations and schedules. This offers our
customers the ability to provide increased internal communication, productivity
improvements and improved customer satisfaction and communication. With the
addition of the WebWare ActiveMedia(TM) product offering the Company has
substantially expanded its digital archive and rich media asset management
capabilities and supports business efforts such as video and voice on demand,
product launches, global marketing efforts, rich asset management and brand
management.

         The ESP+(TM) archive solution provides a robust platform to meet the
demands of high-volume desktop and Internet-based content retrieval by thousands
of users. The ESP+(TM) Solution Suite is built on a three tier scalable
architecture and will support multiple platforms. Access to archived content is
offered through both Windows-client and browser-based desktop solutions.
Additionally, an industry-standard Java-based Application Program Interface
(API) offers seamless integration with third-party applications, such as
Websites, Customer Relationship Management (CRM), service providers, and
Healthcare Information Technology (HIT) providing a platform for expanded market
presence.

         ActiveMedia(TM) provides a secure, central repository where rich media
files such as images, documents, video, animation, voice and other formats of
rich media are required to be organized and stored, and may be delivered to
desktops, websites, print publications, video on demand as they are needed. The
application is offered as a standard licensed application and is also available
in a web based hosted environment on a subscription basis.. The flexible J2EE
based design offers a scaleable three-tier architecture that takes advantage of
industry standard Web Services description language and a standard operating
access protocol (SOAP) application program interface (API). The advanced
interoperability architecture offers substantially increased market
opportunities through the seamless integration with other third party
application services providers.

                                       15

<PAGE>



         Sales to end-users generally include software license, professional
services and maintenance contracts. Additionally, the ActiveMedia(TM) product is
offered under a web based hosting contract. ASP-enabling sales typically include
recurring revenues that are transaction based. As a long-standing provider of
advanced and cost-effective solutions, INSCI has licenses at more than 500
companies across a host of industries - including financial services,
telecommunications, insurance, utilities, manufacturing, healthcare, media,
pharmaceutical and global product marketing companies - enhancing their
bottom-line performance through highly-scalable fixed content and rich media
asset management and electronic presentment applications. Since the archive and
presentment solution is vertically non-specific, the Company's market
opportunity is broad. INSCI also markets and licenses products on an
international basis through its Alliance Partners. INSCI's strategic
relationships include Unisys Corporation, Xerox Corporation, EMC, PFPC and IFIN
Sistemi.

         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, seasonality, capital
spending trends, demand for our products, the introduction of new products and
product enhancements and general economic conditions.

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,
                                           -------------       -------------
                                           2003    2002       2003    2002
                                            %       %          %        %
                                           ----    ----       ----    ----
Revenues
<S>                                      <C>     <C>        <C>     <C>
  Product                                   26      45         40      40
  Services                                  74      55         60      60
                                          ----    ----       ----    ----

    Total revenues                         100     100        100     100
                                          ----    ----       ----    ----
Cost of revenues
  Product                                    3       1          2       2
  Services                                  23      14         18      14
                                          ----    ----       ----    ----

    Total cost of revenues
                                            26      15         20      16
                                          ----    ----       ----    ----

Gross profit                                74      85         80      84
                                          ----    ----       ----    ----
Expenses
  Sales and marketing                       36      23         33      23
  Product development                       39      20         34      20
  General and administrative                29      22         23      23
  Non-recurring item                        21    --           10    --
                                          ----    ----       ----    ----

    Total expenses                         125      65        100      66
                                          ----    ----       ----    ----

Operating income (loss)                    (51)     20        (20)     18
Interest expense, net                       (6)     (8)        (5)     (6)
                                          ----    ----       ----    ----

Income (loss) before extraordinary item    (57)     12        (25)     12
Extraordinary item                        --         9       --         4
                                          ----    ----       ----    ----

Net income (loss)                          (57)     21        (25)     16
                                          ====    ====       ====    ====


</TABLE>



                                       16
<PAGE>



The following tables compare total revenues for the periods indicated
(in thousands):
<TABLE>
<CAPTION>

                                                      THREE MONTHS ENDED SEPTEMBER 30,
                                                      2003         2002           % CHANGE
                                               ------------- -- ------------- --- -------------


<S>                                            <C>            <C>              <C>
Product revenues                                      $ 472          $ 1,021          (54)%
Professional services                                   174              184           (5)
Maintenance and hosting contract revenues             1,144            1,075            6
                                               -------------    -------------
      Total revenues                                $ 1,790          $ 2,280          (21)
                                               =============    =============


                                                       SIX MONTHS ENDED SEPTEMBER 30,
                                                      2003          2002        % CHANGE
                                               ------------- -------------- ---------------


Product revenues                                    $ 1,550          $ 1,814          (15)%
Professional services                                   324              556          (42)
Maintenance and hosting contract revenues             1,994            2,180           (9)
                                               -------------    -------------
      Total revenues                                $ 3,868          $ 4,550          (15)
                                               =============    =============

</TABLE>


SECOND QUARTER OF FISCAL 2004 AS COMPARED TO SECOND QUARTER OF FISCAL 2003:

REVENUES


         Revenues for the Second Quarter of Fiscal 2004 totaled $1.8 million and
decreased by $490,000 or 21% compared to revenues of $2.3 million for the Second
Quarter of Fiscal 2003. The current quarter revenues include $179,000 from
WCORP. Product revenues decreased by $549,000 or 54% to $472,000 in the Second
Quarter of Fiscal 2004 as compared to $1.0 million in the Second Quarter of
Fiscal 2003. Professional service revenues of $174,000 decreased $10,000, or 5%,
in the Second Quarter of Fiscal 2004 as compared to $184,000 in the Second
Quarter of Fiscal 2003. Maintenance and hosting revenues increased $69,000, or
6%, compared to the Second Quarter of Fiscal 2003. Maintenance contract revenues
are earned ratably over the term of the contract commencing upon receipt of
payment or when other acceptance is received. Hosting contract revenues are
earned ratably over the period invoiced, typically monthly or quarterly.


         For the Second Quarter of Fiscal 2004 we received 26% of our total
revenues from one customer. For the Second Quarter of Fiscal 2003 we received
29% of our total revenues from one customer.

GROSS PROFIT


         Gross profit for the Second Quarter of Fiscal 2004 was $1.3 million and
decreased $611,000 or 32% compared to gross profit of $1.9 million for the prior
year period. The decline in aggregate gross profit is directly related to the
decline in product revenue as previously noted. Gross margin decreased to 74%
for the Second Quarter of Fiscal 2004 from 85% for the prior year period. The
decrease in the gross margin percentage is primarily attributable to a decrease
in product sales, which contribute a higher profit margin, and $115,000 in costs
attributable to WCORP at a lower profit margin.


SALES AND MARKETING

         Sales and marketing expenses for the Second Quarter of Fiscal 2004 were
$638,000, an increase of $122,000 or 24% from the prior year period. The
increase reflects the Company's expanded sales effort and its investments in
marketing efforts to stimulate future sales. Sales and marketing expenses
attributable to WCORP were $55,000.




                                       17

<PAGE>



PRODUCT DEVELOPMENT


         Product development expenses of $700,000 increased $232,000 or 50% from
the Second Quarter of Fiscal 2003. The increase is reflective of the Company's
increased product development efforts for additional products for the Enterprise
Content Management (ECM) market. Development costs incurred by WCORP contributed
$85,000, or 37% of the increase.


GENERAL AND ADMINISTRATIVE


         General and administrative expenses were $527,000 for the Second
Quarter of Fiscal 2004 as compared to $497,000 for the prior year period, an
increase of $30,000 or 6%. The portion of general and administrative expenses
attributable to WCORP was $58,000. General and administrative expenses,
exclusive of WCORP, decreased by $28,000 for the Second Quarter of Fiscal 2004
as compared to the prior year period.


NON-RECURRING ITEMS

         Non-recurring items in the Second Quarter of Fiscal 2004 total $380,000
consisting of severance, relocation and moving expenses and other charges to be
incurred as part of a plan to realign the operations of the Company's newly
formed subsidiary's operations.

INTEREST EXPENSE, NET

         Interest expense for the Second Quarter of Fiscal 2004 was $101,000, a
decrease of $73,000 or 42% from the prior year period. The decrease was due to
the lower level of borrowings in the current fiscal quarter as a portion of the
convertible debt was converted to Series B Convertible Redeemable Preferred
Stock as of March 31, 2003, as well as a lower interest rate on the refinanced
convertible debt.

FIRST HALF OF FISCAL 2004 AS COMPARED TO FIRST HALF OF FISCAL 2003:

REVENUES


         Revenues for the First Half of Fiscal 2004 totaled $3.9 million and
decreased by $682,000 or 15% compared to revenues of $4.6 million for the First
Half of Fiscal 2003. Product revenues decreased by $264,000 or 15% to $1.6
million in the First Half of Fiscal 2004 as compared to $1.8 million in the
First Half of Fiscal 2003. Services revenues decreased $418,000 or 15% from $2.7
million in the First Half of Fiscal 2003 as compared to $2.3 million in the
First Half of Fiscal 2004. Service revenues, exclusive of contract revenues,
declined $232,000 or 42% as the Company experienced a decline in large-scale
conversion contracts compared to the prior year period. Maintenance revenues
declined $186,000 or 9% due to timing differences related to collection and
revenue recognition. Maintenance revenues are earned ratably over the term of
the contract commencing upon receipt of payment or when other acceptance is
received.


         For the First Half of Fiscal 2004 we received 17% and 12% of our total
revenues from two of our customers. For the First Half of Fiscal 2003 we
received 14% and 11% of our total revenues from two of our customers.

GROSS PROFIT

         Gross profit for the First Half of Fiscal 2004 was $3.1 million and
decreased $705,000 or 19% compared to gross profit of $3.8 million for the prior
year period. The decline in aggregate gross profit is directly related to the
decline in revenue as previously noted. Gross margin decreased to 80% for the
First Half of Fiscal 2004 from 84% for the prior year period. The decrease in
the gross margin percentage is primarily a result of lower product sales which
contribute a higher profit margin and the increase in cost of services as a
result of the addition of the costs of the hosting center.





                                       18

<PAGE>



SALES AND MARKETING


         Sales and marketing expenses for the First Half of Fiscal 2004 were
$1.3 million an increase of $268,000 or 26% from the prior year period. The
increase reflects the Company's expanded sales effort and its investments in
marketing efforts to stimulate future sales. Sales and marketing expenses
attributable to WCORP were $55,000.


PRODUCT DEVELOPMENT


         Product development expenses increased $395,000 or 43% from the First
Half of Fiscal 2003 level of $915,000 to $1.3 million in the current year
period. The increase is reflective of the Company's increased product
development efforts in additional products for the Enterprise Content Management
(ECM) market. The operations of WCORP contributed $85,000 for the period.


GENERAL AND ADMINISTRATIVE


         General and administrative expenses were $874,000 for the First Half of
Fiscal 2004, a decrease of $160,000 or 16% from the prior year period. The
operations of WCORP contributed $58,000 to General and Administrative expenses.
Total expenses, exclusive of WCORP, declined by $218,000 compared to the prior
period. The decrease is primarily attributable to a $180,000 reduction in the
reserve for restructuring expenses accrued in Fiscal 2001.


NON-RECURRING ITEMS

         Non-recurring items in the First Half of Fiscal 2004 total $380,000
consisting of severance, relocation and moving expenses and other charges to be
incurred as part of a plan to realign the operations of the Company's newly
formed subsidiary's operations.

INTEREST EXPENSE, NET

         Interest expense for the First Half of Fiscal 2004 was $208,000, a
decrease of $100,000 or 33% from the prior year period. The decrease was due to
the lower level of borrowings in the current fiscal quarter as a portion of the
convertible debt was converted to Series B Convertible Redeemable Preferred
Stock as of March 31, 2003, as well as a lower interest rate on the refinanced
convertible debt and receivables financing.

LIQUIDITY AND CAPITAL RESOURCES

         As of September 30, 2003, the Company had $365,000 of cash and working
capital deficit of $3.2 million in comparison to $679,000 of cash and working
capital deficit of $5.2 million at September 30, 2002. As of March 31, 2003, the
Company had $771,000 of cash and working capital deficit of $1.9 million.
Accounts receivable were $1.9 million at September 30, 2003 and $2.1 million at
March 31, 2003. The Company will receive an additional $2.0 million from the
sale of its Series C Preferred stock to SCP pursuant to the purchase agreement.
Of the additional $2.0 million, the Company received payments in the amount of
$500,000 on October 6, 2003 and $500,00 on November 5, 2003. The remaining $1.0
million is due as follows: $500,000 on December 5, 2003 and $500,000 on January
5, 2004.





                                       19

<PAGE>



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

                                 SIX MONTHS ENDED SEPTEMBER 30,
                                        2003          2002
                                        ----          ----
Cash provided by (used in)
  Operating activities                 $(643)        $ 247
  Investing activities                  (704)          (55)
  Financing activities                   941            75
                                       -----         -----

Net (decrease) increase in cash         (406)          267
Cash, beginning of period                771           412
                                       -----         -----

Cash, end of period                    $ 365         $ 679
                                       =====         =====


         Net cash used in operating activities was $643,000 in the First Half of
Fiscal 2004 compared to net cash generated from operating activities of $247,
000 in the prior year period. The increased use of cash is due in part to the
operating losses and reduced revenues.


         Net cash used in investing activities was $704,000 in the First Half of
Fiscal 2004 compared to $55,000 in the prior year period. The increase in cash
used primarily consists of $627,000 used for the purchase of the WebWare assets.

         Net cash generated by financing activities was $941,000 in the First
Half of Fiscal 2004 compared to net cash generated by financing activities of
$75,000 in the prior year period. The increase in cash provided by financing
activities was due to the investment in the Company by SCP.

 "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.





                                       20
<PAGE>



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 distributing our products, demand for our products and services, 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 and capital expenditures, 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, 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.

BUSINESS RISKS

         An investment in our common stock involves a high degree of risk. You
should consider carefully the following risks, and consult with your own legal,
tax and financial advisors.

WE RECENTLY COMPLETED AN ACQUISITION OF THE ASSETS OF A COMPANY WITH A HISTORY
OF OPERATING LOSSES:

         The company recently completed an acquisition of a Company with a
history of operating losses and there is no assurance that the Company will be
successful in reducing such losses. Such losses for the year ended December 31,
2002 were $8,796,000 and for the three months ended June 30, 2003 were
$1,624,000. The extent to which such losses are not reduced would represent a
business risk to the Company.

THE MARKET FOR THE ACQUIRED PRODUCTS IS NOT ASSURED.

         The market for the digital asset market (DAM) is relatively immature
and characterized by evolving technology and erratic adoption rates relative to
vertical markets. Competitive performance within these markets requires
significant investment in product development and market awareness. There is no
assurance that such investments will yield increased revenues in the immediate
future.

WE HAVE A HISTORY OF LOSSES AND OUR ABILITY TO BE PROFITABLE DEPENDS ON A NUMBER
OF FACTORS THAT WE MAY BE UNABLE TO CONTROL.

         We have cumulative losses since our business began in 1989 and although
recently profitable, there is no guarantee we will maintain profitability. While
we reported our first two consecutive profitable fiscal periods for the fiscal
year ended March 31, 2002 and fiscal year ended March 31, 2003, we have reported
losses of $1,022 for the current quarter ended September 30, 2003. Our prior
financial performance was the result of a restructuring plan focused on a return
to the core operations of the business and a reduction in expenses. There can be
no assurance that the expense reductions that have been implemented are
sustainable over future periods or that revenues will increase.





                                       21
<PAGE>


OUR QUARTERLY OPERATING RESULTS MAY EXPERIENCE VARIABILITY

         Our quarterly sales and operating results have varied significantly
and may vary in the future as a result of several factors such as:

o    Size and timing of software license orders
o    Completion of backlog orders
o    Acceptance and sign off of service contracts
o    Seasonality
o    Customer budgetary constraints and timelines
o    Availability of embedded third party products or tool sets
o    Availability of Alliance Partner products
o    Financial condition of Alliance Partners
o    Variations of Alliance Partner strategy
o    Product introduction and acceptance
o    Competitive pricing
o    License revenues as a percentage of revenues
o    Changes in product distribution channels
o    Changes in sales force
o    Variations in expense levels
o    Change of business strategy
o    Competition
o    International exchange rates
o    Changes in accounting pronouncements

         A significant amount of our license and service revenues are derived
from a limited number of customers. Such orders are typically placed within the
specific financial quarter when revenue is recognized, and we expect this trend
to continue. The placement of such orders is typically at the end of a fiscal
quarter requiring shipment, and if a new customer, the implementation of the
licensed product. The sales cycle is typically lengthy for a new licensed
customer and less time for an existing customer. Revenue recognition for service
contracts requires the acceptance and sign off from a customer. The amount of
license product and service backlog at the end of a quarter is typically
immaterial. We also experience variations in product demand due to customer
budgetary constraints that may be imposed within a fiscal year. As a
consequence, the Company experiences difficulty in forecasting license and
service revenues within any period.

         The Company distributes products through Alliance Partners. Changes in
the market strategy, product offering, financial condition, material changes in
the sales distribution strategy, availability of hardware or software products,
product defects and material changes in customer support may affect product
orders and revenues in any period(s).

         License revenue gross margins are substantially higher than other
revenue sources. The percentage of license revenues to the overall revenues in a
fiscal period may materially change the overall gross margins and profitability
for any period. Variations in expense levels compared to other periods may
result in changes in operating income within a fiscal period.





                                       22
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REQUIREMENT TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK OR, IN
THE ALTERNATIVE, FOR THE BOARD TO RESOLVE A REVERSE SPLIT OF COMMON STOCK AS PER
SHAREHOLDER AUTHORIZATION.

         We do not have a sufficient number of authorized shares of common stock
in the authorized but unissued number of shares of common stock as provided for
in our Certificate of Incorporation. As a result of the recent completion of the
investment in Series C preferred stock by SCP, an additional amount of shares of
common stock are required due to the conversion rights afforded to Series C
preferred stockholders to convert the preferred stock to common stock, as well
as for prospective dividends to be paid in Series C shares of preferred stock to
be converted into common stock. We have obtained a waiver from SCP with respect
to the exercise of their right to convert their Series C shares into shares of
common stock in our Company until such time as our Board of Directors determines
to resolve a reverse split shares of outstanding common stock in accordance with
a prior shareholder approved resolution of between 1 to 1 up to 25 to 1 or, in
the alternative, to obtain shareholder approval to amend the Certificate of
Incorporation to increase the issued and outstanding shares of common stock in
order to permit the issuance by the Company of shares of common stock as per the
conversion and dividend rights granted to Series C preferred stockholders.

ACQUISITION OF CERTAIN ASSETS OF WEBWARE CORPORATION

         On September 5, 2003, we reported that we purchased certain assets of
WebWare Corporation ("WebWare") from Diablo Management Group, as assignee for
the benefit of creditors of WebWare Corporation. The acquisition, which included
the ActiveMedia(TM) products, was for cash and stock, for the assets, which now
enables us to offer our customers a digital asset management (DAM) application
for integrating rich media content, such as images, video, audio, graphics and
on-demand features into content management systems, web publishing systems, and
e-commerce portals.

         Our entering into this new area of business requires additional working
capital and management expertise, and we will be competing with companies with
far greater resources and staff, so that there is no assurance that we will be
successful in reversing the losses sustained by the former WebWare business.

BECAUSE WE HAVE EXPERIENCED LOSSES WE MAY NEED ADDITIONAL WORKING CAPITAL TO
IMPLEMENT OUR BUSINESS PLAN.

          We believe that we may need additional financing to operate our
business and implement our business plan. As of September 30, 2003 we had
$365,000 of cash and working capital deficit of $3.2 million in comparison to
$679,000 of cash and working capital of $5.2 million as of September 30, 2002.
There can be no assurances, however, that we will be successful in obtaining
funds from any such sources. If we issue equity securities, this may result in
dilution to our stockholders. If additional funds are not available, we will be
required to modify execution of our business plan.

         The WCORP business model utilizes a hosting service as a material
component of its sales and service product offering. INSCI plans to incorporate
such offering internally to further reduce the costs of such service. The
consolidation will require substantial initial cash outlays to fund the
implementation of such offering. There can be no assurance that service to the
WCORP customer base will be impacted to the extent that the cash requirements
will exceed that of management estimates.

PRODUCT REVENUE CONCENTRATION.

         The Company generates a substantial portion of license revenues and
services from the ESP+ archive solution. We expect that this trend will continue
and any changes to this assumption such as general economic, technology based
and competition may have a material adverse effect on the revenues and operating
results of the Company. We do not expect that there will be a substantial change
in revenue until the WebWare products contribute to our revenue growth.




                                       23

<PAGE>



EXPANSION OF DIRECT SALES.

         To date, the Company has significantly relied on the indirect sales
channel for sales leads and product revenues. The Company has invested, and
expects to continue to invest, in the development and growth of a direct sales
channel. To the extent that the Company is not successful in such efforts,
future revenue growth and operating margins may be adversely affected.

OUR BUSINESS GREATLY DEPENDS ON INDIRECT SALES.

         We depend upon introductions to potential customers by companies with
which we maintain strategic alliances for a significant percentage of our sales.
Although we have written agreements with UNISYS, Xerox Corporation, PFPC and
other value added resellers; the agreements do not require customer
introductions or provide for minimum required purchases of our products. If any
of the companies with which we maintain strategic alliances decides not to refer
potential customers to us, our sales may be reduced and operating losses
increased. In addition, there is no assurance that we will be able to maintain
our strategic alliances on current terms.

DEPENDENCE ON LICENSED TECHNOLOGY.

         INSCI depends on certain software products that are licensed from third
parties, which are embedded and used in our products. The company believes that
there are replacement alternatives for such third party products; however, the
interruption of the availability of such products may have an adverse impact on
the delivery of our products. Additionally, we expect our third party vendors to
maintain and continually improve their products. To the extent that such
products became obsolete or inoperable with other industry standard
applications, we may experience an adverse effect on revenues, operating results
and a decrease in customer satisfaction.

DEPENDENCE ON INTERNET ACCEPTANCE, ACCESSIBILITY, INFRASTRUCTURE AND SECURITY.

         INSCI developed and realized revenues from its Internet based products
and related services. The Internet is a new technology and as such, is
characterized by rapid technology changes, evolving standards and adoption
rates. Future revenues and services are dependent upon the acceptance of the
Internet as a recognized method of commercial competence.

         The accessibility of the Internet has expanded over the last several
years. Technology enhancements and improvements have accelerated the
availability of Internet access. To the extent that continued developments in
communications, communication standards, availability and accessibility do not
continue to expand, the rate of adoption may decline. Additionally, the
corporate expansion of the Internet as a commercial communications platform
typically requires a capital expenditure and support infrastructure. To the
extend that corporate capital expenditures decline or funding for Internet based
programs are reduced, the accessibility and necessary supporting infrastructure
may reduce the adoption and performance on the Internet.

         To the extent that there is an increase in the use of the Internet, or
an increase in bandwidth, the infrastructure may not be able to effectively
support demand and result in a degradation of commercial acceptance. Reduced
response times may also affect the acceptance of the Internet.

RAPID TECHNOLOGY CHANGES IN OUR INDUSTRY MAY ADVERSELY AFFECT OUR BUSINESS.

         Our business is subject to technological advances and possible product
obsolescence. The market for our products is characterized by rapidly changing
technology, intense competition, technological complexity and evolving industry
standards. We must insure that our products are compatible with those products
offered by third-party vendors, including server platforms for our software and
various storage devices and platforms. We have no contracts with third-party
vendors; therefore there is no assurance that we will be able to make our
software products compatible with new products that are introduced by others.
Our WebWare suite of products is subject to continued technological evolution
and adoption which requires a continued investment by our Company to remain
competitive.






                                       24

<PAGE>



WE DEPEND ON PROPRIETARY TECHNOLOGY, WHICH IS NOT PROTECTED BY PATENTS.

         Our business depends on proprietary software technology for which we
have no patent protection. Although we require our employees and others to whom
we disclose proprietary information to sign non-disclosure agreements, this
protection may not be sufficient. Our business will be adversely affected if
anyone improperly uses or discloses our proprietary software or other
proprietary information.

BECAUSE OF THE HIGH COST, WE LACK PRODUCT LIABILITY INSURANCE.

         We develop, market, install and service electronic information and
document management systems, which now include the WebWare product line. Failure
of our products may result in a claim against us. Because of the high cost of
product liability insurance, we do not maintain insurance to protect against
claims associated with the use of our products. Any claim against us may result
in costs to us in defending litigation. Further, any claim may require
management's time and the use of our resources.

WE DEPEND UPON CERTAIN KEY EMPLOYEES TO DEVELOP OUR PRODUCTS.

         We do not have the financial resources to compete with larger more
established companies to attract and retain certain key technological employees.
The loss of current technological employees or our inability to recruit and
retain employees with certain key technology skills will have an adverse effect
on product development and our business.

THE BOARD OF DIRECTORS OWNS A LARGE PERCENTAGE OF OUR COMMON STOCK AND CAN
INFLUENCE MATTERS REQUIRING THE VOTE OF SHAREHOLDERS.

         On September 30, 2003, our directors and officers beneficially owned,
as defined by the SEC Rules, approximately 116.0 million shares of common stock,
representing 70.7% of the outstanding common stock. Holders of Series A (if
convertible debt is converted in Series A Preferred), B and C preferred stock
can vote on an as if converted basis and can therefore obtain shareholder
approval or ratification of shareholder resolutions. Based on their ownership,
our directors and officers have the ability to influence matters requiring a
stockholder vote, including the election of directors, the amendment of charter
documents, the merger or dissolution of our company and the sale of all or
substantially all of our assets. Their voting power also may discourage or
prevent any proposed takeover.

LIQUIDITY.

         Our stock is traded on the Over the Counter Bulletin Board (OTCBB)
under the symbol "INSS". As of Sept 30, 2003 we have 59,923,340 shares
outstanding. Selway and CIP hold 123,344 shares of Series B Convertible
Redeemable Preferred Stock, which, as of September 30, 2003, was convertible
into 59,488,507 shares of the Company's Common Stock. The number of shares is
based on a formula that includes additional shares in the event that certain
convertible securities are converted. Selway and CIP also hold $1.9 million of
convertible debt, which if converted, would be convertible into 17,038,397
shares of the Company's Common Stock. As of September 30, 2003, SCP holds
515,570 shares of Series C Convertible Preferred Stock, which is convertible
into 10,311,400 shares of the Company's Common Stock. Pursuant to stock purchase
agreement between INSCI and SCP, SCP will purchase an additional 1,031,140
shares of Series C Preferred, which will be convertible into 20,622,800 shares
of the Company's Common Stock. The average trading volume for the 30-day trading
period ended November 5, 2003 is 113,500.

THE POTENTIAL ISSUANCE OF ADDITIONAL SHARES OF SERIES C OR OTHER CLASSES OF
PREFERRED STOCK MAY NEGATIVELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK AND
SHAREHOLDER RIGHTS.

          Our certificate of incorporation empowers the board of directors with
the right to determine the designations, rights, preferences and privileges of
the holders of one or more series of preferred stock. The board of directors can
issue, without stockholder approval, preferred stock with voting, dividend,
conversion, liquidation or other rights, which could adversely affect the voting
power and equity interest of common stock holders.




                                       25





<PAGE>

BECAUSE OF CERTAIN PROVISIONS IN OUR BY-LAWS, AND THE ISSUED AND OUTSTANDING
SHARES OF SERIES B AND SERIES C PREFERRED STOCK, CHANGE IN CONTROL MAY BE
DIFFICULT.

         Our by-laws and the Delaware General Corporation Law contain provisions
including a shareholders rights plan that may make a change in control more
difficult or delay attempts by others to obtain control of us, even when this
may be in the interests of stockholders. The Delaware General Corporation Law
also imposes conditions on certain business combinations with "interested
stockholders", as defined by Delaware law. Under certain agreements with key
personnel, we also have provided stock options in the event of a change of
control and a termination of those employment agreements without cause.
Additionally, we have provided that if a change of control occurs, certain
directors will receive immediate vesting of stock options granted under our 1992
Directors Option Plan. Change of control shall occur, in this instance, if a
majority of the directors elected at any Annual Meeting are persons other than
those nominated by management in the proxy statement distributed for such Annual
Meeting. Additionally, Series A, Series B and Series C preferred stock have
certain restrictive rights with respect to the issuance of other classes of
preferred stock as well as liquidation preferences which can inhibit a change of
control.

DIVIDENDS ON OUR COMMON STOCK ARE NOT LIKELY.

         We do not anticipate paying any cash dividends on our common stock. We
intend to keep future earnings, if any, to finance the operation and expansion
of our business.

WE MAY BE REQUIRED TO PAY DIVIDENDS ON OUR SERIES B AND SERIES C PREFERRED STOCK
IN SHARES OF SERIES C PREFERRED STOCK.

         While we may pay cash dividends on our Series B and Series C preferred
stock, it is unlikely that we will do so at this time, and will pay dividends in
shares of Series C stock, which, if converted into shares of the Company's
common stock will result in dilution to our common stockholders.

ITEM 3.       CONTROLS AND PROCEDURES

         The Company maintains controls and procedures designed to ensure that
information required to be disclosed in the reports that the Company files or
submits under the Securities and Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the rules and forms
of the Securities and Exchange Commission. Based upon their evaluation of those
controls and procedures performed within 90 days of the filing date of this
report, the executive officers of the Company concluded that the Company's
disclosure controls and procedures were adequate.

         There have not been any significant changes in the Company's internal
controls or other factors that could affect these controls subsequent to the
date of evaluation."

PART II       OTHER INFORMATION

ITEM 1.       LEGAL PROCEEDINGS

         The Company is a defendant in an action commenced on May 16, 2003 by
Lason, Inc. ("Lason") in the United States Bankruptcy Court for the District of
Delaware. The Lason action is seeking the return of certain pre-petition
payments made prior to the bankruptcy petition of Lason in the amount of
approximately $121,000. The Company is contesting the action and has asserted a
number of affirmative defenses to the action.





                                       26

<PAGE>



ITEM 2.       CHANGE IN SECURITIES

         On April 4, 2003, the Company completed two (2) Amendments to
refinancing transactions. The first refinancing was with Selway Partners LLC
("Selway") and CIP Capital LP ("CIP") of a November 28, 2000 financing
transaction. The second refinancing was for a separate refinancing for a June
21, 2001 financing transaction with Selway. The two Amendments were made as of
November 30, 2002.

         With respect to the Selway-CIP November 28, 2000 financing transaction,
the Company agreed that it would repay to Selway-CIP the balance of principal
and interest of $2,505,000. On January 17, 2003, the Company paid approximately
$305,000 toward the outstanding interest due to Selway-CIP, resulting in the
balance due of $2,200,000, which will be paid in 36 monthly installments with
interest of 10% per annum. The Selway-CIP refinancing agreement further provided
for an extension of one year for the optional redemption of Selway-CIP to demand
repayment of the principal and interest due on all of the outstanding
Convertible Debentures. The Convertible Debentures are convertible into Series A
Preferred Stock of the Company and ultimately into Common Stock. Series A
Preferred Stock has a dividend of 10% per annum. In accordance with the terms of
the Amendment, the conversion price for the Convertible Debentures convertible
to Series A Preferred Stock and ultimately to Common Stock was repriced from
$.65 per share to $.11 per share.

         The Company also amended its June 21, 2001 financing arrangement with
Selway which provides that Selway has the right to convert issued and
outstanding Convertible Debentures in the aggregate sum of $575,000, issued to
Selway as a part of the June 21, 2001 transaction convertible into Series B
Preferred Stock, which is ultimately convertible into Common Stock of the
Company. Additionally, the Company had also issued to Selway Management, Inc.
("Selway Management") debentures in payment of management consulting fees, as
per its Consulting Agreement with Selway Management in the sum of $460,000. The
Company also entered into Amendment No. 2 to the Selway Management Agreement.

         The Convertible Debentures issued to Selway Management provided for the
right of Selway Management to convert the Debentures into Series B Convertible
Preferred Stock, which is ultimately convertible into Common Stock. Series B
Convertible Stock has an annual dividend of 13%. Selway advised the Company that
it assigned the sum of $193,230.33 in Convertible Debentures to CIP. Selway and
CIP disclaim any affiliation with respect to their respective interest in the
Convertible Debentures issued by the Company.

         On April 3, 2003, Selway, Selway Management and CIP converted their
respective Convertible Debentures in the aggregate amount of $1,035,000 into the
aggregate of 123,344 shares of Series B Convertible Stock as follows: Selway
converted the sum of $381,769.67 of Convertible Debentures into 49,073 shares of
Series B Preferred Stock; Selway Management converted the sum of $460,000 into
51,013 Convertible Debentures; and CIP converted the sum of $193,230.33 of
Convertible Debentures into 23,258 Series B Convertible Preferred Stock. Shares
of Series B Convertible Preferred Stock are convertible into shares of Common
Stock of the Company.

         The 173,077 previously issued stock warrants to purchase Series A
Preferred Stock issued to Selway Partners, LLC were extended to November 30,
2007, as well as the 173,077 warrants to purchase Series A Preferred stock
issued to CIP Capital, L.P. Additionally, the 57,692 warrants to purchase Series
A Preferred Stock issued to Selway Partners, LLC and CIP Capital, L.P. were
extended to January 30, 2008, and the 200,000 warrants previously issued to
Selway Management, Inc. were extended to November 30, 2008.

         The Company amended its Certificate of Incorporation on March 31, 2003
with respect to the Series A and Series B Preferred Stock, in that the Series A
Preferred Stock conversion into Common Stock was reduced from $.65 per share to
$.11 per share, and the Series B Preferred Stock authorization was increased
from 100,000 shares of Series B Preferred Stock to 200,000 shares of Series B
Preferred Stock.





                                       27
<PAGE>



         The Registrant (the "Company"), on September 5, 2003, entered into an
agreement with SCP Private Equity Partners II, LP ("SCP"), a private equity
fund, as of September 4, 2003, wherein SCP agreed to purchase, 1,546,711 shares
of Series C Convertible Preferred Stock in the Company at $1.9396 per share (the
"Series C Preferred Stock") for the sum of $3,000,000.

         The 1,546,711 shares of Series C Preferred Stock are convertible into
30,934,422 shares of common stock, or approximately 58.6% of the issued and
outstanding shares of common stock of the Company.

         SCP purchased 515,571 shares of Series C Preferred Stock on closing for
the sum of $1,000,000. Of the 515,571 shares of Series C Preferred Stock,
309,342 shares of Series C Preferred Stock (20% of the total shares) were held
in escrow until such time as the Company amends its agreements with Selway
Partners LLC ("Selway") and CIP Capital LP ("CIP") with respect to the rights
associated with the Company's Series A and Series B convertible preferred stock.
Selway is an affiliate of SCP in that SCP is the majority shareholder of Selway.
As a part of the Purchase Agreement for the Series C Preferred Stock, Selway and
CIP agreed to negotiate with the Company to modify certain provisions of the
Series A and Series B convertible preferred stock within sixty (60) days from
the date of the initial sale of the Series C Preferred Stock to SCP. The Company
intends to enter into a modification agreement with Selway and CIP to amend
certain provisions of the Series A and Series B preferred stock.

         SCP agreed to pay the purchase price on the balance of $2,000,000
         as follows:
     o   $500,000 - 257,785 shares 30 days from closing
     o   $500,000 - 257,785 shares 60 days from closing
     o   $500,000 - 257,785 shares 90 days from closing
     o   $500,000 - 257,785 shares 120 days from closing

         As a result of its purchase of Series C Preferred Stock, and SCP's
affiliate relationship with Selway, SCP is deemed the beneficial owner of
720,855 shares of Series A preferred stock (issuable upon the conversion of the
Company's convertible debt), 100,086 shares of Series B preferred stock 230,769
warrants to purchase shares of Series A preferred stock and 1,068,896 shares of
common stock of the Company which aggregate to 57.5% of the issued and
outstanding common stock of the Company on a fully diluted basis. In accordance
with the terms of the Series C Preferred Stock Purchase Agreement, the Company
has filed a Certificate of Designation setting forth the rights and preferences
for the Series C Preferred Stock.

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.






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ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

(A)      EXHIBITS

            Exhibit 10.76    Series C Convertible Preferred Stock Purchase
                             Agreement dated as of September 4, 2003

            Exhibit 10.77    Asset Purchase Agreement by and between the Diablo
                             Management Group as Assignee for the Benefit of
                             Creditors of WebWare Corporation and WCORP, Inc.
                             dated as of September 4, 2003

            Exhibit 10.78    Note Purchase Agreement dated as of
                             September 4, 2003

(B)      REPORTS ON FORM 8-K.

                  A Current Report of Form 8-K was filed by the Company on
         September 19, 2003 dated September 5, 2003, which reported a change in
         control pursuant to the completion of a stock purchase agreement with
         SCP Private Equity Partners II, LP ("SCP"), a private equity fund, as
         of September 4, 2003, wherein SCP agreed to purchase, 1,546,711 shares
         of Series C Convertible Preferred Stock in the Company at $1.9396 per
         share (the "Series C Preferred Stock") for the sum of $3,000,000. The
         1,546,711 shares of Series C Preferred Stock are convertible into
         30,934,422 shares of common stock, or approximately 58.6% of the
         current issued and outstanding shares of common stock of the Company.

                  A Current Report of Form 8-K was filed by the Company on
         September 19, 2003 dated September 5, 2003, which reported the
         acquisition by WCORP, Inc., the Company's wholly owned subsidiary, of
         certain assets of WebWare Corporation from Diablo Management Group, as
         assignee for the benefit of creditors. The Company's subsidiary
         acquired the assets and assumed certain liabilities of WebWare
         Corporation for a total consideration of $1,300,000 paid as follows:
         cash of $500,000 and an aggregate of 7,162,041 shares of the Company's
         restricted common stock valued at $800,000. Of the 7,162,041 shares,
         4,476,276 shares of common stock of the Company were paid by the
         Assignee to SCP Private Equity Partners II, LP ("SCP"), a secured
         creditor of WebWare Corporation. It is anticipated that the balance of
         2,685,765 shares of common stock are to be distributed to the unsecured
         creditors by the Assignee, and to the Assignee for its expenses.




                                    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 13, 2003           By: /S/ HENRY F. NELSON
                                       ----------------------------------
                                       Henry F. Nelson
                                       Chief Executive Officer, President and
                                       Chief Financial Officer







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