UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                  FORM 10-QSB
                                   (Mark One)


[X]  QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR 15 (d)
     OF  THE  SECURITIES EXCHANGE ACT OF 1934


                 For the quarterly period ended March 31, 2004

                                       OR

[ ] TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15 (d)
    OF THE  SECURITIES EXCHANGE ACT OF 1934


                For the transition period from ______ to ______

                          Commission File No. 0 20660


                              DIRECT INSITE CORP.
        (Exact name of Small Business Issuer as specified in its Charter)


        Delaware                                11-2895590
(State or other jurisdiction of              (I.R.S. Employer
incorporation or organization)              Identification  No.)


80 Orville Drive, Bohemia, N.Y.                   11716
(Address of principal executive office          (Zip Code)


Registrant's telephone number, including area code      (631) 244-1500

Indicate  by check  mark  whether  the  registrant:  (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  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


The number of shares of $.0001 par value stock  outstanding as of April 30, 2004
was: 4,227,984.

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

                      DIRECT INSITE CORP. AND SUBSIDIARIES

                                     INDEX


PART I - FINANCIAL INFORMATION                                              Page

     Item 1

     Condensed Consolidated Balance Sheets as of March 31, 2004 (Unaudited) and
       December 31, 2003 ......................................................3

     Condensed Consolidated Statements of Operations
       For the Three Months Ended March 31, 2004 and 2003 (Unaudited)..........4

     Condensed Consolidated Statements of Cash Flows
       For the Three Months Ended March 31, 2004 and 2003 (Unaudited)..........5

     Notes to Condensed Consolidated Financial Statements (Unaudited) .........6

     Item 2

     Management's Discussion and Analysis or Plan of Operations ..............13

     Item 3

     Controls and Procedures..................................................16

PART II - OTHER INFORMATION

     Item 1. Legal Proceedings ...............................................17

     Item 2. Changes in Securities ...........................................17

     Item 3. Defaults Upon Senior Securities .................................17

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

     Item 5. Other Information ...............................................17

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

     Signatures ..............................................................18


CERTIFICATIONS ...............................................................19
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                   AS OF MARCH 31, 2004 AND DECEMBER 31, 2003
                       (In thousands, except share data)
<TABLE>
<CAPTION>
                                                                                   March 31,           December 31,
                                                                                      2004                 2003
                                                                              --------------------- --------------------
                                                                                  (Unaudited)            (Audited)
<S>                                                                           <C>                   <C>
ASSETS
Current assets
  Cash and cash equivalents                                                   $             135     $              75
  Accounts receivable, net of allowance for doubtful accounts of
   $2 in 2004 and 2003                                                                    1,406                 1,068
  Prepaid expenses and other current assets                                                 226                   215
  Assets from discontinued operations                                                        70                    47
                                                                              --------------------- --------------------
       Total current assets                                                               1,837                 1,405

Property and equipment, net                                                                 642                   771
Other assets                                                                                316                   335
                                                                              --------------------- --------------------
         TOTAL ASSETS                                                         $           2,795     $           2,511
                                                                              --------------------- --------------------
LIABILITIES AND SHAREHOLDERS' DEFICIENCY

Current liabilities
  Accounts payable and accrued expenses                                       $           1,818     $           2,248
  Due to bank                                                                               609                   585
  Deferred revenue                                                                           70                    96
  Current portion of long-term debt                                                         836                   880
  Liabilities from discontinued operations, current portion                                 294                   581
                                                                              --------------------- --------------------
       Total current liabilities                                                          3,627                 4,390

Long term debt, net of current portion                                                       49                    42
Dividends payable                                                                           510                   382
Liabilities from discontinued operations, long-term                                          71                    87
                                                                              --------------------- --------------------

       Total liabilities                                                                  4,257                 4,901
                                                                              --------------------- --------------------
Commitments and contingencies

Shareholders' deficiency
  Preferred stock, $0.0001 par value; 2,000,000 shares authorized;                            -                     -
     Series A Convertible Preferred, 134,680 issued and outstanding
     in 2004 and 2003; liquidation preference of $2,750,000 in 2004 and 2003
     Series B Redeemable Preferred, 974 issued and outstanding in 2004
     and 2003; liquidation preference of $974,075 in 2004 and 2003
     Series C Redeemable Preferred, 1,350 and 590 issued and outstanding
     in 2004 and 2003, respectively; liquidation preference of
     $1,350,000 and $590,000, in 2004 and 2003, respectively
  Common stock, $0.0001 par value; 150,000,000                                                -                     -
     shares authorized in 2004 and 2003;
     4,267,911 and 4,080,402 shares issued in 2004 and 2003,
     respectively; and 4,227,984 and 4,040,475 shares outstanding
     in 2004 and 2003, respectively
  Additional paid-in capital                                                            111,496               110,582
  Accumulated deficit                                                                  (112,630)             (112,644)
                                                                              --------------------- --------------------
                                                                                         (1,134)               (2,062)
  Common stock in treasury, at cost  - 24,371 shares                                       (328)                 (328)
                                                                              --------------------- --------------------
       Total shareholders' deficiency                                                    (1,462)               (2,390)
                                                                              --------------------- --------------------
          TOTAL LIABILITIES AND SHAREHODERS' DEFICIENCY                       $           2,795     $           2,511
                                                                              ===================== ====================

</TABLE>
See notes to condensed consolidated financial statements.

                                       3
<PAGE>

                      DIRECT INSITE CORP. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

               FOR THE THREE MONTHS ENDED MARCH 31, 2004 and 2003
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                                           Three Months Ended
                                                                                           ------------------
                                                                                                March 31,
                                                                                                ---------
                                                                                          2004             2003
                                                                                    ---------------- ----------------
   <S>                                                                              <C>              <C>

   Revenue from continuing operations                                               $       2,106    $       1,936
                                                                                    ---------------- ----------------

   Costs and expenses
     Operations, research and development                                                     918            1,046
     Sales and marketing                                                                      392              573
     General and administrative                                                               649              862
     Amortization and depreciation                                                            143              185
                                                                                    ---------------- ----------------
                                                                                            2,102            2,666
                                                                                    ---------------- ----------------
   Operating income (loss)                                                                      4            (730)

   Other expenses
     Interest expense, net                                                                    (65)            (67)
                                                                                    ---------------- ----------------
     Loss before provision for income taxes                                                   (61)           (797)

   Provision for income taxes                                                                  (1)              -
                                                                                    ---------------- ----------------
   Loss from continuing operations                                                            (62)           (797)

   Income (loss) from discontinued operations                                                 204             (273)
                                                                                    ---------------- ----------------
   Net income (loss)                                                                          142           (1,070)


   Preferred stock dividends                                                                 (128)             (63)
                                                                                    ---------------- ----------------
   Net income (loss) attributable to common shareholders                            $          14     $     (1,133)
                                                                                    ================ ================



   Basic and diluted income (loss) per share:
      Basic and diluted loss from continuing operations                             $       (0.05)    $      (0.22)
      Basic and diluted  income (loss) from discontinued operations                          0.05            (0.07)
                                                                                    ---------------- ----------------
      Basic and diluted income (loss) per share                                     $        0.00     $      (0.29)
                                                                                    ================ ================
   Basic weighted average common shares outstanding                                         4,085            3,935
                                                                                    ================ ================
</TABLE>

See notes to condensed consolidated financial statements.

                                       4
<PAGE>
                               DIRECT INSITE CORP
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

               FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003
                        (In thousands, except share data)
<TABLE>
<CAPTION>
                                                                                          For the three months ended
                                                                                          --------------------------
                                                                                                   March 31,
                                                                                                   ---------
                                                                                           2004               2003
                                                                                     ----------------- ------------------
<S>                                                                                       <C>               <C>
Cash flows from operating activities
 Loss from continuing operations                                                          $      (62)       $     (797)
 Adjustments to reconcile loss from continuing operations
  to net cash used in continuing operations:
   Amortization and depreciation:
     Property and equipment                                                                      143               184
     Other                                                                                         1                18
    Provision for doubtful accounts                                                               --                 2
    Common stock and options issued for services                                                   4                33

  Changes in operating assets and liabilities:
    Accounts receivable                                                                         (338)             (578)
    Prepaid expenses and other current assets                                                    (11)              (36)
    Other assets                                                                                  18                22
    Accounts payable and accrued expenses                                                       (280)              187
    Deferred revenue                                                                             (26)               --
                                                                                     ----------------- ------------------
       Net cash used in continuing operations                                                   (551)             (965)
                                                                                     ----------------- ------------------
  Income (loss) from discontinued operations                                                     204              (273)
  Change in:
    Assets and liabilities from discontinued operations                                         (326)               68
                                                                                     ----------------- ------------------
       Net cash used in discontinued operations                                                 (122)             (205)
                                                                                     ----------------- ------------------
       Net cash used in operating activities                                                    (673)           (1,170)
                                                                                     ----------------- ------------------
Cash flows from investing activities
 Expenditures for property and equipment                                                         (14)             (112)
                                                                                     ----------------- ------------------
       Net cash used in investing activities                                                     (14)             (112)
                                                                                     ----------------- ------------------
Cash flows from financing activities
 Proceeds from common stock  and subscription receivable                                          --                13
 Proceeds from sales of preferred stock                                                          760               500
 Costs related to the sale of preferred stock                                                     --                (8)
 Advances (repayments) from Bank, net                                                             24              (169)
 Proceeds from long-term debt, net of fees                                                        --               496
 Repayments of long-term debt - discontinued operations                                           --               (20)
 Repayments of long-term debt                                                                    (37)              (59)
                                                                                     ----------------- ------------------
       Net cash provided by financing activities                                                 747               753
                                                                                     ----------------- ------------------
Net increase (decrease) in cash and cash equivalents                                              60              (529)

Cash and cash equivalents - beginning of period                                                   75               620
                                                                                     ----------------- ------------------
Cash and cash equivalents - end of period                                                $       135       $        91
                                                                                      ================ ==================
Non-cash investing and financing activities:

Issuance of 182,509 common shares in 2004
for services and fees incurred in 2003  (Note 6)                                         $       150
                                                                                      ================
</TABLE>
See notes to condensed consolidated financial statements.

                                       5
<PAGE>



                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIALS STATEMENTS
                                  (Unaudited)

               FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003




1.   Interim Financial Information

     The  condensed  consolidated  balance  sheet as of March 31, 2004,  and the
     condensed  consolidated  statements  of  operations  and cash flows for the
     three  months  ended  March 31,  2004 and 2003,  have been  prepared by the
     Company and are not audited. These interim financial statements include all
     adjustments which management considers necessary for a fair presentation of
     the financial statements and consist of normal recurring items. The results
     of  operations  for the  quarterly  period  ended March 31,  2004,  are not
     necessarily  indicative  of  results  that may be  expected  for any  other
     interim period or for the full year.

     These unaudited condensed  consolidated financial statements should be read
     in conjunction with the consolidated financial statements and notes thereto
     for the year ended December 31, 2003 included in the Company's  Form-10KSB.
     The  accounting  policies  used  in  preparing  these  unaudited  condensed
     consolidated  financial  statements are consistent  with those described in
     the December 31, 2003 consolidated financial statements.

2.   The Company

     Direct Insite Corp. and subsidiaries (the "Company"),  primarily operate as
     an application  service provider ("ASP"),  which markets an integrated "fee
     for services"  offering  providing high volume  processing of transactional
     data for billing purposes, electronic bill presentation and payment as well
     as visual data analysis and reporting  tools delivered via the Internet for
     its  customers.   The  Company's  core  technology  is  dbExpress  TM,  the
     proprietary  and  patented  management  information  tool,  which  provides
     targeted access through the mining of large volumes of  transactional  data
     via  the  Internet.   During  2001,  the  Company  began  providing  custom
     engineering  services to its customers.  These product offerings enable the
     Company to provide  comprehensive  services from the raw transaction record
     through all of the  internal  workflow  management  processes  including an
     electronically  delivered  invoice  with  customer  analytics.  The Company
     operates  fully  redundant  data  centers  located  at its main  office  in
     Bohemia, N.Y. and in Newark, NJ.

     Management's liquidity plans are discussed in Note 9. Also, as described in
     Note 8, the Company has one major customer that accounted for approximately
     98% of the  Company's  revenue for the three  months  ended March 31, 2004.
     Loss of this customer would have a material adverse effect on the Company.

     Stock Options and Similar Equity Instruments
     --------------------------------------------
     As   permitted   under   SFAS  No.   148,   "Accounting   for   Stock-Based
     CompensationTransition  and  Disclosure",   which  amended  SFAS  No.  123,
     "Accounting  for  Stock-Based  Compensation",  the  Company  has elected to
     continue  to  follow  the  intrinsic  value  method in  accounting  for its
     stock-based  employee  compensation  arrangements  as defined by Accounting
     Principles  Board Opinion  ("APB") No. 25,  "Accounting for Stock Issued to
     Employees",  and related interpretations  including FASB Interpretation No.
     44, "Accounting for Certain Transactions Involving Stock Compensation",  an
     interpretation of APB No. 25. The following table illustrates the effect on
     net loss and net loss per share if the  Company  had applied the fair value
     recognition provisions of SFAS No. 123 to stock-based employee compensation
     (in thousands, except per share data):

                                       6
<PAGE>

                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIALS STATEMENTS
                                  (Unaudited)

               FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003
<TABLE>
<CAPTION>
                                                                                 Three Months Ended
                                                                                      March 31,
                                                                            --------------------------
                                                                                  2004          2003
                                                                            -------------- -------------
             <S>                                                                 <C>           <C>

             Net income (loss) attributable to common shareholders
             As reported                                                         $     14    $  (1,133)
             Less:  Stock-based employee compensation
              expense determined under fair value-based
              method for all awards                                                   (45)       ( 321)
                                                                            -------------- -------------
             Pro forma                                                           $    (31)   $  (1,454)
                                                                            ============== =============

            Basic and diluted net loss per share
             As reported                                                         $   0.00    $   (0.29)
                                                                            ============== =============
             Pro forma                                                          ($   0.01)   $   (0.37)
                                                                            ============== =============
</TABLE>

     The fair value of Company  common stock  options  granted to employees  are
     estimated on the date of grant using the Black-Scholes option-pricing model
     with the following  assumptions:  (1) expected  volatility of 68.1% in 2004
     and 70.9% in 2003, (2) risk-free  interest rates of 4.00% in 2004 and 4.25%
     in 2003 and (3) expected  lives of 5.75 years in 2004 and ranging from 1.90
     years to 4.5 years in 2003.

3.   Discontinued Operations

     Platinum Communications, Inc.
     -----------------------------

     In  2001,  the  Company  and  Platinum  Communications,  Inc.  ("Platinum")
     completed  a  merger  under  an  Agreement  and  Plan  of  Merger  ("Merger
     Agreement").  Under the  Merger  Agreement,  a newly  formed  wholly  owned
     subsidiary of the Company  acquired all of the outstanding  common stock of
     Platinum.

     As a result of the lack of  development  of the  Platinum  business  and to
     focus the Company's  resources on its core business,  in December 2003, the
     Company  decided to close the  operations  of  Platinum.  Accordingly,  the
     results of  operations  and the  assets and  liabilities  of  Platinum  are
     presented as discontinued operations for both the current and prior period.
     The income and losses are  reflected  as income  (loss)  from  discontinued
     operations  in  the  accompanying  condensed  consolidated   statements  of
     operations.  The following  table reflects the results of the  discontinued
     operations  of Platinum for the three months ended March 31, 2004 and 2003,
     respectively:

<TABLE>
<CAPTION>
                                                                             2004              2003
                                                                             ----              ----
                                                                                 (In thousands)
       <S>                                                                <C>                   <C>
       Revenue                                                            $          0          $   263
                                                                          ------------          -------

       Costs and Expenses
       ------------------
         Operations, research and development                                       --             (192)
         Sales and marketing                                                        --             (259)
         General and administrative                                                 --              (31)
         Amortization and depreciation                                              --              (47)
         Other income - net                                                        207               --
         Interest expense, net                                                      (3)              (7)
                                                                          ------------          -------
              Total other income and (expenses)                                    204             (536)
                                                                          ------------          -------
              Income (loss) from discontinued operations                  $        204          $  (273)
                                                                          ============          =======
</TABLE>
                                       7
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIALS STATEMENTS
                                  (Unaudited)

               FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003


     At March 31, 2004, assets of the discontinued  operation consist of cash of
     $8,000 and a security deposit of $62,000 for a leased office facility.  The
     Company is attempting to sub-lease  this facility.  The  liabilities of the
     discontinued  operation include the balance of loans totaling  $91,000,  an
     accrual for closing costs of $182,000  including the remaining office lease
     obligation net of anticipated  sub- lease income,  and accounts payable and
     accrued liabilities of $92,000.

4.   Accounts Receivable and Due To Bank

     The Company  has an Accounts  Receivable  Purchase  Agreement  with a Bank,
     whereby  the Company  from time to time may assign  some of their  accounts
     receivable to the Bank on a full  recourse  basis.  Upon  specific  invoice
     approval, an advance of 80% of the underlying receivable is provided to the
     Company.  The  remaining  balance  (20%),  less  an  administrative  fee of
     approximately  0.5% plus interest at the rate of 1 % per month,  is paid to
     the Company once the customer has paid.  The maximum amount of all assigned
     receivables  outstanding  at any time shall not exceed  $1.5  million.  The
     initial term of the  agreement was for one year,  and  continues  until due
     notice  of  termination  is  given  at any  time  by  either  party  to the
     agreement.

     At March 31,  2004,  the Company  had  assigned  approximately  $761,000 of
     accounts receivable to the Bank and received advances of $609,000.


5.   Long Term Debt

     Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
                                                                        March 31,          December 31,
                                                                           2004                2003
                                                                    ------------------- --------------------
       <S>                                                                 <C>               <C>
       Lines of credit (a)                                                 $   717           $     736
       Capitalized lease obligations (b)                                       168                 186
                                                                           -------           ---------
                                                                               885                 922
       Less current portion                                                   (836)               (880)
                                                                           -------           ---------
       Long-term debt, net of current portion                              $    49           $      42
                                                                           =======           =========
</TABLE>


(a)  In 2003, the Company obtained a discretionary Line of Credit ("LoC") in the
     amount  of  $500,000  from JP  Morgan  Private  Bank  ("JPMC").  The LoC is
     guaranteed  by Tall Oaks  Group,  LLC and is  repayable  on the  earlier of
     demand or June 30,  2005.  The LoC  permitted  two forms of draw down;  one
     based upon prime rate,  the second based upon LIBOR.  In 2003,  the Company
     elected to draw down $500,000  applying the terms and  conditions set forth
     for LIBOR. The interest rate is the JPMC reserve adjusted LIBOR plus 2.30%.
     As of March 31, 2004, the applied interest rate was 3.60%.

     Also in 2003, the Company  obtained,  and fully drew upon, a second line of
     credit from Sterling  National Bank ("Sterling") in the amount of $250,000.
     The line is guaranteed by the Company's chairman,  secured by the assets of
     the Company,  and carries an interest rate of 7%. Repayments are calculated
     monthly at 2.778% of the outstanding  balance,  plus finance  charges,  and
     continue  until the line is fully paid. At March 31, 2004,  the Company had
     an outstanding balance of approximately $217,000 under the line of credit.

                                       8
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIALS STATEMENTS
                                  (Unaudited)

               FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003



     The Company has  equipment  under  capital  lease  obligations  expiring at
     various times through 2006. The assets and liabilities under capital leases
     are  recorded  at the  lower of the  present  values of the  minimum  lease
     payments or the fair values of the assets.

6.   Shareholders' Deficiency

     Preferred Stock
     ---------------

     In December 2003, the Company's  Board of Directors  authorized the sale of
     up to 1,500 shares of its non-voting  Series C Redeemable  Preferred  Stock
     ("Preferred  Stock - C"). During December 2003, the Company sold 590 shares
     of the  Preferred  Stock - C in  consideration  for $590,000  less fees and
     expenses of $60,000 to Metropolitan  Venture  Partners II, L.P. and certain
     board  members  and an  executive  officer of the  Company.  The holders of
     Preferred Stock - C are entitled to dividends at the rate of 9-% per annum,
     payable quarterly in arrears beginning October 1, 2005. The Company has the
     option to redeem issued shares of Preferred Stock - C, in whole or in part,
     at any time,  with the  redemption  price equal to the purchase  price plus
     accrued  and  unpaid  dividends.  For  each  share of  Preferred  Stock - C
     purchased,  each  investor  received  a Warrant to  purchase  the number of
     shares of the  Company's  common stock equal to the Price Per Share divided
     by 123% of the closing price per share of the Company's common stock on the
     trading  day  immediately  prior to the date of  issuance  of the  Warrant.
     During the quarter ended March 31, 2004 the Company sold an additional  760
     shares for proceeds of $760,000,  and issued 807,325 warrants in connection
     with the issuance. As of March 31, 2004, approximately $24,000 in dividends
     are  accrued for the  Preferred  Stock - C holders.  As of March 31,  2004,
     1,438,476  warrants are  outstanding  in  connection  with the issuances of
     Preferred  Stock C. The warrants  expire in 2008 and 2009 and have exercise
     prices ranging from $0.93 to $1.11 per common share. The proceeds were used
     for working capital  purposes.  Subsequent to March 31, 2004, the Company's
     Board of Directors  authorized  the sale of an additional 500 shares of the
     Preferred Stock C.

     Common Stock and Option Issuances
     ---------------------------------

     During the  quarter  ended  March 31,  2004,  the  Company  issued  187,509
     unregistered  shares of common stock and options to purchase  50,000 shares
     of its common stock as follows:

     --   15,000  shares  of  common  stock  valued at  $12,000  pursuant  to an
          employment  agreement with the Company's  Chief  Executive  Officer as
          follows:  5,000  shares  valued at $4,000 for services for the quarter
          ended March 31, 2004,  and 10,000 shares valued at $8,000 for services
          rendered and costs recorded in the year 2003.

     --   82,509  shares valued at $75,000 to directors for service on the Board
          of Directors and  Committees of the Board for the year 2003, the costs
          were recorded in 2003;

     --   35,000  shares  valued at $26,000 to an employee for services in 2003,
          the costs were recorded in 2003;

     --   55,000 shares valued at $41,000 to consultants  for services  rendered
          in 2003, the costs were recorded in 2003.

     --   50,000  options to purchase  shares of common stock to a new member of
          the Board of  Directors.  The options vest ratably from  February 2004
          through February 2007 and have an exercise price of $0.77 per share.

                                       9
<PAGE>
                     DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIALS STATEMENTS
                                  (Unaudited)

               FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003


     Earnings Per Share
     ------------------

     The Company  displays  earnings per share in accordance  with SFAS No. 128,
     "Earnings Per Share".  SFAS No. 128 requires dual presentation of basic and
     diluted  earnings per share ("EPS").  Basic EPS includes no dilution and is
     computed by dividing net income (loss)  attributable to common shareholders
     by the weighted average number of common shares outstanding for the period.
     Diluted EPS includes the potential  dilution that could occur if securities
     or other  contracts to issue common stock were  exercised or converted into
     common stock. Outstanding stock options, warrants and other potential stock
     issuances  have not been  considered  in the  computation  of  diluted  EPS
     amounts since the effect of their inclusion would be antidilutive.

     Securities that could potentially dilute basic EPS in the future, that were
     not included in the  computation  of the diluted EPS because to do so would
     have been antidilutive for the periods presented,  consist of the following
     (in thousands):

<TABLE>
       <S>                                                                         <C>
       Options to purchase common stock                                            4,411
       Convertible preferred stock and warrants to acquire common stock            2,785
                                                                                   -----
             Total potential common shares as of March 31, 2004                    7,196
                                                                                   =====
</TABLE>


7.   Reclassifications

     Certain  reclassifications  have  been made to the  condensed  consolidated
     financial statements shown for the prior period in order to have it conform
     to the current period's classifications.


8.   Products and Services

     The Company and its subsidiaries  currently operate in one business segment
     and provide two separate  products:  ASP  services  and custom  engineering
     services.

<TABLE>
<CAPTION>
                                                      Three Months Ended March 31,
                                                         2004                 2003
                                                 ------------------- --------------------
                <S>                                      <C>                 <C>

                 ASP fees                                 $1,132              $1,126
                 Custom engineering fees                     974                 810
                                                          ------              ------
                      Total Revenue                       $2,106              $1,936
                                                          ======              ======
</TABLE>



     Major Customer
     --------------

     For the three  months  ended March 31,  2004 and 2003,  the Company had one
     major  customer that  accounted for 98.5% and 99.0% of the Company's  total
     revenue,  respectively.  Accounts receivable from this customer amounted to
     $1,402,000 at March 31, 2004.

                                       10
<PAGE>

                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIALS STATEMENTS
                                  (Unaudited)

               FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003


9.   Management's Liquidity Plans

     In order to meet the Company's cash needs and to achieve positive operating
     cash flows the Company has and will  continue to take  various  actions and
     steps that it believes will enable the Company to attain these goals. These
     actions include:

     --   In the second  half of 2003 the Company  embarked on a cost  reduction
          program,  including  among other things,  staff  reductions,  pay rate
          reductions, and elimination of non-essential expenses. As demonstrated
          by the improved  operating  performance in the first quarter 2004, the
          Company  believes these cost  reductions have begun to have a positive
          impact  on its  operating  performance.  The  Company  notes  that its
          intention is to reinstate the pay rate reductions as soon as practical
          and as soon as its operating results and cash flows permit.

     --   As  discussed  in Note 3, in  December  2003 the  Company  closed  the
          Dallas,  Texas based operations of Platinum.  Platinum had experienced
          losses and had  significant  cash needs.  In 2003,  Platinum  utilized
          $1,012,000  of cash.  During the  quarter  ended March 31,  2004,  the
          discontinued operations of Platinum used $122,000 of cash.

     --   The Company intends to raise additional capital through private equity
          offerings and borrowing. In this regard in December 2003, as discussed
          in Note 6, the Company  initiated the sale of Series C Preferred stock
          and as of  March  31,  2004  had net  proceeds  from  these  sales  of
          $1,290,000.

     --   The Company  continues to strive to increase  revenue through offering
          custom  engineering  services,  expanding  and  enhancing its existing
          product offerings,  and introducing new product offerings. In 2003 the
          Company's  revenue from continuing  operations  increased  $827,000 or
          12.5% over  revenue in 2002.  For the first  quarter  2004 our revenue
          from  continuing  operations  exceeded  revenue for the same period in
          2003 by more than 8%.

     --   The  Company  continues  to expand its  marketing  efforts in order to
          increase  its customer  base.  In this  regard,  in 2003,  the Company
          became a business partner with IBM and through this  relationship will
          work with IBM in an  effort to  achieve  sales to new  customers.  The
          Company will continue to pursue similar channel partner opportunities.

     The Company  believes that the plan and  initiatives  discussed  above will
     ultimately lead to positive cash flows and profitability. While the Company
     pursues  these goals the Company  also  believes  that the ability to raise
     additional   capital  through  equity  and  debt  placements  will  provide
     sufficient  cash to meet our  requirements at least through March 31, 2005.
     There can be no assurance,  however, that the Company will achieve its cash
     flow and  profitability  goals,  or that the Company  will be able to raise
     additional  capital  sufficient to meet operating expenses or implement the
     plan.  In such  event,  the  Company  may  have to  revise  the  plans  and
     significantly reduce operating expenses, which could have an adverse effect
     on revenue and operations in the short term.


10.  New Accounting Pronouncements

     In January  2003 and amended in December  2003,  the  Financial  Accounting
     Standards Board ("FASB") issued  Interpretation  No. 46,  "Consolidation of

                                       11
<PAGE>

                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIALS STATEMENTS
                                  (Unaudited)

               FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003

     Variable  Interest  Entities" ("FIN 46"), an  interpretation  of Accounting
     Research  Bulletin  No. 51. FIN 46 expands  upon and  strengthens  existing
     accounting  guidance that  addresses  when a company  should include in its
     financial  statements  the assets,  liabilities  and  activities of another
     entity. A variable interest entity is any legal structure used for business
     purposes that either does not have equity  investors  with voting rights or
     has equity investors that do not provide sufficient financial resources for
     the entity to support its activities.  FIN 46 requires a variable  interest
     entity to be  consolidated  by a company  if that  company  is subject to a
     majority of the risk of loss from the variable interest entity's activities
     or entitled to receive a majority of the entity's residual returns or both.
     The  consolidation  requirements  of FIN 46 apply  immediately  to variable
     interest  entities  created  after  January  31,  2003.  The  consolidation
     requirements  apply to older  entities in the first  fiscal year or interim
     period  beginning  after June 15, 2003.  However,  in December  2003,  FASB
     deferred  the  latest  date by which all  public  entities,  which meet the
     definition of small business  issuer under SEC  Regulation  S-B, must apply
     FIN 46 to the first interim or annual reporting period ended after December
     15, 2004. The effect of the adoption of this new  accounting  pronouncement
     is not expected to have a significant impact on the Company's  consolidated
     financial statements.

11.  Subsequent Events

     Between  September  2002 and June 2003, the Company sold a total of 134,680
     shares of Series A Convertible  Preferred Stock, ("Series A Preferred ") in
     consideration  for the gross amount of $2,750,000 to  Metropolitan  Venture
     Partners II, L.P. The holders of the Series A Preferred ("the Holders") are
     entitled to dividends, on a cumulative basis, at the rate of 9-% per annum,
     compounded  quarterly  and payable on February  1, 2005 and  September  25,
     2005.  The  payment of the first  dividend  was  originally  scheduled  for
     September 25, 2004,  however,  the Company and the Holders  agreed to defer
     this payment until February 1, 2005. As  consideration  for the deferral of
     the dividend  payment,  the Company  agreed to pay the Holders a premium of
     7.5% of the  dividend.  Subsequent  to March 31,  2004 the  Company and the
     Holders  further  agreed  to  grant  the  Company  the  right,  in its sole
     discretion,  to defer the payment of the  dividend  scheduled to be paid on
     February 1, 2005 until February 1, 2006. In the event the Company elects to
     pay the dividend on February 1, 2006 the Holders would receive a premium of
     $157,000.  In the event the Company  does not elect to defer the payment of
     the  dividend  the Company  agreed to pay the Holders a premium of $35,000.
     Also,  the Company and the Holders  further agreed to grant the Company the
     right,  in its  sole  discretion,  to defer  the  payment  of the  dividend
     scheduled to be paid on September  25, 2005 until  February 1, 2006. In the
     event the  Company  elects to pay this  dividend  on  February  1, 2006 the
     Holders would  receive a premium of $17,000.  In the event the Company does
     not elect to defer the payment of the  dividend  the Company  agreed to pay
     the Holders a premium of $8,000.

     In April 2004,  the Company  modified  its  employment  agreement  with the
     Company's Chairman and Chief Executive Officer.  The terms of the agreement
     remain substantially unchanged except for the compensation being reduced by
     $10,000 per month for the period January 2004 through June 2004.

     Also, in April 2004, the Company modified its employment agreement with the
     Company's  President.  The  terms  of the  agreement  remain  substantially
     unchanged except for the compensation being reduced by $4,000 per month for
     the period January 2004 through August 2004.

     In addition,  in April 2004, the Company modified the consulting  agreement
     dated  December 1, 1999 with  Mountain  Meadow Farm, an affiliate of S.J. &
     Associates, Inc., to provide for a reduction in compensation of $10,000 per
     month for the period January through June 2004.


                                       12
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES


Item 2  Managements Discussion and Analysis or Plan of Operations

Forward looking statements

All statements  other than  statements of historical  fact included in this Form
10-QSB including, without limitation, statements under, "Management's Discussion
and Analysis of Financial  Condition  and Results of  Operations"  regarding the
Company's financial position,  business strategy and the plans and objectives of
management for future operations, are forward-looking  statements.  When used in
this Form 10-QSB, words such as "anticipate,"  "believe,"  "estimate," "expect,"
"intend"  and  similar  expressions,  as  they  relate  to  the  Company  or its
management, identify forward-looking statements. Such forward-looking statements
are based on the  beliefs of  management,  as well as  assumptions  made by, and
information  currently  available to, the Company's  management.  Actual results
could  differ  materially  from  those   contemplated  by  the   forward-looking
statements  as a  result  of  certain  factors  including  but not  limited  to,
fluctuations in future operating results, technological changes or difficulties,
management  of future  growth,  the risk of errors or failures in the  Company's
software products,  dependence on proprietary  technology,  competitive factors,
risks associated with potential  acquisitions,  the ability to recruit personnel
and the dependence on key personnel.  Such statements  reflect the current views
of  management  with respect to future events and are subject to these and other
risks,  uncertainties  and assumptions  relating to the  operations,  results of
operations, growth strategy and liquidity of the Company. All subsequent written
and oral  forward-  looking  statements  attributable  to the Company or persons
acting  on its  behalf  are  expressly  qualified  in  their  entirety  by  this
paragraph.

Overview

Direct Insite Corp. and its  subsidiaries  (hereinafter  referred to at times as
"Direct Insite" or the "Company"), was organized under the name Unique Ventures,
Inc. as a public company,  under the laws of the State of Delaware on August 27,
1987.  In August,  2000,  we changed our name to Direct  Insite Corp.  which the
Board of Directors believed was more in line with our new direction.

We primarily  operate as an application  service provider ("ASP") and, market an
integrated  "fee for  services"  offering  providing  high volume  processing of
transactional  data for  billing  purposes,  electronic  bill  presentation  and
payment  ("EBP&P") as well as visual data analysis and reporting tools delivered
via the Internet for our  customers.  Our core  technology  is dbExpress TM, the
proprietary and patented  management  information  tool, which provides targeted
access  through  the  mining  of large  volumes  of  transactional  data via the
Internet.  Further, in 2001, we began to provide custom engineering services for
our customers.  These services have increasingly  become a significant source of
revenue  for us and we believe  will  continue  to  increase.  Additionally,  we
believe that this type of service leads to recurring  revenue streams similar to
our ASP products.

This suite of services enables us to provide a comprehensive  Internet delivered
service from the raw  transaction  record  through all of the internal  workflow
management processes including an electronically delivered invoice with customer
analytics.  This comprehensive service offering provides back office operations,
reduces our  customers'  costs and  provides for  improved  customer  service by
providing the end customer  with easy access to all of the detailed  information
about their bill. We operate fully  redundant  data centers  located at our main
office in Bohemia,  N.Y. and in Newark,  NJ. Our facility in New Jersey is space
leased at an International Business Machines ("IBM"), e-business Hosting Center.
This  co-location / redundancy  feature  enables us to offer virtually down time
free service.

Currently,  IBM, our largest  customer,  representing  approximately  98% of our
revenue  for the three  months  ended  March 31,  2004 and  2003,  utilizes  our
products  and services to allow their large  enterprise  customers to mine their
respective high volume  telecommunications  data to determine cost allocation by
usage,  provide  for  network  planning,  budgeting  and the  identification  of
significant trends in calling patterns. In addition, we added electronic invoice
presentment,  payment and analysis  capabilities  to our  services  offering all
based on our dbExpress TM platform.

                                       13
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

As  disclosed in Note 6 to the  accompanying  Condensed  Consolidated  Financial
Statements,  during the three months ended March 31, 2004, we received  proceeds
from the sale of Redeemable Preferred Series C Stock totaling $760,000.

Results of operations

For the  three  months  ended  March 31,  2004 we had net loss  from  continuing
operations  of $62,000  compared  to a net loss from  continuing  operations  of
$797,000  in the same  period in 2003.  This  significant  improvement  of a 92%
reduction in the loss is the result of continued  revenue  growth  combined with
significant  efforts to streamline our operations and reduce our operating costs
as  discussed  below.  Net income for the three  months ended March 31, 2004 was
$142,000 compared to a net loss of $1,070,000 in 2003. This includes income from
discontinued  operations  of $204,000 in the three  months ended March 31, 2004.
This income is principally the result of recognizing  income related to deferred
revenue of $180,000 included in other income of the discontinued operation.  The
results  for the  first  quarter  2004  may not be  indicative  of  results  for
subsequent quarters or for the year.

For the three months ended March 31, 2004  revenue  from  continuing  operations
increased  $170,000 or 8.8% to $2,106,000  compared to revenue of $1,936,000 for
the same period in 2003. This increase is primarily  attributable to an increase
in custom engineering fees, while revenue from ASP services increased  slightly.
The increase in engineering fees is principally due to the further international
deployment of our ASP services and is expected to result in further increases in
revenue from our ongoing ASP services.

In 2003, the Company embarked on a major cost reduction program, including among
other  things,  staff  reductions,   pay  rate  reductions  and  elimination  of
non-essential  expenses.  These  efforts are  reflected  in the cost  reductions
discussed  below.  Certain  of  these  reductions,  particularly  the  pay  rate
reductions,  are temporary in nature, as it is the Company's intent to reinstate
the pay rate reductions at such time as the Company's operating results and cash
flow permit.

Costs of operations,  research and development  decreased by $128,000 (12.2%) to
$918,000  for the three  months  ended March 31,  2004  compared to the costs of
$1,046,000  for the three  months  ended March 31,  2003.  These  costs  consist
principally   of  salaries  and  related   expenses  for  software   developers,
programmers,  custom  engineers,  network  services,  and  quality  control  and
assurance.  Also included are network costs, costs of the production co-location
facility and other expenses  directly related to our custom  engineering and ASP
production  services.  The decrease in costs is principally  due to decreases in
personnel  wages and  benefit  costs,  a decrease in costs for  software,  and a
decrease in  professional  fees,  offset by an increase in rental  costs for our
co-location   production   facility.   All  other  operating  expenses  remained
relatively flat.

Sales and  marketing  costs were  $392,000  for the three months ended March 31,
2004,  a decrease of $181,000 or 31.6%  compared to costs for the same period in
2003.  Salaries  and  related  costs  decreased  by $69,000  primarily  due to a
decrease in personnel and salary reductions.  Also, consulting fees were reduced
by $81,000, while all other costs were reduced by $31,000.

General and administrative costs decreased $213,000 or 24.7% to $649,000 for the
three  months  ended March 31, 2004  compared to costs of $862,000  for the same
period in 2003. Salaries and related costs decreased $174,000  principally due a
decrease in personnel and salary  reductions,  while other costs  decreased in a
net amount of $39,000.

Depreciation and amortization expense decreased by $42,000 (22.7%) primarily due
to fully amortizing  certain  software costs and other computer  equipment and a
lower rate of investment in new software and equipment.

                                       14
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

Financial Condition and Liquidity

For the  three  months  ended  March 31,  2004,  we had net  income of  $142,000
compared  to a net loss of  $1,070,000  for the  same  period  in 2003.  We used
$551,000 in cash for  continuing  operations  in the first three  months of 2004
compared to $965,000 for the same period in 2003, an  improvement of $414,000 or
42.9%.  Cash used in  discontinued  operations was $122,000 for the three months
ended March 31, 2004. We funded the shortfall in cash from operations  primarily
through the sale of redeemable preferred stock totaling $760,000.

Cash used in operations,  including cash used for discontinued  operations,  for
the three months ended March 31, 2004 was $673,000, consisting of the net income
of  $142,000,   non-cash  expenses  of  $148,000,   including  depreciation  and
amortization of $143,000.  This is offset by an increase in accounts  receivable
and other current assets of $331,000, a decrease in accounts payable and accrued
expenses   of  $280,000   and  a  decrease  in  deferred   revenue  of  $26,000.
Additionally,  cash used in operations was reduced by the decrease in net assets
attributable to discontinued operations of $326,000.

Cash used in investing  activities  was $14,000 for the three months ended March
31,  2004,  compared to $112,000 for same period in 2003.  This was  principally
expenditures for property and equipment.

Cash from financing activities totaled $747,000 for the three months ended March
31, 2004,  compared to $753,000  for the three  months ended March 31, 2003.  As
noted above,  we received net proceeds from the sale of Series C Preferred stock
of  $760,000.  We also  repaid  $37,000  of  long-term  debt and  capital  lease
obligations in the first quarter of 2004.  Advances from a bank for  receivables
financing increased by $24,000 in 2004.

Management's Liquidity and Financing Plans

In order to meet our cash needs and to achieve positive  operating cash flows we
have and will  continue to take  various  actions and steps that we believe will
enable us to attain these goals.

     --   In the  second  half of 2003 we  embarked  on a major  cost  reduction
          program,  including  among other things,  staff  reductions,  pay rate
          reductions, and elimination of non-essential expenses. We believe that
          this will reduce our  operating  costs in excess of $1.6 million on an
          annual basis.  We believe these cost  reductions  have begun to have a
          positive impact on our operating  performance.  We note that it is our
          intent to reinstate  the pay rate  reductions as soon as practical and
          our operating results and cash flows permit

     --   In December 2003 we closed the operations of our Platinum  subsidiary.
          Platinum had  experienced  losses and had  significant  cash needs. We
          estimate that this action will reduce our operating costs in excess of
          $1,200,000  annually.  During the quarter  ended March 31,  2004,  the
          discontinued operations of Platinum used $122,000 of cash.

     --   We intend to raise additional capital through private equity offerings
          and borrowing. In this regard in December 2003, as discussed above, we
          initiated  the sale of  Series C  Preferred  stock and as of March 31,
          2004 had net proceeds from these sales of $1,290,000.  There can be no
          assurance,  however,  that we will be able to raise additional capital
          through equity sales and/or borrowing.

     --   We continue to strive to increase our revenue through  offering custom
          engineering  services,  expanding and  enhancing our existing  product
          offerings such as IOL, and introducing new product offerings.  In 2003
          our revenues from continuing  operations  increased  $827,000 or 12.5%
          over  revenues in 2002.  For the first  quarter  2004 our revenue from
          continuing  operations exceeded revenue for the same period in 2003 by
          more than 8%.

                                       15
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

     --   We continue to expand our  marketing  efforts in order to increase our
          customer base. In this regard,  in 2003, we became a business  partner
          with IBM and through this  relationship  will work with IBM to achieve
          sales to new  customers.  We will continue to pursue  similar  channel
          partner opportunities.

We believe that our plans and new  initiatives  as discussed  above will lead to
positive  cash  flows and  profitability.  While we pursue  these  goals we also
believe that our ability to raise  additional  capital  through  equity and debt
placements  will  provide  sufficient  cash to meet  our  requirements  at least
through March 31, 2005. There can be no assurance, however, that we will achieve
our  cash  flow  and  profitability  goals,  or that  we  will be able to  raise
additional  capital  sufficient to meet our operating  expenses or implement our
plan. In such event,  we may have to revise our plans and  significantly  reduce
our  operating  expenses,  which  could  have an adverse  effect on revenue  and
operations in the short term.

Item 3 - Controls and Procedures

Our chief  executive  officer and chief  financial  officer have  supervised and
participated in an evaluation of the  effectiveness  of our disclosure  controls
and  procedures  as of a date  within 90 days of the date of this  report,  and,
based on their  evaluations,  they  believe  that our  disclosure  controls  and
procedures (as defined in Rule 13a-14(c) of the Securities Exchange Act of 1934,
as amended) are designed to ensure that information  required to be disclosed by
us in the reports  that we file or submit under the  Securities  Exchange Act of
1934 is recorded,  processed,  summarized and reported,  within the time periods
specified in the  Commission's  rules and forms.  As a result of the evaluation,
there were no significant  changes in our internal  controls or in other factors
that could  significantly  affect these controls subsequent to the date of their
evaluation.

                                       16
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

                           PART II OTHER INFORMATION


Item 1. Legal Proceedings
        None

Item 2. Changes in Securities
        None

Item 3. Defaults Upon Senior Securities
        None

Item 4. Submission of Matters to a Vote of Security Holders
        None

Item 5. Other Information
        None

Item 6. Exhibits and Reports on Form 8-K.
  (a)   Exhibits

     31   Certifications  pursuant  to Rules  13a-14(a)  as adopted  pursuant to
          Section 302 of the Sarbanes-Oxley Act of 2002.
     32   Certifications  pursuant to 18 U.S.C. Section 1350 as adopted pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002.

  (b)   Reports on Form 8-K

        None

                                       17
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

                                   SIGNATURES




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.




DIRECT INSITE CORP.


/s/ James A. Cannavino
-------------------------------------------
James A. Cannavino, Chief Executive Officer                    May 12, 2004


/s/ Michael J. Beecher
-------------------------------------------
Michael J. Beecher, Chief Financial Officer                    May 12, 2004






                                       18