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 June 30, 2003

                                       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 offices)             (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 August 19, 2003
was: 4,027,672.

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 June 30, 2003 (Unaudited)
   and December 31, 2002                                                       3

  Unaudited Condensed Consolidated Statements of Operations and
   Comprehensive Loss For the Three and Six Months Ended June 30, 2003
   and 2002                                                                    4

  Unaudited Condensed Consolidated Statements of Cash Flows For the
   Six Months Ended June 30, 2003 and 2002                                     5

  Notes to Unaudited Condensed Consolidated Financial Statements          6 - 12
Item 2
  Management's Discussion and Analysis or Plan of Operations             13 - 16
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 - 22
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                   AS OF JUNE 30, 2003 AND DECEMBER 31, 2002
                       (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                            June 30,   December 31,
                                                                              2003         2002
                                                                          -----------  ------------
                                                                          (Unaudited)    (Audited)
<S>                                                                       <C>          <C>
ASSETS
Current assets
  Cash and cash equivalents                                               $       46   $        700
  Accounts receivable, net of allowance for doubtful accounts of
   $103 and $42 in 2003 and 2002, respectively                                  1,378         1,350
  Stock subscription receivable                                                     -           500
  Prepaid expenses and other current assets                                       175           239
                                                                          -----------  ------------
       Total current assets                                                     1,599         2,789

Software costs, net                                                               377           444
Property and equipment, net                                                       993         1,166
Other assets                                                                      456           492
                                                                          -----------  ------------
                                                                          $     3,425  $      4,891
                                                                          ===========  ============
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
  Accounts payable and accrued expenses                                   $     1,742  $      1,663
  Due to bank                                                                     691           690
  Deferred revenue                                                                249           252
  Current portion of long-term debt                                               269           396
   Restructuring costs payable, net of long-term portion                           50             6
                                                                          -----------  ------------
       Total current liabilities                                                3,001         3,007

Long term debt, net of current portion                                            110           556
Dividends payable                                                                 185            56
Restructuring costs payable, long-term                                              -            60
                                                                          -----------  ------------
       Total liabilities                                                        3,296         3,679
                                                                          -----------  ------------

Commitments and contingencies

Shareholders' equity
  Preferred stock, $0.0001 par value; 2,000,000 shares authorized;
     Series A Convertible Preferred, 134,680 and 116,823 issued and
     outstanding in 2003 and 2002, respectively; liquidation preference
     of $2,750,000 and $2,500,000 in 2003 and 2002, respectively;                   -             -
     Series B Redeemable Preferred, 974 issued and outstanding in 2003;
     liquidation preference of $974,075 in 2003                                     -             -
  Common stock, $0.0001 par value; 50,000,000 and 150,000,000
     shares authorized in 2003 and 2002 respectively;
     4,062,599 and 3,966,055 shares issued in 2003 and 2002,
     respectively; and 4,022,672 and 3,926,128 shares outstanding
     in 2003 and 2002, respectively                                                 -             -
  Additional paid-in capital                                                  110,055       108,708
  Accumulated deficit                                                        (109,533)     (107,081)
  Subscriptions receivable                                                        (40)          (62)
  Accumulated other comprehensive loss                                            (25)          (25)
                                                                          -----------  ------------
                                                                                  457         1,540

  Common stock in treasury, at cost  - 24,371 shares                             (328)         (328)
                                                                          -----------  ------------
       Total shareholders' equity                                                 129         1,212
                                                                          -----------  ------------
                                                                          $     3,425  $      4,891
                                                                          ===========  ============
</TABLE>
See notes to condensed consolidated financial statements.                      3
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED STATEMENTS OF
                       OPERATIONS AND COMPREHENSIVE LOSS
                                   (Unaudited)

           FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2003 and 2002
                      (in thousands, except per share data)
<TABLE>
<CAPTION>
                                                    Three Months Ended              Six Months Ended
                                                         June 30,                       June 30,
                                                    2003           2002            2003           2002
                                               --------------- -------------- --------------- --------------
   <S>                                            <C>            <C>              <C>           <C>
   Revenue                                        $ 2,070        $ 1,982          $ 4,269       $ 3,496
                                                  -------        -------          -------       -------
   Costs and expenses
     Operations, research and development           1,328          1,088            2,565         2,146
     Sales and marketing                              746            615            1,579         1,150
     General and administrative                       911            996            1,804         1,941
     Amortization and depreciation                    210            233              441           487
                                                  -------        -------          -------       -------
                                                    3,195          2,932            6,389         5,724
                                                  -------        -------          -------       -------

Operating loss                                     (1,125)          (950)          (2,120)       (2,228)

   Other expenses
     Loss on sales of NetWolves common
        stock                                           -              -                -          (250)
     Other-than-temporary decline in
        Investment in NetWolves                         -           (457)               -          (457)
     Equity in Loss of Voyant and Valuation
       Adjustment                                       -           (259)               -          (322)
     Interest expense, net                            (87)           (51)            (162)          (88)
     Other expense                                    (41)             -              (41)            -
                                                  -------        -------          -------       -------
   Net loss                                        (1,253)        (1,717)          (2,323)       (3,345)

   Preferred stock dividends                          (66)             -             (129)            -
                                                  -------        -------          -------       -------
   Net loss attributable to
        common shareholders                       $(1,319)       $(1,717)         $(2,452)      $(3,345)
                                                  =======        =======          =======       =======
   Other comprehensive income
      Reclassification adjustment and
      unrealized gain on marketable
      securities
                                                        -            303                -             -
                                                  -------        -------          -------       -------
   Comprehensive loss                             $ 1,319)       $(1,414)         $(2,452)      $(3,345)
                                                  =======        =======          =======       =======
   Basic and diluted net loss attributable
     to common shareholders  per share             $(0.33)       $ (0.46)         $ (0.62)      $ (0.99)
                                                  =======        =======          =======       =======
   Basic and diluted  weighted average common
   shares outstanding                               3,976          3,701            3,953         3,395
                                                  =======        =======          =======       =======
</TABLE>
See notes to condensed consolidated financial statements.                      4
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                       For the six months ended
                                                                                 June 30,
                                                                   -----------------------------------

                                                                         2003               2002
                                                                   ----------------- -----------------
                                                                            (In thousands)
<S>                                                                      <C>             <C>
Cash flows from operating activities
 Net loss                                                                $(2,323)         $(3,345)
  Adjustments to reconcile net loss to net cash used in
   operating activities
    Depreciation and amortization
       Property and equipment                                                374              427
       Software costs                                                         67               58
       Other                                                                   1                -
    Provision for doubtful accounts                                           64               35
    Loss on sales of NetWolves common stock                                    -              250
    Other-than-temporary decline in Investment in NetWolves                    -              457
    Equity in loss of Voyant  and Valuation Adjustment                         -              322
    Common stock and options issued for services                             130              464
  Changes in operating assets and liabilities
    Accounts receivable                                                      (92)              (8)
    Prepaid expenses and other current assets                                 64               239
    Other assets                                                              35                10
    Accounts payable and accrued expenses                                     87              (226)
    Restructuring costs payable                                              (16)             (281)
    Deferred revenue                                                          (3)                -
                                                                         -------          --------
             Net cash used in operating activities                        (1,612)           (1,598)
                                                                         -------          --------
Cash flows used in investing activities
  Proceeds from the sale of NetWolves common stock                             -               236
  Advances to Voyant                                                           -              (194)
  Capital expenditures                                                      (163)             (188)
                                                                         -------          --------
             Net cash used in investing activities                          (163)             (146)
                                                                         -------          --------
Cash flows from financing activities
      Proceeds from Bank advances, net                                         1               256
      Proceeds from the sale of preferred stock, net of fees                 737                 -
      Proceeds from common stock and subscription receivable                  20               560
      Proceeds from long term debt, net of fees                              496               250
      Repayments of long-term debt                                          (133)              (86)
                                                                         -------          --------
             Net cash provided by financing activities                     1,121               980
                                                                         -------          --------
Net decrease in cash and cash equivalents                                  (654)              (764)

Cash and cash equivalents, beginning of period                               700             1,359
                                                                         -------          --------
Cash and cash equivalents, end of period                                 $    46          $    595
                                                                         =======          ========

Non-cash investing and financing activities:

Conversion of long-term debt into 974 shares of
     Series B Redeemable Preferred Stock                                 $   974          $      -
                                                                         =======          ========
</TABLE>
See notes to condensed consolidated financial statements.       5
<PAGE>

                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

                FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002


1.   Interim Financial Information

     The  condensed  consolidated  balance  sheet as of June 30,  2003,  and the
     condensed consolidated  statements of operations and comprehensive loss and
     cash  flows  for the  quarterly  periods  ended  June 30,  2003,  have been
     prepared by the Company without audit.  These interim financial  statements
     include all  adjustments,  consisting  only of normal  recurring  accruals,
     which  management  considers  necessary  for a  fair  presentation  of  the
     financial  statements.  The results of operations for the quarterly periods
     ended June 30, 2003, are not necessarily  indicative of results that may be
     expected for any other interim periods 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, 2002.  The  accounting  policies  used in
     preparing these unaudited condensed  consolidated  financial statements are
     consistent  with those  described  in the  December  31, 2002  consolidated
     financial statements.


2.   The Company

     Direct Insite Corp. and subsidiaries (the "Company")  primarily operates as
     an application  service provider ("ASP") and markets an integrated "fee for
     services"  offering  providing high volume processing of transactional data
     for billing purposes, electronic invoice presentation and payment ("EIP&P")
     as well as visual data  analysis  and  reporting  tools  delivered  via the
     Internet for our customers.  The Company's core technology is d.b.Express?,
     the proprietary and patented  management  information  tool, which provides
     targeted access through the mining of large volumes of  transactional  data
     via the Internet.  In 2001 the Company  acquired  Platinum  Communications,
     Inc.  ("Platinum"),  a Dallas,  Texas  based  company,  which  markets  its
     integrated  proprietary back office software solutions,  Account Management
     Systems   ("AMS"   or   sometimes   referred   to   as   "TAMS")   to   the
     telecommunications  industry either as a license or as an ASP. Further,  as
     an added  source of revenue,  the Company  began in 2001 to provide  custom
     engineering services to its customers.

     This newly  assembled  suite of  services  enables the Company 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,  cuts costs
     and provides for improved  customer  service by providing  the end customer
     with easy access to all of the detailed  information  about their bill. The
     Company operates fully redundant data centers located at its main office in
     Bohemia,  N.Y. and in Newark,  N.J. The facility in New Jersey is leased at
     an International Business Machines ("IBM"), e-business Hosting Center.

     Management's  liquidity plans are discussed in Note 8. As described in Note
     7, the Company has one major  customer that  accounted for more than 87% of
     the Company's revenue for the six-month period ended June 30, 2003. Loss of
     this customer would have a material adverse effect on the Company.

     New Accounting Pronouncements
     -----------------------------
     Statement of Financial  Accounting  Standards ("SFAS") No.146,  "Accounting
     for Costs Associated with Exit or Disposal  Activities",  provides guidance
     on the  recognition and measurement of liabilities for cost associated with
     exit or disposal activities. The provisions of this statement are effective
     for exit or disposal activities that are initiated after December 31, 2002.
     The adoption of SFAS No.146 did not have a material effect on the Company's
     consolidated financial statements.

                                                                               6
<PAGE>
                     DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

                FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002

     In January 2003, the Financial  Accounting  Standards Board ("FASB") issued
     Interpretation  No. 46 ("FIN  46"),  "Consolidation  of  Variable  Interest
     Entities,  an  Interpretation  of ARB  No.  51."  FIN 46  requires  certain
     variable interest entities to be consolidated by the primary beneficiary of
     the  entity  if  the  equity  investors  in the  entity  do  not  have  the
     characteristics  of  a  controlling  financial  interest  or  do  not  have
     sufficient equity at risk for the entity to finance its activities  without
     additional  financial  support from other parties.  FIN 46 is effective for
     all new variable  interest  entities  created or acquired after January 31,
     2003. For variable  interest entities created or acquired prior to February
     1, 2003,  the provisions of FIN 46 must be applied for the first interim or
     annual period  beginning  after June 15, 2003.  The Company does not expect
     the  adoption  of FIN 46 will have a  material  effect on its  consolidated
     financial statements.

     In May  2003,  the  FASB  issued  SFAS No.  150,  "Accounting  for  Certain
     Financial Instruments with Characteristics of both Liabilities and Equity,"
     which  establishes  standards  for  how an  entity  that  issues  financial
     instruments  (or may be required under the terms of a financial  instrument
     to issue its equity  shares)  classifies  and measures in its  statement of
     financial  position certain financial  instruments with  characteristics of
     both  liabilities  and equity.  The Company does not expect the adoption of
     SFAS No.  150 will have a  material  effect on its  consolidated  financial
     statements.

     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. No stock-based employee  compensation cost is
     reflected in  operations,  as all options  granted  have an exercise  price
     equal to or above the market  value of the  underlying  common stock on the
     date of grant.  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):
<TABLE>
<CAPTION>
                                                                  Three Months Ended          Six Months Ended
                                                                       June 30,                   June 30,
                                                              --------------------------- -------------------------

                                                                   2003         2002           2003         2002
                                                               ------------ -------------- ------------- -----------
     <S>                                                         <C>          <C>            <C>          <C>
     Net loss attributable to common shareholders
      As reported                                                $(1,319)     $(1,717)       $(2,452)     $(3,345)
      Less:  Stock-based employee compensation
       expense determined under fair value-based
       method for all awards                                        (270)        ( 31)          (591)        (435)
                                                                 -------      -------        -------      -------
      Pro forma                                                  $(1,589)     $(1,748)       $(3,043)     $(3,780)
                                                                 =======      =======        =======      =======
     Basic and diluted net loss per share
      As reported                                                 $(0.33)      $(0.46)        $(0.62)      $(0.99)
                                                                  ======       ======         ======       ======
      Pro forma                                                   $(0.40)      $(0.47)        $(0.77)      $(1.11)
                                                                  ======       ======         ======       ======
</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 ranging from 63.4%
     to 71.5% in 2003 and from 67.7% to 68.9% in 2002,  (2)  risk-free  interest
     rates  of 4.25% in 2003  and  4.80% in 2002 and (3)  expected  lives of 2.0
     years to 5.2 years in 2003 and 3.0 years to 5.0 years in 2002.

                                                                               7
<PAGE>
                     DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

                FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002

3.   Accounts Receivable and Due To Bank

     In 2001, the Company entered into 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 primary  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 June 30,  2003,  the  Company  had  assigned  approximately  $848,000 of
     accounts  receivable to the Bank and received advances of $691,000 from the
     Bank.


4.   Long Term Debt

     Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
                                                             June 30,          December 31,
                                                               2003                2002
                                                        ------------------- --------------------
       <S>                                                  <C>                   <C>
       Lines of credit (a)                                  $   113               $  133
       Capitalized lease obligations (b)                        266                  319
       Term Loan  - Chief Executive Officer (c)                   -                  250
       Installment Note - Markus & Associates (d)                 -                  250
       Term Loan - Tall Oaks (e)                                  -                  -0-
                                                            -------               ------
                                                                379                  952
       Less current portion                                    (269)                (396)
                                                            -------               ------
       Long-term debt, net of current portion                  $110               $  556
                                                            =======               ======
</TABLE>

(a)  The Company has three lines of credit with various  expiration  dates.  One
     line has an  expiration  date of July 30, 2006,  bears an interest  rate of
     10%, is  collateralized  by substantially all the assets of Platinum and is
     personally guaranteed by one of the former officers of Platinum. The second
     line  is  payable  on  demand,  bears  an  interest  rate of 10% and has no
     available  balance.  The third line contains no expiration  date,  bears an
     interest rate of 16.25% and has no available balance.

(b)  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.  The assets are  included  in
     property and equipment.

(c)  In January 2002, the Company's Chairman and current Chief Executive Officer
     loaned  the  Company  $250,000.  The loan had a term of  three  years  with
     interest at 5%, payable  quarterly in arrears.  In June 2003, the loan plus
     accrued interest,  aggregating  $266,000,  was converted into 266 shares of
     the  Company's  Series B Redeemable  Preferred  Stock,  par value $0.01 per
     share ("Series B Preferred"). See Note 5.

(d)  In December 2002, the Company  executed a $250,000 note payable to Markus &
     Associates (an affiliate of S.J. & Associates, Inc.). This note was payable

                                                                               8
<PAGE>
                     DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

                FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002


     in 28 equal monthly  installments  of principal plus interest at 9 1/2%. In
     June 2003,  the loan balance of $208,000 was  converted  into 208 shares of
     the Company's Series B Preferred stock. See Note 5.

(e)  In January 2003,  Tall Oaks Group,  LLC ("Tall Oaks")  provided the Company
     with an  unsecured  $500,000  loan.  The loan was to mature March 31, 2005,
     bore interest at 9 1/2%,  with the entire unpaid  principal  amount and all
     accrued  interest  payable on the maturity date. In June 2003, the loan was
     converted into 500 shares of the Company's  Series B Preferred  stock.  See
     Note 5. An employee of the Company is the  Managing  Partner and  principal
     owner of Tall Oaks.


5.   Shareholders' equity

     Preferred Stock
     ---------------
     In  September  2002,  the  Company  sold  93,458  shares  of its  Series  A
     Convertible  Preferred  Stock,  ("Preferred  Stock") in  consideration  for
     $2,000,000  less fees and  expenses  of $178,000  to  Metropolitan  Venture
     Partners II, L.P.  ("Metropolitan"),  a private equity  investment firm. In
     December  2002,  the Company sold 23,365 shares of its  Preferred  Stock in
     consideration   for  $500,000  less  fees  and  expenses  of  $61,000,   to
     Metropolitan.  The proceeds from this  transaction were received January 3,
     2003,  and, as of December 31, 2002,  the  principal  sum was  reflected as
     stock subscription receivable. In June 2003, the Company sold 17,857 shares
     of its Series A Convertible  Preferred Stock in consideration  for $250,000
     less fees and expenses of $5,000 to Metropolitan.  The holders of Preferred
     Stock ("the holders") are entitled to dividends,  on a cumulative basis, at
     the rate of 9-% per annum,  compounded  quarterly  and payable on September
     25, 2004 and  September 25, 2005.  Dividends are payable,  at the option of
     the  holders,  in cash or in the  Company's  common  stock.  Each  share of
     Preferred  Stock is  convertible  into 10 shares of  common  stock,  at the
     option of the  holder.  The  holders  have  certain  demand  and  piggyback
     registration  rights, have preference in the event of liquidation,  and are
     entitled to ten votes for each share of  Preferred  Stock on all matters as
     to which holders of common stock are entitled to vote. As of June 30, 2003,
     $185,000 in dividends are payable to the holders.

     The  managing  partner of  Metropolitan  was  appointed  as a member of the
     Company's Board of Directors in September 2002.

     In June 2003, the Company's Board of Directors approved the exchange of the
     then  outstanding  obligations to its Chairman and current Chief  Executive
     Officer,  Markus &  Associates  and Tall Oaks Group,  LLC for 974 shares of
     Series B Redeemable  Preferred Stock at an exchange ratio of $1,000 of debt
     per share  ("Price Per  Share") . The Series B  Redeemable  Preferred  were
     issued as follows:

          --   266 shares were exchanged for $266,000 of debt  obligation to the
               Company's Chairman and current Chief Executive Officer;

          --   208 shares were  exchanged  for  $208,000 of debt  obligation  to
               Markus & Associates; and

          --   500 shares were exchanged for $500,000 of debt obligation to Tall
               Oaks Group, LLC.

     Each of the Series B Redeemable  Preferred  shares is entitled to mandatory
     dividends,  payable quarterly,  commencing on the first day of the calendar
     quarter  after  the  date  of  issuance,  at the  rate  of 12%  per  annum.
     Additionally,  the Series B Redeemable Preferred shares are redeemable,  at
     the sole  option of the  Company,  on or after  March 31, 2005 (or prior to
     March 31, 2005 with the consent of majority-in-interest holders of Series B
     Preferred shares). Upon redemption,  the holders of the Series B Redeemable
     Preferred  shall  be  entitled  to  receive,  for each  share  of  Series B
     Redeemable  Preferred  outstanding,  an amount equal to the Price Per Share
     plus accrued and unpaid dividends.

     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

                                                                               9
<PAGE>
                     DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

                FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002

     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                           2,918
     Redeemable convertible preferred stock                     1,347
                                                                -----
         Total potential common shares as of June 30, 2003      4,265
                                                                =====

     Issuances after June 30, 2003 through August 14, 2003
       Common stock issued                                          5
       Options to purchase common stock granted                   225
                                                                -----

                                                                  230
                                                                =====
</TABLE>

     Common Stock and Options Issuances
     ----------------------------------
     During the quarter ended June 30, 2003, the Company issued 76,851 shares of
     its common stock and options to purchase 389,000 shares of its common stock
     as detailed below:

          --   Issued  17,654  net  shares of its  common  stock as  payment  of
               certain consulting expenses,  valued at $15,000.
          --   Pursuant  to an  employment  agreement  with its Chief  Executive
               Officer  (see below),  the Company  issued  15,000  shares of its
               common stock valued at $20,000.
          --   In lieu of cash,  for the six month  period  ended June 30, 2003,
               the Company  issued  44,197  shares of its common stock valued at
               $57,000 to the Company's Board of Directors for Board fees.
          --   The Company  granted  180,000  options to purchase  shares of its
               common stock to certain  employees  of the  Company.  The options
               vest in one-third  increments  on April 30, 2004,  April 30, 2005
               and April 30, 2006 and have an exercise price of $1.20 per share.
          --   The Company  granted  200,000  options to purchase  shares of its
               common stock to an employee of the Company.  The options,  having
               an exercise price of $1.40, vested upon issuance, but may only be
               exercised during the period March 31, 2005 to April 01, 2006. The
               employee is also the Managing Partner and principal owner of Tall
               Oaks.  See Note 4 (e).
          --   The  Company  granted  9,000  options to  purchase  shares of its
               common stock to three employees of the Company.  The options vest
               in one-third  increments:  on the date of issuance,  December 31,
               2003 and June 30,  2004.  The options  have an exercise  price of
               $1.30 per share.

     During the quarter ended March 31, 2003,  the Company  issued 19,693 shares
     of its common  stock and options to purchase  272,500  shares of its common
     stock as detailed below:

          --   Issued  9,693  shares of its  common  stock as payment of certain
               consulting expenses, valued at $20,000.

                                                                              10
<PAGE>
                     DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

                FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002

          --   In December  2002,  the Company's  Chairman  became the Company's
               Chief  Executive  Officer.  In January 2003, the Company  entered
               into an employment  agreement with its Chief  Executive  Officer,
               which expires in January 2005. As part of the  compensation,  the
               Chief  Executive  Officer  will  receive  60,000  shares  of  the
               Company's  common  stock which vest ratably over the first twelve
               months of the  agreement.  Accordingly,  during the quarter ended
               March 31, 2003,  the Company  issued  10,000 shares of its common
               stock   valued  at   $18,000.   Additionally,   as  part  of  his
               compensation  he was granted  240,000  options to purchase common
               stock of the  Company  at $2.02  per  share,  which was above the
               market price on the date of issuance.  50% of the options  vested
               upon  execution of the  agreement;  the balance will vest ratably
               during the term of the agreement.

          --   The Company  granted  30,000  options to  purchase  shares of its
               common  stock to certain  members of its Board of  Directors  for
               services rendered in their capacity as Board members. The options
               vest on December 31, 2003 and have an exercise price of $2.00 per
               share.

          --   The  Company  granted  2,500  options to  purchase  shares of its
               common stock to an employee of the Company.  The options,  having
               an  exercise  price of $1.85,  vest in  one-third  increments  on
               February 28, 2003, June 30, 2003 and June 30, 2004.


6.   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.


7.   Products and Services

     The Company and its subsidiaries  currently operate in one business segment
     and provide  three  separate  products:  ASP services,  custom  engineering
     services and AMS services.
<TABLE>
<CAPTION>
                                                  Three Months Ended                Six Months Ended
                                                       June 30,                         June 30,
                                                 2003             2002            2003            2002
                                            ---------------- --------------- --------------- ---------------
            <S>                                 <C>              <C>               <C>           <C>

            ASP fees                            $    1,546       $    1,111        $  2,672      $    1,933
            Custom engineering fees                    412              646           1,222           1,224
            AMS fees                                   112              225             375             339
                                                ----------       ----------        --------      ----------
                 Total Revenue                  $    2,070       $    1,982        $  4,269      $    3,496
                                                ==========       ==========        ========      ==========
</TABLE>

     Major customer
     --------------
     For the three  months  ended June 30,  2003 and 2002,  the  Company had one
     major  customer that  accounted for 87.1% and 80.0% of the Company's  total
     revenue,  respectively.  For the six months  ended June 30,  2003 and 2002,
     this major  customer  accounted for 87.2% and 88.7% of the Company's  total
     revenue,  respectively.  Accounts receivable from this customer amounted to
     $1,213,000 at June 30, 2003.


8.   Management's Liquidity Plans

     The Company's  management has and will continue to take numerous steps that
     it believes will create positive  operating cash flow for the Company.  Key
     measures are as follows:

                                                                              11
<PAGE>
                    DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

                FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002

     --   In July  2003,  management  commenced  a  major  cost  reduction  plan
          involving  staff  reductions,   executive  pay  rate  reductions,  and
          downsizing of office space.
     --   Continue to expand the  Company's  products and  services;
     --   Actively pursue channel partner opportunities;
     --   Continue to market its custom  engineering fees. The Company generated
          in excess of $2,500,000 in custom  engineering  fees in 2002,  and has
          generated  $1,222,000  in custom  engineering  fees for the six months
          ended June 30, 2003.  Management believes this revenue should continue
          throughout 2003;
     --   Increase  revenue as a result of the  agreement  entered  into in 2002
          between  the  Company  and  IBM,  which  allows  IBM  the  ability  to
          electronically  attach  supporting   documentation  to  an  electronic
          invoice, all submitted via the Internet to their customers;
     --   Capitalize  on the growing  trend for  outsource  services  within the
          communications  sector.  The  acquisition  of Platinum  broadened  the
          Company's product  offerings in this market sector.  For the six month
          period  ended June 30, 2003,  AMS revenue is ten percent  ahead of the
          same period during 2002.  However,  the Company is uncertain  that AMS
          revenue for the full year of 2003 will exceed 2002.
     --   In January 2003, the Company received $500,000 through the issuance of
          long term debt to Tall Oaks Group, LLC. See Notes 4e and 5.
     --   In January 2003,  the Company  received  $500,000  through the sale of
          23,365  shares of its  Preferred  stock to  Metropolitan,  with  terms
          similar to their previous transaction. See Note 5.
     --   Additionally,  in June 2003, the Company raised  $250,000  through the
          sale of 17,857 shares of its Preferred Stock to Metropolitan. See Note
          5.
     --   In July 2003, the Company obtained a $500,000 line of credit. See Note
          9.
     --   The Company  received a firm  commitment of $250,000 from its chairman
          to  guarantee a line of credit  expected  to be obtained  from a major
          bank.
     --   Additionally,  the senior  executives  have  pledged an  aggregate  of
          $250,000 in the event the Company would  require  capital in excess of
          $1,000,000  described in the three previous items.  These  commitments
          and pledges extend through at least March 31, 2004.

     Management  believes  that its plan will  ultimately  enable the Company to
     generate positive cash flows from operations.  Until such time, the Company
     believes that its present cash on hand as well as obtaining additional debt
     and/or equity  financing  should provide  adequate funding through at least
     June 30, 2004.  However,  there can be no assurances  that the Company will
     have sufficient  funds to implement its current plan. In such an event, the
     Company  could be forced to  significantly  alter its plan and  reduce  its
     operating  expenses,   which  could  have  an  adverse  effect  on  revenue
     generation and operations in the near term.

9.   Subsequent Events

     On July 16, 2003, the Company granted 225,000 options to purchase shares of
     its common stock to certain board members, executive officers and employees
     of the Company. The options, having an exercise price of $1.26, vested upon
     issuance,  but may only be  exercised  during the period  March 31, 2005 to
     April 01, 2006.

     In June 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, and is repayable 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 July 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%.  This
     obligation matures six months from date borrowed.

     On April 16, 2003, the Company  received  notification  from Nasdaq that it
     did not comply with Marketplace Rule 4310(c)(2)(B),  to the extent that the
     Company did not have a minimum of $2,500,000 in  shareholders'  equity.  On
     May 1, 2003 the Company submitted a plan which specifically outlined how it
     believed it would  achieve and sustain  compliance  with this  requirement.
     Nasdaq  reviewed the plan submitted and determined  that the Company's plan
     does not adequately  address the issues.  The Company appealed the decision
     to the Nasdaq Listing  Qualification Panel (the "Panel"). On July 24, 2003,
     the Company  presented its business case to the Panel.  To date the Company
     has not received any formal response from the Panel.  The Panel's denial of
     the  Company's  appeal  would  result in the  Company's  common stock being
     delisted from the Nasdaq SmallCap Market.

                                                                              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

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  invoice  presentation and
payment  ("EIP&P") as well as visual data analysis and reporting tools delivered
via the Internet for our customers.  Our core  technology is  d.b.Express?,  the
proprietary and patented  management  information  tool, which provides targeted
access  through  the  mining  of large  volumes  of  transactional  data via the
Internet. In 2001 we acquired,  Platinum  Communications,  Inc. ("Platinum"),  a
Dallas,  Texas based  company,  which markets its  integrated  proprietary  back
office  software  solutions,  Account  Management  Systems  ("AMS" or  sometimes
referred to as "TAMS") to the telecommunications industry either as a license or
as an ASP. We completed a merger with  Platinum  under an Agreement  and Plan of
Merger ("Merger Agreement"). Under the Merger Agreement, our newly formed wholly
owned  subsidiary  acquired  all of the  outstanding  common  stock of Platinum.
Further,  as an added  source of  revenue,  we began in 2001 to  provide  custom
engineering services for our customers.

This newly  assembled  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, cuts 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, N.J. Our facility in New Jersey is leased
at an  IBM,e-business  Hosting  Center.  This  co-location / redundancy  feature
enables us to offer virtually down time free service.

Results of operations

IBM continues to be our largest customer accounting for 87% of total revenue for
the  three-month  period  ended  June  30,  2003,  as  compared  to 80%  for the
three-month period ended June 30, 2002. We derive revenue from IBM from the sale
of managed services (ASP) as well as custom engineering.  During the second half
of 2001,  we entered  into an agreement  with IBM wherein for a per  transaction
fee,  we enable IBM to present  invoices to a portion of its  customers  via the
Internet.  This EIP&P  offering  has since been  expanded to include  additional
functionality.  In March 2002, the parties signed a new agreement,  which allows
IBM to expand this EIP&P  offering to more of its  customers,  both domestic and
international.  In addition,  the Company continues to provide data analysis and
reporting  services  for IBM's  telecommunications  customers.  We are  actively
pursuing new sales opportunities to further reduce sales concentration.

                                                                              13
<PAGE>
DIRECT INSITE CORP. AND SUBSIDIARIES

For the three months ended June 30, 2003, total revenue  increased  $88,000 from
$1,982,000  for the three months ended June 30, 2002 to $2,070,000 for the three
months  ended June 30,  2003.  An  analysis of the  increase is as follows:  ASP
revenue  increased  $434,000,  or 39%, to $1,546,000 in 2003 from  $1,112,000 in
2002. This increase was offset by decreases in engineering  fees and AMS fees of
$234,000 and $113,000, respectively.

Total  revenue  for the six month  period  ended  June 30,  2003  aggregated  to
$4,269,000.  When compared to  $3,496,000,  the total revenue  earned during the
same time  period  total in 2002,  the  Company  achieved an increase in overall
revenue  of  $773,000  or 22%.  During  the six month  time-frame,  ASP  revenue
increased  $739,000 to  $2,672,000,  representing a 38% increase in revenue from
this  service  compared to the six month total in 2002 of  $1,933,000.  The most
significant  factor  contributing  to the  increase  in ASP revenue has been the
expansion of the EIP&P services.  As of June 30, 2003 this service is offered in
the U.S., Canada, Brazil, and eight nations in Europe, enabling our customers to
deliver their invoices in all local  languages.  The Company  believes that this
service will continue to expand into additional countries in Europe, Middle East
and into the Pacific Rim within the next six to nine months. Engineering revenue
remained  virtually the same,  decreasing by $2,000 when comparing 2003 and 2002
amounts of $1,222,000 and $1,224,000,  respectively. During the six-month period
ended June 30, 2003, AMS revenue increased $36,000 to $375,000, when compared to
$339,000 in the 2002 period.  However, the Company is uncertain that AMS Revenue
for the full year of 2003 will exceed 2002.

Operations,  research and development expenses consist primarily of salaries and
related  costs  (benefits,  travel and training)  for  developers,  programmers,
custom  engineers,  network  services,  quality control / quality  assurance and
documentation personnel, applicable overhead allocations, as well as co-location
facilities expenses and all costs directly associated with the production and or
development of the Company's services.

     --   When  comparing  the three  months  ended June 30, 2003 and 2002,  the
          Company increased its operations, research and development expenses by
          $240,000.  The Company  continues to upgrade,  improve and enhance its
          current products and services. As a result, the most significant items
          contributing  to this  increase  was  additional  staffing  costs  and
          professional fees totaling $268,000.

     --   When  comparing  the six  months  ended  June 30,  2003 and 2002,  the
          Company increased its operations, research and development expenses by
          $419,000 or 54% of incremental  revenue  growth of $773,000.  The most
          significant item contributing to this increase was additional staffing
          costs and professional fees totaling $402,000.  Additional operations,
          research and development  expenses  incurred  associated with Platinum
          amounted  to  $32,000.   All  other  expenses  decreased  by  $15,000.
          Management  believes  that it is  critical  to  maintain  a  qualified
          personnel  staff  and,  further,  to  continue  to  enhance as well as
          develop new and innovative services and products.  It is expected that
          operations,  research and  development  costs will  increase in future
          periods as a result of anticipated increases in future revenue as well
          as  costs   associated  with  its   product/service   enhancement  and
          development activities.

Sales and marketing  expenses include  salaries and related costs,  commissions,
travel,  facilities,  communications  costs  and  promotional  expenses  for the
Company's direct sales organization and marketing staff.

     --   Sales and marketing  expenses  increased  $131,000 to $746,000 for the
          three months ended June 30,  2003,  when  compared to $615,000 for the
          three months ended June 30, 2002.  Wages and consulting fees increased
          $82,000 and costs  associated  with Platinum  increased  $66,000.  All
          other items, such as travel,  entertainment,  commissions and rent, in
          the aggregate, decreased $17,000.

     --   Sales and marketing  expenses increased $429,000 to $1,579,000 for the
          six months ended June 30, 2003 when compared to $1,150,000 for the six

                                                                              14
<PAGE>
DIRECT INSITE CORP. AND SUBSIDIARIES

          months ended June 30, 2002. Costs  associated with Platinum  increased
          expenses by $216,000.  Further,  wages and  consulting  fees increased
          $176,000. Additionally, rent expense increased $30,000.

General  and  administrative   expenses  include  administrative  and  executive
salaries and related benefits,  legal, accounting and other professional fees as
well as general corporate overhead.

     --   Expenses decreased $85,000 to $911,000 for three months ended June 30,
          2003,  when  compared to $996,000  reported for the three months ended
          June 30, 2002.  Major factors  contributing  to this decrease  include
          reductions in professional fees and business insurance of $104,000 and
          $27,000,  respectively,  as well as a reduction in expenses related to
          salaries and benefits  totaling  $24,000.  Offsetting these decreases,
          among other  things,  were an increase in rent  expense of $26,000 and
          general and administrative expenses related to Platinum that increased
          by $47,000 when  compared to the same period in 2002.  Other  expenses
          showed a net increase of $3,000.

     --   Expenses  decreased  $137,000 to  $1,804,000  for the six months ended
          June 30,  2003 when  compared to the six months  ended June 30,  2002.
          Major  factors  contributing  to this  decrease  include,  among other
          things,  a decrease in  professional  fees and  business  insurance of
          $204,000 and $16,000,  respectively.  Offsetting the  reductions  were
          increases  in salaries  and  benefits of $41,000,  an increase of rent
          expense of  $65,000,  as well as $11,000 of expenses  attributable  to
          Platinum. Other expenses showed a net increase of $34,000.

Amortization and depreciation  expenses  decreased  $23,000 for the three months
ended June 30, 2003 when  compared to the three  months  ended June 30, 2002 and
decreased  $46,000 for the six months  ended June 30, 2003 when  compared to the
six months ended June 30, 2002.

Financial Condition and Liquidity

For the six months ended June 30, 2003, the Company incurred net operating
losses thereby requiring cash from sources other than normal operations to fund
its operating activities. In order to fund its operating losses, the Company:

--   as described in Note 4e, in January  2003,  received an unsecured  $500,000
     loan from Tall Oaks.
--   as  described  in Note 5, in  December  2002,  sold  23,365  shares  of its
     Preferred  Stock in  consideration  for $500,000  less fees and expenses of
     $61,000, to Metropolitan.  The proceeds from this transaction were received
     January 3, 2003.
--   as described in Note 5, in June 2003,  sold 17,857  shares of its Preferred
     Stock in consideration  for $250,000,  less fees and expenses of $5,000, to
     Metropolitan.
--   as described in Note 5, reduced future cash outflows by exchanging $974,000
     of Company obligations for 974 shares of its Series A-1 Preferred stock.
--   continues  to make use of its  financing  arrangement  with an asset  based
     lending institution.
--   as  described in Note 9, in July 2003,  the Company drew the full  $500,000
     amount of a line of credit obtained from JP Morgan Private Bank.

As detailed in the Condensed  Consolidated  Statement of Cash Flows,  during the
six month  period  ended June 30,  2003,  the  Company  utilized  $1,612,000  in
operating  activities,  which  includes,  among  other  items,  a  net  loss  of
$2,323,000,  an  increase  in  accounts  receivable  of  $92,000,  a decrease in
deferred revenue of $3,000, and $16,000 paid toward the restructuring, partially
offset by non-cash expenses totaling  $636,000,  an increase in accounts payable
and accrued  expenses of $87,000  and a decrease in prepaid  expenses  and other
current assets of $64,000.  Further,  during the six months ended June 30, 2003,
the Company expended approximately $163,000 for capital expenditures.

The Company's  management  has and will continue to take numerous  steps that it
believes will create positive operating cash flow for the Company.  Key measures
are as follows:

     --   Management  has  commenced on a major cost  reduction  plan  involving
          staff  reductions,  executive pay rate  reductions,  and downsizing of
          office space.
     --   Continue to expand the Company's products and services;
     --   Actively pursue channel partner opportunities;

                                                                              15
<PAGE>
DIRECT INSITE CORP. AND SUBSIDIARIES

     --   Continue to market its custom  engineering fees. The Company generated
          in excess of $2,500,000 in custom  engineering  fees in 2002,  and has
          generated   $1,222,000  for  the  six  months  ended  June  30,  2003.
          Management believes this revenue should continue throughout 2003;
     --   Increase  revenue as a result of the  agreement  entered  into in 2002
          between  the  Company  and  IBM,  which  allows  IBM  the  ability  to
          electronically  attach  supporting   documentation  to  an  electronic
          invoice, all submitted via the Internet to their customers;
     --   Capitalize  on the growing  trend for  outsource  services  within the
          communications  sector.  The  acquisition  of Platinum  broadened  the
          Company's product  offerings in this market sector.  For the six month
          period  ended June 30, 2003,  AMS revenue is ten percent  ahead of the
          same period during 2002.  However,  the Company is uncertain  that AMS
          revenue for the full year of 2003 will exceed 2002.
     --   In January 2003, the Company received $500,000 through the issuance of
          long term debt to Tall Oaks Group, LLC. See Notes 4e and 5
     --   In January 2003,  the Company  received  $500,000  through the sale of
          23,365  shares of its  Preferred  stock to  Metropolitan,  with  terms
          similar to their previous transaction. See Note 5.
     --   Additionally,  in June 2003, the Company raised  $250,000  through the
          sale of 17,857 shares of its Preferred Stock to Metropolitan. See Note
          5.
     --   In July 2003, the Company obtained a $500,000 line of credit. See Note
          9.
     --   The  Company  received  has a firm  commitment  of  $250,000  from its
          chairman to guarantee a line of credit  expected to be obtained from a
          major bank.
     --   Additionally,  the senior  executives  have  pledged an  aggregate  of
          $250,000 in the event the Company would  require  capital in excess of
          $1,000,000  described in the three previous items.  These  commitments
          and pledges extend through at least March 31, 2004.

     Management  believes  that its plan will  ultimately  enable the Company to
     generate positive cash flows from operations.  Until such time, the Company
     believes that its present cash on hand as well as obtaining additional debt
     and/or equity  financing  should provide  adequate funding through at least
     June 30, 2004.  However,  there can be no assurances  that the Company will
     have sufficient  funds to implement its current plan. In such an event, the
     Company  could be forced to  significantly  alter its plan and  reduce  its
     operating  expenses,   which  could  have  an  adverse  effect  on  revenue
     generation and operations in the near 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
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                      DIRECT INSITE CORP. AND SUBSIDIARIES

                           PART II OTHER INFORMATION



Item 1. Legal Proceedings
        None

Item 2. Changes in Securities

     In June,  2003  the  Company  issued  974  shares  of  Series B  Redeemable
Preferred Stock. Each of the Series B Redeemable Preferred shares is entitled to
mandatory  dividends,  payable  quarterly,  commencing  on the  first day of the
calendar  quarter  after  the date of  issuance,  at the rate of 12% per  annum.
Additionally,  the Series B Redeemable  Preferred shares are redeemable,  at the
sole  option of the  Company,  on or after March 31, 2005 (or prior to March 31,
2005 with the  consent of  majority-in-interest  holders  of Series B  Preferred
shares). Upon redemption, the holders of the Series B Redeemable Preferred shall
be  entitled  to  receive,  for each  share of  Series  B  Redeemable  Preferred
outstanding,  an amount  equal to the Price Per Share  plus  accrued  and unpaid
dividends.

Item 3. Defaults Upon Senior Securities
     None

Item 4. Submission of Matters to a Vote of Security Holders
     On May 30, 2003 the Company held its annual meeting of  Stockholders at the
Grand Hyatt Hotel in NYC.  The  following  are the results of the items voted on
during the meeting:

     1.   Mrs.  Carla J.  Steckline  was  elected  to  serve as a member  of the
          Company's  Board of Directors until the annual meeting of stockholders
          in 2006;
     2.   Mr. Peter B. Yunich was elected to serve as a member of the  Company's
          Board of Directors until the annual meeting of stockholders in 2004;
     3.   A proposal to Amend the  Certificate  of  Incorporation  reducing  the
          number of shares of capital stock from  150,000,000  to 50,000,000 was
          passed by the shareholders carrying over 99% of the votes cast;
     4.   A proposal to sell to  Metropolitan  Venture  Partners II, LLP and its
          affiliates,  in one or more  transactions,  Company  common stock,  or
          securities  convertible into common stock, equal to 20% or more of our
          common  stock or our voting  power prior to the  issuance  and sale of
          such securities was approved by the shareholders,  carrying 99% of the
          votes cast;
     5.   With  nearly 98% of the Votes  cast,  the  shareholders  ratified  and
          approved the 2003/A stock Option / Stock Issuance Plan;
     6.   The Shareholders  voted to Ratify the Board's  appointment of Marcum &
          Kliegman,   LLP  as  the  Company's   independent   certified   public
          accountants for the year ending December 31, 2003.


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

        Item 5 - Current Report on Form 8-K dated June 3, 2003 -

Issuance of  Preferred  Stock for  $250,000.  Pursuant to a Stock  Purchase  and
Registration Rights Agreement dated as of June 3, the Company sold 17,857 shares
("Preferred  Shares") of its Series A  Convertible  Preferred  Stock,  par value
$.0001 per share  ("Preferred  Stock"),  in consideration of $250,000 in cash to
Metropolitan Venture Partners II, L.P.

                                                                              17
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                      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 Cannavino
----------------------------------------             ---------------
James Cannavino, Chief Executive Officer             August 19, 2003


/s/ George Aronson
----------------------------------------             ---------------
George Aronson,  Chief Financial Officer             August 19, 2003

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