UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                   FORM 10-Q
                                   (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, 2001
                                       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 registrant 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 15, 2001
was: 1,851,469.

<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

                                     INDEX

PART I - FINANCIAL INFORMATION                                              Page

  Condensed Consolidated Balance Sheets as of June 30, 2001 and
   December 31, 2000                                                          3

  Condensed Consolidated Statements of Operations and Comprehensive Income
   For the Three and Six Months Ended June 30, 2001 and 2000                  4

  Condensed Consolidated Statements of Cash Flows
   For the Six Months ended June 30, 2001 and 2000                            5

  Notes to Condensed Consolidated Financial Statements                    6 - 14

  Management's Discussion and Analysis of Financial Condition and
   Results of Operations                                                 15 - 20

  Quantitative and Qualitative Disclosure About Market Risk
   -- Not Applicable

PART II  OTHER INFORMATION

  Item 1. Legal Proceedings                                                   21

  Item 2. Changes in Securities                                               21

  Item 3. Defaults Upon Senior Securities                                     21

  Item 4. Submission of Matters to a Vote of Security Holders                 21

  Item 5. Other Information                                                   21

  Item 6. Exhibits and Reports on Form 8-K                                    21

  Signatures                                                                  22

<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS

                    AS OF JUNE 30, 2001 AND DECEMBER 31, 2000
                        (In thousands, except share data)
<TABLE>
<CAPTION>

                                                                           June 30,  December 31,
                                                                             2001        2000
                                                                           --------- -----------
                                                                          (Unaudited)(Audited)
<S>                                                                         <C>       <C>
ASSETS
Current assets
   Cash and cash equivalents                                                $   965   $10,851
   Accounts receivable, net of allowance for sales returns
     and doubtful accounts of $26 and $70 in 2001 and 2000,
     respectively                                                               515       260
   Prepaid expenses and other current assets                                    343       451
   Investment in NetWolves Corporation                                        5,984     4,922
                                                                             -------   -------
      Total current assets                                                    7,807    16,484

Intangible assets, net of accumulated
   amortization of $10 in 2001                                                  593         -
Property and equipment, net                                                   1,387     1,140
Other assets                                                                  1,053       629
                                                                             -------   -------

                                                                             $10,840   $18,253
                                                                             =======   =======
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
   Accounts payable and accrued expenses                                     $ 2,131   $ 1,715
   Restructuring costs payable, current portion                                  367     1,526
   Convertible debentures, net of discount of $305 in 2000                         -     2,695
   Income taxes payable                                                           53       855
                                                                             -------   -------
      Total current liabilities                                                2,551     6,791

Long term debt, net of current portion                                           104         -
Restructuring costs payable, long-term                                           604       924
                                                                             -------   -------
      Total liabilities                                                        3,259     7,715
                                                                             -------   -------
Commitments and contingencies

Shareholders' equity
   Common  stock, $.0001 par value; 150,000,000 shares authorized;
      1,875,840 and 1,449,833 shares issued in 2001 and 2000,
      respectively; and 1,851,469 and 1,425,462 shares outstanding
      in 2001 and 2000, respectively                                               -         -
   Additional paid-in capital                                                103,645   103,569
   Unearned compensation                                                         (48)     (115)
   Accumulated deficit                                                       (93,921)  (89,502)
   Accumulated other comprehensive loss                                       (1,767)   (3,086)
                                                                             -------   -------
                                                                               7,909    10,866
   Common stock in treasury, at cost  - 24,371 shares                           (328)     (328)
                                                                             -------   -------
      Total shareholders' equity                                               7,581    10,538
                                                                             -------   -------
                                                                             $10,840   $18,253
                                                                             =======   =======
</TABLE>
See notes to condensed consolidated financial statements.

                                       3
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED STATEMENTS OF
                      OPERATIONS AND COMPREHENSIVE INCOME
                                   (Unaudited)

           FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 and 2000
                      (in thousands, except per share data)
<TABLE>
<CAPTION>
                                              Three Months Ended      Six Months Ended
                                              ------------------      ----------------
                                                    June 30,              June 30,
                                                    --------              --------
                                              2001        2000         2001       2000
                                            -------     -------       -------    -------
<S>                                         <C>         <C>           <C>        <C>
Revenue                                     $   677     $   500       $ 1,194    $ 1,026

Cost of revenue                                 156          80           245        193
                                            -------     -------       -------    -------
Gross margin                                    521         420           949        833
                                            -------     -------       -------    -------
Operating expenses
  Research and development                      781         479         1,337      3,499
  Sales and marketing                           617         351         1,122      3,643
  General and administrative                  1,149         597         1,979      3,870
  Amortization and depreciation                 241         225           479        434
  Non-recurring restructuring charge              -         192             -     15,005
                                            -------     -------       -------    -------
                                              2,788       1,844         4,917     26,451
                                            -------     -------       -------    -------
Operating loss                               (2,267)     (1,424)       (3,968)   (25,618)

Other income (expenses)
   Gain on sale of Softworks                      -           -             -     47,813
   Gain on sale of ComputerCOP
      assets held for sale                        -           -             -      8,534
   Loss on sales of NetWolves
      common stock                              (98)          -           (98)         -
   Interest income (expense), net                10         212          (307)       544
                                            -------     -------       -------    -------
(Loss) income before (provision for)
      benefit from income taxes              (2,355)     (1,212)       (4,373)    31,273
(Provision for) benefit from income
      taxes                                     (13)        385           (46)   (12,427)
                                            -------     -------       -------    -------
Net (loss) income                           $(2,368)    $  (827)      $(4,419)   $18,846
                                            =======     =======       =======    =======
Other comprehensive income (loss)
   Unrealized gain (loss) on marketable
       securities                               616     (13,250)        1,319    (18,650)
                                            -------    --------       -------    -------
Comprehensive (loss) income                 $(1,752)   $(14,077)      $(3,100)   $   196
                                            =======    ========       =======    =======

Basic net (loss) income per share           $ (1.44)   $  (0.57)      $ (2.87)   $ 13.32
                                            =======    ========       =======    =======
Diluted net (loss) income per share         $ (1.44)   $  (0.57)      $ (2.87)   $ 13.05
                                            =======    ========       =======    =======
Basic weighted average common
  shares outstanding                          1,650       1,463         1,538      1,415
                                            =======    ========       =======    =======
Diluted weighted average common
  shares outstanding                          1,650       1,463         1,538      1,444
                                            =======    ========       =======    =======
</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,
                                                                ---------------------------
                                                                     2001        2000
                                                                     ----        ----
                                                                       (In thousands)
<S>                                                                <C>          <C>
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
Cash flows from operating activities
  Net (loss) income                                                $(4,419)     $18,846
  Adjustments to reconcile net (loss) income to net cash used in
   operating activities
    Depreciation and amortization
      Property and equipment                                           477          441
      Excess of cost over fair value of net assets acquired             10            -
      Other                                                              1            1
    Non-cash interest charge pertaining to the discount on
      convertible debentures and loss on prepayment                    346            -
    Provision for doubtful accounts                                     36            -
    Loss on sales of NetWolves common stock                             98
    Deferred income taxes                                                -        9,197
    Common stock and options issued for services                       481        2,539
    Common stock issued for settlement of restructuring charges          -        1,180
    NetWolves common stock issued for services and for
     settlement of restructuring charges                                 -        2,000
    Gain on sale of Softworks and ComputerCOP                            -      (56,347)
  Changes in operating assets and liabilities
    Accounts receivable                                               (203)         247
    Prepaid expenses and other current assets                          327          229
    Assets held for sale  ComputerCOP                                    -          (18)
    Cash held in escrow                                                  -          (72)
    Other assets                                                        76          (49)
    Accounts payable and accrued expenses                                2       (4,304)
    Restructuring costs payable                                     (1,296)       3,878
    Income taxes payable                                              (802)       3,215
    Deferred revenue                                                     -          (21)
                                                                   -------      -------
          Net cash used in operating activities                     (4,866)     (19,038)
                                                                   -------      -------
Cash flows from investing activities
  Increase in cash resulting from the acquisition of Platinum
    Communications                                                      15            -
  Proceeds from the sale of Softworks stock (net of $3,157 of
    expenses)                                                            -       48,301
  Cash utilized in the ComputerCOP/NetWolves transaction
    (including $1,819 of expenses)                                       -      (22,319)
  Investment in NetWolves Corporation                                    -       (4,500)
  Consideration paid in Platinum Communications
    acquisition                                                       (142)           -
  Investment in non-marketable securities                             (500)           -
  Capital expenditures                                                (620)        (548)
  Repayment of officers' loans, net                                      -          899
                                                                   -------      -------
          Net cash (used in) provided by investing activities       (1,247)      21,833
                                                                   -------      -------
Cash flows from financing activities
   Repayments of  long-term debt                                       (22)           -
   Payment of dividend                                                   -       (2,194)
   Repayments of convertible debentures                             (3,751)           -
                                                                   -------      -------
          Net cash (used in) provided by financing activities       (3,773)      (2,194)
                                                                   -------      -------
Net (decrease) increase in cash and cash equivalents                (9,886)         601

Cash and cash equivalents, beginning of period                      10,851        1,852
                                                                   -------      -------
Cash and cash equivalents, end of period                           $   965      $ 2,453
                                                                   =======      =======
</TABLE>
See notes to condensed consolidated financial statements.

                                       5
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

           FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000


1    Interim financial information

     The  condensed  consolidated  balance  sheet as of June 30,  2001,  and the
     condensed  consolidated  statements of operations and comprehensive  income
     and cash flows for the three and six months  ended June 30,  2001 and 2000,
     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 for the above periods.  The results of operations
     for the three and six  months  ended  June 30,  2001,  are not  necessarily
     indicative of results that may be expected for any other interim periods or
     for the full year.

     These  condensed  consolidated  financial  statements  should  be  read  in
     conjunction  with the consolidated  financial  statements and notes thereto
     for the year ended  December  31, 2000.  The  accounting  policies  used in
     preparing the condensed  consolidated  financial  statements are consistent
     with those  described  in the  December  31,  2000  consolidated  financial
     statements.


2    The Company

     At the Company's special meeting of stockholders held on May 4th, 2001, the
     Company's shareholders granted the Board of Directors authority to effect a
     reverse stock split in a ratio of one-for-fifteen.  On that date, the Board
     of Directors  declared a one-for-fifteen  reverse stock split effective for
     shareholders  of record as of the close of business on May 7th, 2001.  (See
     Note 4)

     At the annual  shareholders'  meeting held in August 2000, the shareholders
     elected to change  the  corporate  name to Direct  Insite  Corp.  (formerly
     Computer  Concepts  Corp.) to better reflect the initiation of new business
     strategies.

     Direct Insite Corp. and subsidiaries  (the "Company")  operate primarily as
     an  Application  Service  Provider  (generally  referred to as an ASP, also
     referred to as the Server Farm)  providing high volume data  processing and
     analysis  tools  for  their  customers.   The  Company's  core  technology,
     d.b.Express,  is a management  information  tool providing  targeted access
     through the mining of large volumes of transactional  data. The Server Farm
     permits end users the ability to  visually  access and analyze  information
     through the Internet.  Data can be visually  presented  using the Company's
     patented data visualization technology. Additionally, in the fourth quarter
     2000, the Company  entered into a license  agreement that will enable it to
     add to its suite of  products  and  services,  a complete  Electronic  Bill
     Presentment  and Payment  ("EBPP"),  as well as an Internet  Customer  Care
     ("ICC") tool set.

     In May 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.  Platinum  markets  proprietary  back office  software  solutions
     either  as  a  license  or  as  an  Application  Service  Provider  to  the
     telecommunications sector. (See Note 13.)

     In  2000,   the  Company   began   offering  a  new   consulting   service,
     "Telecommunications   Solutions"  (also  marketed  under  the  name  Global
     Telecommunications Services or GTS). The primary function of the consulting
     service is to create cost  savings for its  customers  through  effectively
     negotiating their telecommunications and network service provider contracts
     as well as reviewing  both past and future  communication  expenditures  to
     assure  compliance.  The Company is combining  this service with its Server
     Farm to create a unique,  powerful  detailed  customer  profile.  This new,
     enhanced   profile  will  allow  customers  to  efficiently   optimize  all
     telecommunications contract compliance,  establish traffic metrics, monitor
     invoice  accuracy and rate compliance as well as support complex  invoicing
     and reporting  requirements,  exception reporting and electronic invoicing,
     all via  the  Internet.  To  date,  revenue  from  this  service  has  been
     insignificant.

                                       6
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

           FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000


     The most significant  portion of the Company's  operations had historically
     been  conducted   through  one  of  its   subsidiaries,   Softworks,   Inc.
     ("Softworks").  Through  Softworks,  the Company  developed,  marketed  and
     supported systems management software products for corporate mainframe data
     centers.  Softworks was wholly owned by the Company  through June 29, 1998,
     and majority owned through March 31, 1999. On January 27, 2000, the Company
     sold its  remaining  interest  to EMC  Corporation  for  approximately  $61
     million in cash, before expenses (See Note 8).

     In June 1998, the Company completed an acquisition of software (and related
     sales and  marketing  rights)  which is designed  to provide  non  computer
     literate individuals (e.g. parents,  guardians,  schools, etc.) the ability
     to identify threats as well as objectionable material that may be viewed by
     users (e.g.  children) of a computer on the Internet.  The Company formed a
     wholly owned  subsidiary  and marketed  the acquired  technology  under the
     trade name, ComputerCOP. On February 14, 2000, the Company sold ComputerCOP
     Corp. to NetWolves Corporation ("NetWolves")(See Note 8).

     During the period ended March 31, 2001,  the Company  adopted SFAS No. 133.
     SFAS No. 133 establishes  accounting and reporting standards for derivative
     instruments,  including certain  derivative  instruments  embedded in other
     contracts  (collectively  referred  to as  derivatives),  and  for  hedging
     activities.   This  Statement   requires  that  an  entity   recognize  all
     derivatives as either assets or  liabilities in the condensed  consolidated
     balance sheets and measure those  instruments at fair value. The accounting
     for  changes in the fair value of a  derivative  instrument  depends on its
     intended use and the resulting designation.  Implementation of SFAS No. 133
     did not  have  any  material  impact  on the  financial  statements  of the
     Company.

     In July 2001, the Financial Accounting Standards Board issued SFAS No. 141,
     "Business  Combinations,"  and SFAS No. 142, "Goodwill and Other Intangible
     Assets."  SFAS No.  141  provides  guidance  is  completed.  The  statement
     requires  the  use of the  purchase  method  accounting  for  all  business
     combinations  initiated after June 30, 2001, thereby eliminating use of the
     pooling-of-inteests  method.  SFAS  No.  142  provides  guidance  on how to
     account  for  goodwill  and  intangible  asssets  after an  acquisition  is
     completed.  The most substantive  change is that goodwill will no longer be
     amortized,  but instead will be tested for  impairment  periodically.  This
     statement will apply to existing goodwill and intangible assets,  beginning
     in 2002.

3    Restructuring

     The  restructuring  charge includes costs directly related to the Company's
     plan.  EITF No.  94-3 and SEC Staff  Accounting  Bulletin  No. 100  provide
     specific  requirements  as to appropriate  recognition of costs  associated
     with  employee  termination   benefits  and  other  exit  costs.   Employee
     termination costs are recognized when details of the severance arrangements
     are  communicated  to affected  employees  (all 53 employees  were actually
     terminated  in  March  2000).   Other  exit  costs  (such  as   contractual
     obligations) that are not associated with or that do not benefit activities

                                       7
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

           FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000

     that will be continued are  recognized at the date of commitment to an exit
     plan subject to certain  conditions.  Other costs  directly  related to the
     restructuring  that are not eligible for recognition at the commitment date
     are expensed as incurred. The activity in the restructuring accrual for the
     six months ended June 30, 2001 is summarized below:


<TABLE>
<CAPTION>
                                       Officer/director
                                       ----------------
                            Employee      retirement     Consulting     Operating
                            --------      ----------     ----------     ---------
                          terminations     packages       contracts       leases    Other      Total
                          ------------     --------       ---------       ------    -----      -----
<S>                          <C>           <C>            <C>            <C>        <C>       <C>
Restructuring accrual,
 as of December 31,
 2000                        $32,000       $558,000       $1,113,000     $217,000   $530,000  $2,450,000
Company stock
 issuances                      -              -            (133,000)        -       (50,000)   (183,000)

Cash expenditures,
 six months ended
 June 30, 2001               (23,000)      (533,000)        (191,000)     (69,000)  (480,000) (1,296,000)
                             -------       --------        ---------     --------   --------  ----------
Restructuring accrual,
 June 30, 2001               $ 9,000       $ 25,000        $ 789,000     $148,000   $      -  $  971,000
                             =======       ========        =========     ========   ========  ==========

       Of the total outstanding liability of $971,000, $604,000, is payable after one year.
</TABLE>

4    Shareholders' equity

     At the Company's special meeting of stockholders held on May 4th, 2001, the
     Company's shareholders granted the Board of Directors authority to effect a
     reverse stock split in a ratio of one-for-fifteen.  On that date, the Board
     of Directors  declared a one-for-fifteen  reverse stock split effective for
     shareholders  of  record  as of the  close of  business  on May 7th,  2001.
     Holders of the common  stock have the right to payment in cash for  partial
     shares.  Common stock,  treasury stock and additional paid-in capital as of
     December 31, 2000 has been  restated to reflect  this split.  Par value and
     authorized  shares  remain  unchanged  at $0.0001 and  150,000,000  shares,
     respectively.  All  references to the number of common shares and per share
     amounts elsewhere in the condensed  consolidated  financial  statements and
     related  footnotes  have also been  restated  to reflect  the effect of the
     split for the periods presented.

     During the quarter ended June 30, 2001,  the Company  issued 426,007 shares
     of its common stock and also  recorded  transactions  with respect to stock
     options in the second quarter, as detailed below:

     --   Issued  156,285  shares of its common stock as  settlement  of certain
          consultant liabilities, valued at $260,000.

     --   Issued  29,340  shares of its common  stock as  settlement  of certain
          director liabilities, valued at $49,000.

     --   Issued  109,715  shares of its common stock as  settlement  of certain
          restructuring liabilities, valued at $183,000.

     --   Issued 64,000 shares of its common stock as employee  bonuses,  valued
          at $105,000.

     --   Issued 66,667 shares of its common stock to the former shareholders of
          Platinum as part of the Merger Agreement, valued at $137,000.(See Note
          13).

     --   Granted 257,000 options to employees for services previously rendered.
          All options are exercisable at $1.63 per share and expire periodically
          from May 31, 2005 to December 31, 2005.  The options have an intrinsic
          value of zero and vest periodically from six to eighteen months.

     --   Granted  20,000  options to  employees  (the  former  shareholders  of
          Platinum) to purchase  shares of the  Company's  common stock  vesting
          over three  years,  with an exercise  price of $2.06,  the fair market
          value on the date of the grant. See Note 13.

                                       8
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

           FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000


5    Legal matters

     In March, 1995, an action was originally  commenced against the Company and
     a number of defendants  (Barbara  Merkens v. Aval  Guarantee  Ltd.,  Walter
     Mennel,  J. Forror,  A.  Faehndreich-Braun,  T&M Consulting AG, M. Schmidt,
     E.G. Baltruschat and Computer Concepts Corp.; United States District Court,
     Eastern  District of New York).  In early 1997,  after a change in counsel,
     the  plaintiff  amended  the  complaint  for a second  time,  now naming as
     defendants  only the Company and three of its officers.  The second amended
     complaint  alleges that certain  third  parties,  unrelated to the Company,
     transferred certificates representing 66,667 shares of the Company's common
     stock to the plaintiff. The complaint further alleges that such shares were
     endorsed in blank by the third parties and became bearer securities,  which
     were negotiated to the plaintiff by physical delivery. The certificates had
     not been legally acquired from the Company and the Company had reported the
     certificates   to  the  Securities   and  Exchange   Commission  as  stolen
     certificates.  Plaintiff  has  requested  validation of the transfer of the
     certificates and is seeking damages of an unspecified amount, consisting of
     alleged  diminution in market value of the subject shares from 1994 through
     the date of any  judgment in the  plaintiff's  favor.  The  Company  denied
     plaintiff's  allegations  and filed a motion for  summary  judgment.  On or
     about  November  8, 1999,  the motion for summary  judgment  was granted in
     favor of the Company and its  officers.  However,  the  plaintiff  filed an
     appeal,  which was  contested by the  Company.  Since that time the parties
     agreed to settle the matter.  Under the terms of the  tentative  settlement
     agreement the Company  would issue 16,667  shares of its common stock.  The
     tentative  settlement  has been  remanded to the district  court,  which is
     required to review the fairness of the settlement agreement pursuant to the
     Securities Act of 1933,as amended.  The Company believes this settlement is
     likely to be accepted by the district court. Accordingly, during the fourth
     quarter  of 2000 the  Company  accrued  $80,000  to cover  the value of the
     shares to be issued plus estimated legal fees.

     During 1999, the Company and certain officers  received  notification  that
     they had been named as  defendants  in a class  action  (case # CV 99 1046,
     Kassouf, et al v. Computer Concepts Corp., Daniel DelGiorno, Sr. and Daniel
     DelGiorno Jr., U.S. District Court,  Eastern District of New York) alleging
     violations  of  certain  securities  laws with  respect  to the  content of
     certain  Company  announcements.  On January 30, 2001,  the Court entered a
     judgment dismissing the suit. The time to file an appeal has expired.

     In August  of 1999,  the  Company  and its  directors  were  served  with a
     complaint filed in the Chancery Court of Delaware, New Castle County Claude
     Nadef v. Daniel  DelGiorno,  et al and Computer  Concepts  Corp. as Nominal
     Defendant; C.A. No. 17376-NC). This is a derivative action, which is action
     brought by the  plaintiff on behalf of the  Company,  in which the Company,
     for technical reasons, was named as a nominal defendant along with the real
     defendants in interest,  Daniel  DelGiorno,  Sr.,  Daniel  DelGiorno,  Jr.,
     Russell  Pellicano,  Augustin  Medina,  all former members of the Company's
     Board of Directors.  The plaintiffs alleged that the individual  defendants
     breached  their  respective  fiduciary  duties to the  Company by  awarding
     excess  compensation  and was requesting a judgment in favor of the Company
     for such excess  compensation.  An answer to the complaint was  interposed,
     denying the material  allegations of the  Complaint.  On June 29, 2001 this
     matter was resolved  through the issuance of a  Stipulation  of  Dismissal,
     without prejudice.


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    Segment information

     The  Company  and its  subsidiaries  previously  operated  in two  separate
     business segments,  computer software and professional  services.  With the
     sale of Softworks and ComputerCOP  (Note 8) and the completion of its major
     professional  services contract,  commencing in the quarter ended March 31,
     2000, the Company began operating in one business segment.

                                       9
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

           FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000


     Major customer

     For the three  months  ended June 30,  2001 and 2000,  the  Company had one
     major  customer  with revenue of $551,000 and $393,000 - 81.4% and 78.6% of
     total  revenue,  respectively.  For the six months ended June 30, and 2001,
     the Company had one major  customer with revenue of $1,018,000 and $805,000
     - 85.3 % and 78.5% of total revenue, respectively.


8    Dispositions

     ComputerCOP Corp.
     ----------------

     During  February 2000, the Company sold  ComputerCOP  Corp., a wholly owned
     subsidiary  with assets  consisting  primarily of $20.5 million dollars and
     the  technology  acquired  pursuant to an Asset Purchase and Sale Agreement
     with Internet  Tracking & Security  Ventures,  LLC ("ITSV") to NetWolves in
     exchange for 1,775,000 shares of NetWolves common stock. Additionally,  the
     Company purchased  225,000 shares from certain  NetWolves  shareholders for
     $4.5 million  dollars.  The sale resulted in a pre-tax gain of  $8,534,000,
     net of  $2,572,000  of expenses,  recorded in the first quarter of 2000. As
     part of the restructure plan of March 2000, the Company exchanged 75,000 of
     these  shares.  Also during the three months  ended March 31, 2000,  25,000
     were exchanged to settle legal fees to the Company's then general  counsel,
     and 25,000 shares were issued as a bonus to an executive officer, resulting
     in a balance of 1,875,000  shares of  NetWolves  common  stock.  All shares
     exchanged were valued at $20.

     Softworks, Inc.
     ---------------

     Prior to June 30,  1998,  Softworks  was a wholly owned  subsidiary  of the
     Company with 14,083,000 shares of common stock  outstanding.  Pursuant to a
     series of transactions including an initial public offering of Softworks in
     August  1998,  and a second  public  offering in June 1999,  the  Company's
     ownership in Softworks was reduced to 35%.

     Pursuant to a tender offer the Company sold its  remaining  35% interest in
     Softworks  (a  total  of  6,145,767  shares)  to EMC  Corporation  and  its
     subsidiary  ("EMC")  for  $10.00  per  share.  The  transaction,  which was
     completed on January 2000,  provided aggregate cash proceeds of $61,458,000
     and  resulted  in a  pre-tax  gain of  $47,813,000,  net of  $3,316,000  of
     expenses, recorded in the first quarter of 2000.


     9    Income taxes

     The  Company  accounts  for  income  taxes  under  Statement  of  Financial
     Accounting  Standards No. 109,  "Accounting for Income Taxes" ("SFAS 109").
     SFAS 109 requires the  determination of deferred tax assets and liabilities
     based on the  differences  between the  financial  statement and income tax
     bases of assets and  liabilities,  using  enacted  tax rates.  SFAS  No.109
     requires  that the net  deferred  tax  asset  be  adjusted  by a  valuation
     allowance, if, based on the weight of available evidence, it is more likely
     than not that some portion or all of the net deferred tax asset will not be
     realized.

     As a result of the Company's sale of its remaining interest in Softworks in
     January 2000 and the sale of its  ComputerCOP  technology  in February 2000
     (Note 8), the Company  recognized  a taxable  gain in the first  quarter of
     2000 and utilized all of its then  estimated  available net operating  loss
     carryforwards.  The tax provision for the three months ended March 31, 2000
     was $12,812,000,  which consisted of deferred tax expense of $9,197,000 and
     current tax expense of  $3,615,000.  The  Company's  tax  provision for the
     three  months  ended June 30,  2001,  consists  of current  tax  expense of
     $13,000. The Company's tax provision for the six months ended June 30, 2001
     consists of current tax expense of $46,000.

                                       10
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

           FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000

10   Earnings per share

     For the six months ended June 30, 2001, outstanding stock options, warrants
     and  other  potential  stock  issuances  have  not been  considered  in the
     computation of diluted earnings per share amounts since the effect of their
     inclusion  would be  antidilutive.  For the six months ended June 30, 2000,
     the Company's  dilutive  instruments  are "in the money" stock options with
     various  exercise  dates and prices.  The Company uses the  treasury  stock
     method to calculate  the effect that the  conversion  of the stock  options
     would have on earnings per share  ("EPS").  The following  table sets forth
     the  computation of basic and diluted EPS (in  thousands,  except per share
     data):
<TABLE>
<CAPTION>
                                                        Six months ended June 30,
                                                        -------------------------
                                                           2001            2000
                                                           ----            ----
                                                          (in thousands, except
                                                              per share data)
        <S>                                              <C>             <C>
        Numerator:
          Net income (loss)                              $(4,419)        $18,846
                                                         =======         =======
        Denominator:
          Weighted average shares outstanding
          (Denominator for basic EPS)                      1,538           1,415
          Effect of dilutive securities
            Stock options                                    N/A              29
                                                         -------         -------
        Denominator for diluted EPS                        1,538           1,444
                                                         =======         =======
        Basic net income (loss) per share                $ (2.87)        $ 13.32
        Diluted net income (loss) per share              $ (2.87)        $ 13.05
</TABLE>

11   Convertible Debentures

     On  September  27, 2000,  the Company  entered into an agreement to sell an
     aggregate  principal  amount of $3,000,000 of Convertible  Debentures  (the
     "Debentures") bearing interest at a rate of 6% per annum, due September 27,
     2002. The Company sold the full amount of $3,000,000 of Debentures in 2000.

     The Debentures were  convertible  into shares of the Company's common stock
     beginning  February 25, 2001, subject to certain  limitations.  The Company
     had the right, exercisable at any time, to prepay all or any portion of the
     outstanding principal amount of the Debentures for which conversion notices
     had not  previously  been  delivered.  On January  30,  2001,  the  Company
     exercised  its  prepayment  rights and paid the  Holders  $3,700,000,  plus
     accrued interest.

     The Debentures  originally had a minimum  assured  discount of 18% from the
     fair value of the Company's  common stock,  as defined.  In connection with
     that discount,  the Company recorded debt discount of $658,000 upon receipt
     of $3,000,000 in funds and was  amortizing the discount over the period the
     Debentures  were  issued to the date they first  became  convertible.  As a
     result of the prepayment,  the discount,  which was originally  credited to
     additional  paid-in-capital,  was  reversed  in  the  first  quarter  2001,
     resulting  in a loss of  $185,000.  The  Company  recorded  total  interest
     charges of $751,000  ($353,000 in 2000 and $398,000 in 2001,  including the
     $185,000 loss).

                                       11
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

           FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000


12   Investments In Securities

     Non-Marketable
     --------------

     In  February  2001,  the  Company  acquired   2,000,000  shares  of  Voyant
     Corporation ("Voyant") through an equity investment of $500,000.  Voyant is
     a privately held company,  and accordingly,  the investment is reflected on
     the Company's balance sheet as a non-marketable security, which is included
     in "other assets". The Company's Chairman is also the Chairman of Voyant.

     Marketable
     ----------

     As  discussed  in Note 8,  the  Company,  as of  December  31,  2000,  held
     1,875,000 shares of NetWolves  common stock.  During the three month period
     ended June 30, 2001 and up through July 25, 2001,  the Company sold 209,900
     shares in the open market at prices ranging from $3.01 to $5.30 aggregating
     in net proceeds of  approximately  $703,000.  At June 30, 2001, the Company
     owned 1,824,400 shares of NetWolves common stock with a quoted market value
     $5,984,000  ($3.28 per share).  The unrealized loss as of June 30, 2001 was
     $1,741,000,  and has been  included  in  "Accumulated  other  comprehensive
     loss."

     NetWolves is an innovator of  firewall,  security and  all-in-one  Internet
     access devise systems, which is a trend in the Internet industry due to the
     enhanced  functionality  offered to end  users.  Their  primary  product is
     marketed  under  the  trade  name,   FoxBox.  In  addition  to  the  FoxBox
     appliances,  NetWolves has patent pending "Mother  System"  technology that
     offers worldwide  twenty-four hours per day, seven days per week, real-time
     monitoring and management of a complete network from one or many locations.


13   Investment In Platinum Communications, Inc.

     On May 10, 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.  Platinum  markets  proprietary  back office  software  solutions
     either  as  a  license  or  as  an  Application  Service  Provider  to  the
     telecommunications sector.

     The purchase price of Platinum  approximated  $281,000,  which consisted of
     $50,000, and 66,667 shares of common stock (valued at $137,000,  based on
     the  quoted  market  price at the time of the  acquisiton,  and  $93,000 of
     acquisition  costs).  The Company has placed an additional 46,667 shares of
     its common stock in escrow (not  reflected as  outstanding  common  stock,)
     that are to be released to the former shareholders of Platinum,  subject to
     certain performance provisions, (as defined) in various increments, through
     April 2004.  In addition,  two key  employees of Platinum have entered into
     three-year  employment  agreements with the Company, with an aggregate base
     compensation  of $300,000 per annum and options to purchase an aggregate of
     20,000 shares of the Company's common stock vesting over three years,  with
     an exercise price of $2.06, the fair market value on the date of the grant.
     Further, as part of their employment agreements, the two key employees can,
     based upon achieving certain revenue thresholds, earn up to an aggregate of
     a maximum of $1,000,000 in employee incentive bonuses.  The acquisition was
     accounted for as a purchase and,  accordingly,  assets and liabilities were
     fair valued at the date of  acquisition  and the results of operations  are
     included  in  the  consolidated   financial   statements  of  the  Company,
     commencing May 1, 2001. Intangible assets (as adjusted,if necessary, over a
     twelve month period from the date of  acquisition)  are being  amortized by
     the straight line method over a ten-year period.  An allocation of the fair
     value of the assets acquired and liabilities assumed is as follows:

                                       12

<PAGE>

                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

           FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000


<TABLE>
<CAPTION>

        <S>                                                 <C>
        Purchase price
            Direct Insite common stock issued               $137,334
            Cash consideration                                50,000
            Acquisition costs                                 93,266
                                                            --------
                                                             280,600
                                                            ========
        Allocation of purchase price
            Fair value of tangible assets and liabilities
                 Current assets                              103,633
                 Non-current assets                          103,520
                 Current liabilities                        (403,597)
                 Non-current liabilities                    (125,520)
                                                            --------
                                                            (321,964)
            Intangible assets acquired                       602,564
                                                            --------
                                                            $280,600
                                                            ========

</TABLE>


                                       13
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

           FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000


The  following  pro forma  financial  information  has been  prepared  as if the
acquisition  of Platinum  were  consummated  as of the  beginning of each of the
periods  presented.  The pro forma information is not necessarily  indicative of
the combined results that would have occurred had the acquisition taken place at
the  beginning of the period,  nor is it  necessarily  indicative of the results
that may occur in the future. (In thousands except per share data):

<TABLE>
<CAPTION>
                         Six months ended June 30, 2001

                                                  Actual         Pro Forma
                                                  ------         ---------

<S>                                             <C>               <C>
Revenue                                         $  1,194          $  1,421
Expense                                            5,613             5,956
                                                --------          --------
Net loss                                        $ (4,419)         $ (4,535)
                                                ========          ========

Basic and diluted loss per share                $  (2.87)         $  (2.98)
                                                ========          ========

</TABLE>

                         Six months ended June 30, 2000

<TABLE>
<CAPTION>

                                                 Actual          Pro Forma
                                                 ------          ---------
<S>                                             <C>               <C>
Revenue                                         $  1,026          $  1,727
Expense                                           39,071            39,696
                                                --------          --------
                                                 (38,045)          (37,969)

Other income                                      56,891            56,891
                                                --------          --------

Net income                                      $ 18,846          $ 18,922
                                                ========          ========
Basis net income per share                      $  13.32          $  13.37
                                                ========          ========
Diluted net income per share                    $  13.05          $  13.10
                                                ========          ========

</TABLE>

14      Management's Plans

For the six-month period ended June 30, 2001, the Company continued to incur net
losses ($4,419,000) and use substantial amounts of cash in operating  activities
($4,866,000).  The  Company  continued  to  finance  its  operations  with  cash
generated  from the sale of  Softworks.  As of June 30, 2001,  the Company had a
cash balance of $965,000 and the market value of its investment in NetWolves was
$5,984,000.  The Company has begun to liquidate its  investment in NetWolves and
its ability to generate additional cash from its NetWolves investment is subject
to market volume and price fluctuations as well as certain restrictions pursuant
to regulations of the Securities and Exchange Commission. However, the Company's
management has and will continue to take numerous steps to create  positive cash
flow for the Company.  These steps include the March 2000 restructure  plan, the
acquisition  of Platinum and the broadening of the Company's  product  offerings
that Management believes will complete the Company's current market strategy. In
addition,  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,  the  liquidation  of its  investment in
NetWolves,  as well as obtaining  additional  debt and equity  financing  should
provide adequate funding through at least June 30, 2002.  However,  there can be
no  assurances  that the Company will have  sufficient  funds to  implement  its
current  plan. In such an event,  the Company  would be forced to  significantly
reduce its  operating  expenses,  which  could have an adverse  effect on future
revenue.


                                       14
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

                       MANAGEMENT DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

           FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000


Forward looking statements

All statements  other than  statements of historical  fact included in this Form
10-Q 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-Q, 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  subsidiaries  (the "Company")  operate  primarily as an
Application  Service Provider (generally referred to as an ASP, also referred to
as the Server Farm) providing high volume data processing and analysis tools for
their  customers.  The Company's core technology,  d.b.Express,  is a management
information  tool providing  targeted access through the mining of large volumes
of transactional data. The Server Farm permits end users the ability to visually
access and  analyze  information  through  the  Internet.  Data can be  visually
presented   using  the  Company's   patented  data   visualization   technology.
Additionally,  in the fourth  quarter 2000,  the Company  entered into a license
agreement  that will enable it to add to its suite of products and  services,  a
complete  Electronic  Bill  Presentment  and  Payment  ("EBPP"),  as  well as an
Internet Customer Care ("ICC") tool set.

In  May  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 such, two
months of Platinum's  financial data are included in the condensed  consolidated
results  of  operations.  Platinum  markets  proprietary  back  office  software
solutions  either as a license  or as an  Application  Service  Provider  to the
telecommunications sector.

In   2000,   the   Company   began   offering   a   new   consulting    service,
"Telecommunications   Solutions"   (also   marketed   under   the  name   Global
Telecommunications  Services  or GTS).  The primary  function of the  consulting
service  is to  create  cost  savings  for  its  customers  through  effectively
negotiating their  telecommunications  and network service provider contracts as
well as  reviewing  both past and future  communication  expenditures  to assure
compliance. The Company is combining this service with its Server Farm to create
a unique,  powerful detailed  customer profile.  This new, enhanced profile will
allow  customers  to  efficiently  optimize  all   telecommunications   contract
compliance,  establish  traffic  metrics,  monitor  invoice  accuracy  and  rate
compliance as well as support  complex  invoicing  and  reporting  requirements,
exception  reporting and electronic  invoicing,  all via the Internet.  This new
service continues to meet resistance in the marketplace.  To date,  revenue from
this service has been insignificant.

In the first quarter of 2000, the Company's Board of Directors  approved and the
Company  announced a  restructuring  plan that it believes would  streamline the
Company's  operations and reduce overhead.  As a result,  the Company recorded a
non-recurring restructuring charge of $15,176,000 in the year 2000.

                                       15
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

                       MANAGEMENT DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

           FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000

In February 2000 the Company sold its subsidiary, ComputerCOP Corp. to NetWolves
for 1,775,000 shares of NetWolves common stock.

The most significant  portion of the Company's  operations had historically been
conducted through one of its subsidiaries,  Softworks.  Through  Softworks,  the
Company developed,  marketed and supported systems management  software products
for corporate mainframe data centers.  Softworks was wholly owned by the Company
through June 29, 1998, and majority owned through March 31, 1999. On January 27,
2000, the Company sold its remaining interest to EMC Corporation.


Results of operations

During the first six months of 2001 and 2000,  the Company's  primary  source of
revenue was generated  from the Server Farm.  Presently the Company is providing
data  analysis  and  reporting  services  for  International  Business  Machines
Corporation's  ("IBM")  telecommunications   customers.  IBM  is  currently  the
Company's largest customer accounting for 81.4% of total revenue or $551,000 and
$393,000, or 78.6% of total revenue for the three months ended June 30, 2001 and
2000,  respectively  and $1,018,000,  or 85.3% and $805,000 or 78.5% for the six
months ended June 30, 2001 and 2000, respectively.  Overall, Server Farm revenue
increased $98,000,  or 20.0%, to $587,000 from $489,000 when comparing the three
months ended June 30, 2001 to June 30, 2000. For the six month period ended June
30,  2001,  when  compared  to the same  period  in 2000,  Server  Farm  revenue
increased $134,000, or 13.8%, to $1,104,000.

As  part  of  an  expanded  agreement,  the  Company  is  scheduled  to  provide
outsourcing  services  to assist IBM with  certain  tasks  related to EBPP.  The
Company will supply processing services, application development, consulting and
integration / implementation services to support electronic invoice presentation
on behalf of IBM. As part of this  expanded  agreement,  the Company has built a
fully redundant facility within an IBM co-location  center. The purpose of which
is to ensure  virtual  zero down time.  Additionally,  the Company is  presently
determining  costs and other barriers to possibly enter and attract new specific
markets / applications.

Included  in total  revenue for the three and six month  periods  ended June 30,
2001, is $90,000 related to Platinum,  which was acquired  effective May 1, 2001
(See Note 13). Included in revenue for the six-month period ended June 30, 2000,
is $35,000  related to  ComputerCOP,  which was sold during the first quarter of
2000. (See Note 8).

For the six months  ended June 30, 2001,  the cost of revenue was  substantially
attributable  to the Server  Farm.  It  consisted  primarily of the direct labor
associated with processing call detail records,  Internet connectivity costs and
various overhead  allocations of rent, utilities and telephones at the corporate
offices as well as the entire  costs of opening and  operating  the  co-location
facility.  While  revenue  related to the Server Farm for the  six-month  period
increased year over year, costs as a percentage of Server Farm revenue increased
to 20.5 % from  17.0%.  Similarly,  while  revenue  related to the  Server  Farm
increased  for the three months  ended June 30, 2001 when  compared to the three
months  ended  June 30,  2000,  costs as a  percentage  of Server  Farm  revenue
increased to 23.3% from 15.1%. These percentage increases are primarily a result
of co-location  facility costs incurred and no additional  revenue.  The Company
believes added revenue generated from the expanded agreement will commence later
this year.  The Company  believes that the cost of revenue  associated  with the
Server Farm revenue is not directly proportional. As such, as revenue increases,
costs,  as a percentage of revenue,  should  decrease.  For the six months ended
June 30, 2000, in addition to Server Farm costs,  the Company also incurred cost
of revenue of $11,000  relating to ComputerCOP.  The  depreciation of the Server
Farm's hardware is included in "Amortization and depreciation."

Research  and  development  expenses  consist  primarily of salaries and related
costs (benefits,  travel, training) for developers, sales application engineers,
quality  control  /  quality  assurance  and  documentation  personnel.  It also

                                       16
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

                       MANAGEMENT DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

           FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000

includes consultants as well as applicable overhead  allocations.  Overall, when
comparing  the  six-month  periods  ended June 30, 2001 and June 30,  2000,  the
Company  reduced its research and development  expenses by $2,162,000.  However,
included in the six months  ended June 30, 2000 were costs  associated  with the
development of the multi-media  display station.  Pursuant to the  restructuring
plan put in place  during  March 2000,  the Company  ceased  development  of the
multi-media display station. As a result, there are no expenses  attributable to
this  project in the first six months of 2001,  thereby  creating a reduction of
$1,793,000 when compared the six months ended June 30, 2000. With respect to the
Server Farm, the Company continues to upgrade improve and enhance the underlying
technology associated with this technology.  Further, it anticipates releasing a
new version of the d.b.Express? technology in 2001. It should be noted that when
comparing  the  six-month  periods  ended June 30,  2001 and 2000,  the  Company
reduced its development  costs  associated to the Server Farm by $454,000.  When
comparing the three-month  periods ended June 30, 2001 and 2000,  total research
and  development  costs  increased  $302,000  from  $479,000  to  $781,000.  The
acquisition of Platinum accounted for $85,000 of the increase,  and expenditures
totaling  approximately  $217,000  relating to the  development  of the expanded
services offering involving EBPP and other internet  applications  accounted for
the balance.

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 decreased  $2,521,000 to $1,122,000 for the six-month period ended June
30, 2001,  when compared to  $3,643,000  for the six month period ended June 30,
2000.  The major  factor  for this  decrease  was the  restructure  plan,  which
included,   among  other  items,  the  elimination  of  $1,073,000   related  to
consultants' fees, and $659,000 in reduced staffing levels.  Further, as part of
the restructure  plan, there was a reduction of expenses of $597,000 as a result
of a contractual  arrangement  wherein the Company no longer is responsible  for
the marketing efforts relating to the multi-media  display station.  The Company
has also reduced by nearly $123,000 its  advertising  and promotional  costs. An
additional  component of the reduction is the sale of  ComputerCOP  in the first
quarter 2000, which created a savings of $210,000.  These reductions were offset
by an increase of $225,000 of expenses  attributable  to the sales and marketing
efforts of the Company's GTS offering as well as $75,000 to the Company's  newly
acquired subsidiary,  Platinum.  However, when comparing the three-month periods
ended  June 30,  2001 and  2000,  costs  increased  $266,000  from  $351,000  to
$617,000.  Expenses  attributable  to GTS and  Platinum of $79,000 and  $75,000,
respectively,  contributed  to  part of  this  increase,  with  the  balance  of
approximately $112,000 attributable to increased efforts to market the Company's
d.b.Express technology.

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 $1,891,000 to $1,979,000
for the  six-month  period ended June 30, 2001,  when  compared to the six-month
period ended June 30, 2000. Major factors contributing to this decrease include,
among other  things,  staff  reductions of $890,000,  reduced legal  expenses of
$418,000  and  the  reduction  in the  retention  of  financial  consultants  of
$244,000.  However,  when comparing the  three-month  period ended June 30, 2001
with the same period ended June 30, 2000, costs increased $552,000 from $597,000
to $1,149,000.  Major factors contributing to this increase include, among other
things,  $85,000 as a result of hiring a new chief executive officer,  increased
legal expenses of $99,000 due primarily to fees  attributable  to the successful
resolution of the derivative  action  complaint;  professional  fees of $62,000,
increased costs associated with the board of directors and shareholders meetings
of $86,000,  additional costs pertaining to GTS of $40,000, and the inclusion of
costs attributable to Platinum of $33,000.

Overall,  expenses during the  three-month  period ended June 30, 2001 increased
compared to 2000. However,  management believes these increases are necessary in
order to achieve the successful  implementation of its plan.  Wherever possible,
cost saving  measures are in place and management  continually  scrutinizes  all
disbursements.  Further, management believes that other than expenses, which may
vary  with  sales  volume,  expenses  should  remain  at  these  levels  for the
foreseeable future.

Amortization  and  depreciation  expenses  increased  $16,000 and  $45,000  when
comparing the three and six-month periods ended June 30, 2001 and June 30, 2000,
respectively. The increase is primarily attributable to the purchase of property
and equipment during the respective periods.

                                       17
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

                       MANAGEMENT DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

           FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000

Gain on sale of Softworks of  $47,813,000  during the six months ended March 31,
2000  represents the gain  associated with a tender offering for the purchase of
Softworks common stock made by EMC  Corporation,  which was completed on January
27, 2000. (See Note 8).

Gain on sale of  ComputerCOP  assets held for sale of $8,534,000  during the six
months ended March 31, 2000  represents  the gain  associated  with an agreement
dated February 10, 2000 for the sale of the ComputerCOP  subsidiary to NetWolves
Corporation. (See Note 8).

As  discussed  in Note 12,  through  July 25, 2001 the Company sold or exchanged
209,900 shares of NetWolves common stock, resulting in a net loss of $98,000.

The Company's tax provision for the three and six months ended June 30, 2001 was
$13,000 and  $46,000,  respectively.  As a result of the  Company's  sale of its
remaining  interest in Softworks in January 2000 and the sale of its ComputerCOP
technology in February 2000, the Company  recognized a taxable gain in the first
quarter of 2000 and utilized all of its then  estimated  available net operating
loss carryforwards. The tax provision for the six months ended June 30, 2000 was
$12,427,000, which consisted of deferred tax expense of $9,197,000 and a current
tax expense of $3,230,000.

                                       18
<PAGE>

Financial Condition and Liquidity

For the  six-month  period ended June 30, 2001,  the Company  continued to incur
operating  losses.  The Company  used  substantial  amounts of cash in operating
activities  during the six months ended June 30, 2001. The Company  continued to
finance its operations  from cash generated from the sale of Softworks.  In late
December 2000, the Company received $10,000,000,  which was being held in escrow
by EMC Corp as a condition to the sale in January 2000 of the  Company's  shares
of Softworks.  As discussed in Note 11, the Company, during the period September
through December 2000, sold $3,000,000 of 6% Convertible  Debentures,  which was
settled with a payment of $3,751,000 in January, 2001.

As detailed in the Condensed  Consolidated  Statement of Cash Flows,  during the
six month  period  ended June 30,  2001,  the  Company  utilized  $4,866,000  in
operating  activities,  which  includes,  among  other  items,  a  net  loss  of
$4,419,000  (offset by non-cash expenses totaling  $1,449,000),  $1,296,000 paid
toward the restructuring and income taxes paid of $802,000

During the six months  ended June 30,  2001,  the  Company,  as a condition to a
recently  expanded  service  agreement  with its major  customer,  commenced the
establishment of a co-location facility by purchasing  approximately $600,000 of
additional  data  processing and Internet  connectivity  equipment.  In February
2001,  the Company made an equity  investment of $500,000  cash in Voyant.  (See
Note 12).

The Company's cash balance as of August 7, 2001, is approximately $1,002,000.

Management's current short-term plan is primarily focused on achieving operating
profit by successfully  marketing innovative software products and services that
capitalize on the Company's  patented  technologies.  To achieve its goals,  the
Company is  continuing  to take what it believes are the  necessary  steps.  The
process  began in March  2000  when the newly  elected  board of  directors  and
management  implemented  a  restructure  plan,  which  eliminated   unprofitable
business units, and reduced its operating  expenses,  while continuing to market
the Server  Farm.  The next key step in  management's  plan was to  enhance  its
product  offering.  As  discussed  in Note 13 to  these  Condensed  Consolidated
Financial Statements, the Company recently completed the acquisition of Platinum
Communications, Inc., a provider of business-to-business infrastructure software
for customer management, billing and operations for telecommunications, Internet
and  next  generation  communications  service  providers.  Platinum's  products
provide an integrated solution based on a singular database strategy serving all
order entry, workflow management,  provisioning, rating and billing requirements
for communications service providers. The acquisition should provide the Company
with  complementary  technology  for dbExpress TM, the existing high volume data
visualization,  analysis and EBP&P  ("Electronic  Bill Presentment and Payment")
toolset currently being marketed to the telecommunications industry. The Company
believes this  acquisition  will allow it to capitalize on the growing trend for
outsource services within the communications  sector.  Further,  the acquisition
broadens the product offering and completes the foundation of our current market
strategy,  that is to focus on the  telecommunications  market  and  expand  our
product / service  offerings,  specifically  aimed at  becoming  a leading  full
service provider for all back office system  functionality.  Lastly, the Company
intends to market its existing visual data analysis and EBP&P product  offerings
to  Platinum's  established  clients,  as well  as  through  their  distribution
channels.

Management  believes that its plan will ultimately enable the Company to achieve
positive cash flows from operations.  Until such time, the Company believes that
its present cash on hand, the  liquidation  of its  investment in NetWolves,  as
well as obtaining  additional debt and equity  financing should provide adequate
funding through at least June 30, 2002. However,  there can be no assurance that
the Company will have sufficient funds to implement its current plan. In such an
event,  the  Company  would be  forced to  significantly  reduce  its  operating
expenses, which could have an adverse effect on future revenue.



                                       19
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

                       MANAGEMENT DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

           FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000

The  Company  is deemed to be an  Affiliate  of  NetWolves.  As such,  there are
certain  restrictions  pursuant to  regulations  of the  Securities and Exchange
Commission that limit the amount of shares that the Company may sell in the open
market in a 90-day period. Should the Company be required to liquidate shares in
excess of the  permitted  quantities,  the Company may need to sell a portion of
its investment in private transactions. Private transactions would likely result
in sales at a discount to the quoted market price. As previously noted,  through
July 25,  2001,  the Company  sold  209,900  shares of  NetWolves  common  stock
resulting  in net proceeds of  approximately  $703,000.  On August 7, 2001,  the
quoted market value of the 1,665,100  remaining shares of NetWolves common stock
was $5,827,850 ($3.50 per share).

NetWolves is an innovator of firewall,  security and all-in-one  Internet access
devise  systems,  which is a trend in the Internet  industry due to the enhanced
functionality  offered to end users. Their primary product is marketed under the
trade name, FoxBox. In addition to the FoxBox  appliances,  NetWolves has patent
pending "Mother System"  technology that offers worldwide  twenty-four hours per
day,  seven days per week,  real-time  monitoring  and  management of a complete
network from one or many locations.


In April 2000,  the  Company  entered  into a  contractual  arrangement  with an
unrelated  third party,  whereby the Company  transferred  all of its in-process
research and development  technology related to the multi- media display station
for the rights to 50% of the future profits (as defined), if any, from the third
party's operation or sale of this technology.  The third party agreed to utilize
its contacts in the industry and also agreed to fund all future costs associated
with the continued development and marketing of the display station. The Company
believes  that it is unlikely  that it will  recognize  any  proceeds  from this
transaction.

                                       20
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

                          PART II - OTHER INFORMATION

           FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000

Item 1. Legal Proceedings
        See Note 5 to the Financial Statements.

Item 2. Changes in Securities
        Not applicable.
Item 3. Defaults Upon Senior Securities
        Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders
     A  Special  Shareholders  Meeting  was  held on May 4,  2001 to  approve  a
proposal to grant the Board of Directors  authority to amend the  Certificate of
Incorporation to authorize a  one-for-fifteen  reverse stock split of the common
stock.

The results of the vote are:

    For   18,349,923;      Against    2,165,245;        Abstain   89,636

Item 5. Other Information
        Not applicable.

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

     Exhibits
     --------

     None


                                       21
<PAGE>

                                   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                 Chairman and Director           August 16, 2001



/s/ George Aronson12
--------------------------
George Aronson                  Chief Financial Officer         August 16, 2001











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