EXHIBIT 10.7

     THIS WARRANT AND THE SHARES OF COMMON STOCK  ISSUABLE UPON EXERCISE OF
     THIS  WARRANT HAVE NOT BEEN  REGISTERED  UNDER THE  SECURITIES  ACT OF
     1933, AS AMENDED,  OR ANY STATE  SECURITIES LAWS. THIS WARRANT AND THE
     COMMON STOCK  ISSUABLE  UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
     OFFERED  FOR  SALE,  PLEDGED  OR  HYPOTHECATED  IN THE  ABSENCE  OF AN
     EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND
     ANY  APPLICABLE  STATE  SECURITIES  LAWS  OR  AN  OPINION  OF  COUNSEL
     REASONABLY  SATISFACTORY  TO  FRONT  PORCH  DIGITAL,  INC.  THAT  SUCH
     REGISTRATION IS NOT REQUIRED.


            RIGHT TO PURCHASE UP TO 500,000 SHARES OF COMMON STOCK OF
                            FRONT PORCH DIGITAL, INC.
                   (SUBJECT TO ADJUSTMENT AS PROVIDED HEREIN)
                          COMMON STOCK PURCHASE WARRANT

No. _________________                              Issue Date:  October 25, 2004

         FRONT PORCH DIGITAL,  INC., a corporation  organized  under the laws of
the State of Nevada ("FPDI"),  hereby certifies that, for value received, LAURUS
MASTER FUND, LTD., or assigns (the "Holder"), is entitled,  subject to the terms
set forth below, to purchase from the Company (as defined herein) from and after
the Issue Date of this  Warrant and at any time or from time to time before 5:00
p.m.,  New York  time,  through  the close of  business  October  25,  2011 (the
"Expiration Date"), up to 500,000 fully paid and nonassessable  shares of Common
Stock (as  hereinafter  defined),  at the applicable  Exercise Price (as defined
below) per share.  The number and  character  of such shares of Common Stock and
the  applicable  Exercise  Price per share are subject to adjustment as provided
herein.

         As used  herein  the  following  terms,  unless the  context  otherwise
requires, have the following respective meanings:

                  (a) The term "Company"  shall include FPDI and any corporation
         which shall succeed, or assume the obligations of, FPDI hereunder.

                  (b) The term "Common Stock" includes (i) the Company's  Common
         Stock,  par value $0.001 per share;  and (ii) any other securities into
         which  or for  which  any of the  securities  described  in (a)  may be
         converted  or  exchanged  pursuant  to  a  plan  of   recapitalization,
         reorganization, merger, sale of assets or otherwise.

                  (c) The term  "Other  Securities"  refers to any stock  (other
         than  Common  Stock) and other  securities  of the Company or any other
         person (corporate or otherwise) which the Holder of this Warrant at any
         time shall be entitled to receive, or shall have

<PAGE>

         received,  on the exercise of the Warrant, in lieu of or in addition to
         Common Stock, or which at any time shall be issuable or shall have been
         issued in  exchange  for or in  replacement  of  Common  Stock or Other
         Securities pursuant to Section 4 or otherwise.

                  (d) The "Exercise  Price"  applicable under this Warrant shall
         be $0.50.

         1. Exercise of Warrant.

                  1.1 Number of Shares  Issuable upon  Exercise.  From and after
         the date hereof through and including the  Expiration  Date, the Holder
         shall be entitled to receive, upon exercise of this Warrant in whole or
         in part,  by delivery of an original or fax copy of an exercise  notice
         in the form attached hereto as Exhibit A (the "Exercise  Notice") up to
         500,000  shares of Common Stock of the Company,  subject to  adjustment
         pursuant to Section 4.

                  1.2 Fair Market Value. For purposes  hereof,  the "Fair Market
         Value"  of a  share  of  Common  Stock  as of a  particular  date  (the
         "Determination Date") shall mean:

                  (a) If the  Company's  Common  Stock is traded on the American
         Stock  Exchange  or  another  national  exchange  or is  quoted  on the
         National  or  SmallCap   Market  of  The  Nasdaq  Stock  Market,   Inc.
         ("Nasdaq"), then the closing or last sale price, respectively, reported
         for the last business day immediately preceding the Determination Date.

                  (b)  If the  Company's  Common  Stock  is  not  traded  on the
         American Stock Exchange or another  national  exchange or on the Nasdaq
         but is traded on the National  Association of Securities Dealers,  Inc.
         Over-the-Counter  Bulletin  Board,  then the mean of the average of the
         closing  bid and  asked  prices  reported  for the  last  business  day
         immediately preceding the Determination Date.

                  (c) Except as provided in clause (d) below,  if the  Company's
         Common Stock is not publicly traded, then as the Holder and the Company
         agree or in the absence of agreement by arbitration in accordance  with
         the  rules  then in  effect of the  American  Arbitration  Association,
         before  a  single  arbitrator  to be  chosen  from a panel  of  persons
         qualified  by  education  and  training  to  pass on the  matter  to be
         decided.

                  (d) If the  Determination  Date is the date of a  liquidation,
         dissolution  or winding  up, or any event  deemed to be a  liquidation,
         dissolution or winding up pursuant to the Company's  charter,  then all
         amounts to be payable per share to holders of the Common Stock pursuant
         to the charter in the event of such liquidation, dissolution or winding
         up,  plus all other  amounts to be payable  per share in respect of the
         Common  Stock  in  liquidation  under  the  charter,  assuming  for the
         purposes of this clause (d) that all of the shares of Common Stock then
         issuable  upon  exercise  of  the  Warrant  are   outstanding   at  the
         Determination Date.

                  1.3 COMPANY  ACKNOWLEDGMENT.  The Company will, at the time of
         the exercise of this  Warrant,  upon the request of the Holder  hereof,
         acknowledge in writing

                                       7
<PAGE>

         its continuing obligation to afford to such Holder any rights to which
         such Holder shall continue to be entitled after such exercise in
         accordance with the provisions of this Warrant. If the Holder shall
         fail to make any such request, such failure shall not affect the
         continuing obligation of the Company to afford to such Holder any such
         rights.

                  1.4 TRUSTEE FOR WARRANT HOLDERS. In the event that a bank or
         trust company shall have been appointed as trustee for the Holder of
         this Warrant pursuant to Subsection 3.2, such bank or trust company
         shall have all the powers and duties of a warrant agent (as hereinafter
         described) and shall accept, in its own name for the account of the
         Company or such successor person as may be entitled thereto, all
         amounts otherwise payable to the Company or such successor, as the case
         may be, on exercise of this Warrant pursuant to this Section 1.

         2. PROCEDURE FOR EXERCISE.

                  2.1 DELIVERY OF STOCK CERTIFICATES, ETC., ON EXERCISE. The
         Company agrees that the shares of Common Stock purchased upon exercise
         of this Warrant shall be deemed to be issued to the Holder as the
         record owner of such shares as of the close of business on the date on
         which this Warrant shall have been surrendered and payment made for
         such shares in accordance herewith. As soon as practicable after the
         exercise of this Warrant in full or in part, and in any event within
         three (3) business days thereafter, the Company at its expense
         (including the payment by it of any applicable issue taxes) will cause
         to be issued in the name of and delivered to the Holder, or as such
         Holder (upon payment by such Holder of any applicable transfer taxes)
         may direct in compliance with applicable securities laws, a certificate
         or certificates for the number of duly and validly issued, fully paid
         and nonassessable shares of Common Stock (or Other Securities) to which
         such Holder shall be entitled on such exercise, plus, in lieu of any
         fractional share to which such Holder would otherwise be entitled, cash
         equal to such fraction multiplied by the then Fair Market Value of one
         full share, together with any other stock or other securities and
         property (including cash, where applicable) to which such Holder is
         entitled upon such exercise pursuant to Section 1 or otherwise.

                  2.2 EXERCISE. Payment may be made either (i) in cash or by
         certified or official bank check payable to the order of the Company
         equal to the applicable aggregate Exercise Price, (ii) by delivery of
         this Warrant, or shares of Common Stock and/or Common Stock receivable
         upon exercise of this Warrant in accordance with Section (b) below, or
         (iii) by a combination of any of the foregoing methods, for the number
         of Common Shares specified in such Exercise Notice (as such exercise
         number shall be adjusted to reflect any adjustment in the total number
         of shares of Common Stock issuable to the Holder per the terms of this
         Warrant); provided, however, that if at the time of delivery of an
         Exercise Notice the shares of Common Stock to be issued upon payment of
         the Exercise Price have been registered under the Securities Act of
         1933, as amended (the "Securities Act"), and are covered by an
         effective registration statement under the Securities Act, payment of
         the Exercise Price may only be made pursuant to clause (i) above and
         may not be made pursuant to clause (ii) or (iii) above. Upon receipt

                                       8
<PAGE>

         by the Company of an Exercise Notice and proper payment of the
         aggregate Exercise Price, the Holder shall thereupon be entitled to
         receive the number of duly authorized, validly issued, fully-paid and
         non-assessable shares of Common Stock (or Other Securities) determined
         as provided herein. Notwithstanding any provisions herein to the
         contrary, if the Fair Market Value of one share of Common Stock is
         greater than the Exercise Price (at the date of calculation as set
         forth below), in lieu of exercising this Warrant for cash, the Holder
         may elect to receive shares equal to the value (as determined below) of
         this Warrant (or the portion thereof being exercised) by surrender of
         this Warrant at the principal office of the Company together with the
         properly endorsed Exercise Notice, in which event the Company shall
         issue to the Holder a number of shares of Common Stock computed using
         the following formula:

         X=Y       (A-B)
                 ---------
                     A

         Where X =         the number of shares of Common Stock to be issued to
                           the Holder

         Y =               the number of shares of Common Stock purchasable
                           under this Warrant or, if only a portion of this
                           Warrant is being exercised, the portion of this
                           Warrant being exercised (at the date of such
                           calculation)

         A =               the Fair Market  Value of one share of the  Company's
                           Common Stock (at the date of such calculation)

         B =               the Exercise Price (as adjusted to the date of such
                           calculation)

         3. EFFECT OF REORGANIZATION, ETC.; ADJUSTMENT OF EXERCISE PRICE.

                  3.1 REORGANIZATION, CONSOLIDATION, MERGER, ETC. In case at any
         time or from time to time, the Company shall (a) effect a
         reorganization, (b) consolidate with or merge into any other person, or
         (c) transfer all or substantially all of its properties or assets to
         any other person under any plan or arrangement contemplating the
         dissolution of the Company, then, in each such case, as a condition to
         the consummation of such a transaction, proper and adequate provision
         shall be made by the Company whereby the Holder of this Warrant, on the
         exercise hereof as provided in Section 1 at any time after the
         consummation of such reorganization, consolidation or merger or the
         effective date of such dissolution, as the case may be, shall receive,
         in lieu of the Common Stock (or Other Securities) issuable on such
         exercise prior to such consummation or such effective date, the stock
         and other securities and property (including cash) to which such Holder
         would have been entitled upon such consummation or in connection with
         such dissolution, as the case may be, if such Holder had so exercised
         this Warrant, immediately prior thereto, all subject to further
         adjustment thereafter as provided in Section 4.

                  3.2 DISSOLUTION. In the event of any dissolution of the
         Company following the transfer of all or substantially all of its
         properties or assets, the Company, concurrently with any distributions
         made to holders of its Common Stock, shall at its expense deliver

                                       9
<PAGE>

         or cause to be delivered to the Holder the stock and other securities
         and property (including cash, where applicable) receivable by the
         Holder of this Warrant pursuant to Section 3.1, or, if the Holder shall
         so instruct the Company, to a bank or trust company specified by the
         Holder and having its principal office in New York, NY as trustee for
         the Holder of this Warrant (the "Trustee").

                  3.3 CONTINUATION OF TERMS. Upon any reorganization,
         consolidation, merger or transfer (and any dissolution following any
         transfer) referred to in this Section 3, this Warrant shall continue in
         full force and effect and the terms hereof shall be applicable to the
         shares of stock and other securities and property receivable on the
         exercise of this Warrant after the consummation of such reorganization,
         consolidation or merger or the effective date of dissolution following
         any such transfer, as the case may be, and shall be binding upon the
         issuer of any such stock or other securities, including, in the case of
         any such transfer, the person acquiring all or substantially all of the
         properties or assets of the Company, whether or not such person shall
         have expressly assumed the terms of this Warrant as provided in Section
         4. In the event this Warrant does not continue in full force and effect
         after the consummation of the transactions described in this Section 3,
         then the Company's securities and property (including cash, where
         applicable) receivable by the Holders of the Warrant will be delivered
         to Holder or the Trustee as contemplated by Section 3.2.

         4. EXTRAORDINARY EVENTS REGARDING COMMON STOCK. In the event that the
Company shall (a) issue additional shares of the Common Stock as a dividend or
other distribution on outstanding Common Stock, (b) subdivide its outstanding
shares of Common Stock, or (c) combine its outstanding shares of the Common
Stock into a smaller number of shares of the Common Stock, then, in each such
event, the Exercise Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then Exercise Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Exercise Price then in effect. The
Exercise Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this Section 4.
The number of shares of Common Stock that the Holder of this Warrant shall
thereafter, on the exercise hereof as provided in Section 1, be entitled to
receive shall be increased to a number determined by multiplying the number of
shares of Common Stock that would otherwise (but for the provisions of this
Section 4) be issuable on such exercise by a fraction of which (a) the numerator
is the Exercise Price that would otherwise (but for the provisions of this
Section 4) be in effect, and (b) the denominator is the Exercise Price in effect
on the date of such exercise.

         5. CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on the
exercise of this Warrant, the Company at its expense will promptly cause its
Chief Financial Officer or other appropriate designee to compute such adjustment
or readjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment or readjustment and showing in

                                       10
<PAGE>

detail the facts upon which such adjustment or readjustment is based, including
a statement of (a) the consideration received or receivable by the Company for
any additional shares of Common Stock (or Other Securities) issued or sold or
deemed to have been issued or sold, (b) the number of shares of Common Stock (or
Other Securities) outstanding or deemed to be outstanding, and (c) the Exercise
Price and the number of shares of Common Stock to be received upon exercise of
this Warrant, in effect immediately prior to such adjustment or readjustment and
as adjusted or readjusted as provided in this Warrant. The Company will
forthwith mail a copy of each such certificate to the Holder of this Warrant and
any Warrant agent of the Company (appointed pursuant to Section 11 hereof).

         6. RESERVATION OF STOCK, ETC., ISSUABLE ON EXERCISE OF WARRANT. The
Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise of this Warrant, shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of this Warrant.

         7. ASSIGNMENT; EXCHANGE OF WARRANT. Subject to compliance with
applicable securities laws, this Warrant, and the rights evidenced hereby, may
be transferred by any registered holder hereof (a "Transferor") in whole or in
part. On the surrender for exchange of this Warrant, with the Transferor's
endorsement in the form of Exhibit B attached hereto (the "Transferor
Endorsement Form") and together with evidence reasonably satisfactory to the
Company demonstrating compliance with applicable securities laws, which shall
include, without limitation, the provision of a legal opinion from the
Transferor's counsel that such transfer is exempt from the registration
requirements of applicable securities laws, and with payment by the Transferor
of any applicable transfer taxes) will issue and deliver to or on the order of
the Transferor thereof a new Warrant of like tenor, in the name of the
Transferor and/or the transferee(s) specified in such Transferor Endorsement
Form (each a "Transferee"), calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock called for on the face or faces
of the Warrant so surrendered by the Transferor.

         8. REPLACEMENT OF WARRANT. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.

         9. REGISTRATION RIGHTS. The Holder of this Warrant has been granted
certain registration rights by the Company. These registration rights are set
forth in a Registration Rights Agreement dated as of even date of this Warrant
entered into by the Company and the initial Holder of this Warrant.

         10. MAXIMUM EXERCISE. The Holder shall not be entitled to exercise this
Warrant on an exercise date, in connection with that number of shares of Common
Stock which would be in excess of the sum of (i) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates on such exercise date,
and (ii) the number of shares of Common Stock

                                       11
<PAGE>

issuable upon the exercise of this Warrant with respect to which the
determination of this proviso is being made on such exercise date, which would
result in beneficial ownership by the Holder and its affiliates of more than
4.99% of the outstanding shares of Common Stock of the Company on such date. For
the purposes of the proviso to the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder.
Notwithstanding the foregoing, the restriction described in this paragraph may
be revoked upon 75 days prior notice from the Holder to the Company and is
automatically null and void upon an Event of Default under the Note.

         11. WARRANT AGENT. The Company may, by written notice to the Holder of
this Warrant, appoint an agent for the purpose of issuing Common Stock (or Other
Securities) on the exercise of this Warrant pursuant to Section 1, exchanging
this Warrant pursuant to Section 7, and replacing this Warrant pursuant to
Section 8, or any of the foregoing, and thereafter any such issuance, exchange
or replacement, as the case may be, shall be made at such office by such agent.

         12. TRANSFER ON THE COMPANY'S BOOKS. Until this Warrant is transferred
on the books of the Company, the Company may treat the registered Holder hereof
as the absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.

         13. NOTICES, ETC. All notices and other communications from the Company
to the Holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, at such address as may have been furnished to
the Company in writing by such Holder or, until any such Holder furnishes to the
Company an address, then to, and at the address of, the last Holder of this
Warrant who has so furnished an address to the Company.

         14. MISCELLANEOUS. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant shall be governed by and construed in accordance with
the laws of State of New York without regard to principles of conflicts of laws.
Any action brought concerning the transactions contemplated by this Warrant
shall be brought only in the state courts of New York or in the federal courts
located in the state of New York; provided, however, that the Holder may choose
to waive this provision and bring an action outside the State of New York. The
individuals executing this Warrant on behalf of the Company agree to submit to
the jurisdiction of such courts and waive trial by jury. In the event that any
provision of this Warrant is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of this Warrant. The headings in this Warrant are for
purposes of reference only, and shall not limit or otherwise affect any of the
terms hereof. The invalidity or unenforceability of any provision hereof shall
in no way affect the validity or enforceability of any other provision hereof.
The Company acknowledges that legal counsel participated in the preparation of
this Warrant and, therefore, stipulates that the rule of

                                       12
<PAGE>

construction that ambiguities are to be resolved against the drafting party
shall not be applied in the interpretation of this Warrant to favor any party
against the other party.

                   [BALANCE OF PAGE INTENTIONALLY LEFT BLANK;
                            SIGNATURE PAGE FOLLOWS.]




                                       13
<PAGE>


         IN WITNESS WHEREOF, the Company has executed this Warrant as of the
date first written above.

                                       FRONT PORCH DIGITAL, INC.


WITNESS: /s/ MINDY BOATRIGHT           By:    /s/ MATTHEW RICHMAN
         -------------------------            ----------------------------------
                                       Name:  Matthew Richman
                                       Title: Senior Vice President - Corporate
                                              Development and Treasurer





                                       14
<PAGE>

                                                                       EXHIBIT A

                              FORM OF SUBSCRIPTION
                   (To Be Signed Only On Exercise Of Warrant)

TO:   Front Porch Digital, Inc.
      1140 Pearl Street
      Boulder, CO 80302
      Attention:  Chief Financial Officer


         The  undersigned,  pursuant to the provisions set forth in the attached
Warrant (No.____), hereby irrevocably elects to purchase (check applicable box):

____________      _______ shares of the Common Stock covered by such Warrant; or

____________      the maximum  number of shares of Common Stock  covered by such
                  Warrant pursuant to the cashless exercise  procedure set forth
                  in Section 2.

         The  undersigned  herewith makes payment of the full Exercise Price for
such  shares  at the  price per share  provided  for in such  Warrant,  which is
$___________. Such payment takes the form of (check applicable box or boxes):

____________      $__________ in lawful money of the United States; and/or

____________      the cancellation of such portion of the attached Warrant as is
                  exercisable  for a total of  _______  shares of  Common  Stock
                  (using a Fair Market  Value of $_______ per share for purposes
                  of this calculation); and/or

____________      the  cancellation  of such number of shares of Common Stock as
                  is  necessary,  in  accordance  with the  formula set forth in
                  Section  2.2, to exercise  this  Warrant  with  respect to the
                  maximum number of shares of Common Stock purchasable  pursuant
                  to the cashless exercise procedure set forth in Section 2.

         The  undersigned  requests  that the  certificates  for such  shares be
issued in the name of, and delivered to  ________________________________  whose
address is

---------------------------------------------------------------------------.

         The  undersigned  represents  and warrants that all offers and sales by
the  undersigned of the securities  issuable upon exercise of the within Warrant
shall be made pursuant to  registration of the Common Stock under the Securities
Act of 1933, as amended (the "Securities  Act") or pursuant to an exemption from
registration under the Securities Act.

Dated:
       ----------------------------    -----------------------------------------
                                       (Signature must conform to name of holder
                                       as specified on the face of the Warrant)

                                       Address:
                                                --------------------------------

                                                --------------------------------


<PAGE>

                                                                       EXHIBIT B

                         FORM OF TRANSFEROR ENDORSEMENT

                   (To Be Signed Only On Transfer Of Warrant)

         For  value  received,   the  undersigned  hereby  sells,  assigns,  and
transfers  unto the person(s)  named below under the heading  "Transferees"  the
right represented by the within Warrant to purchase the percentage and number of
shares of Common  Stock of Front  Porch  Digital,  Inc.  into  which the  within
Warrant  relates  specified  under the  headings  "Percentage  Transferred"  and
"Number Transferred,"  respectively,  opposite the name(s) of such person(s) and
appoints each such person Attorney to transfer its respective right on the books
of Front Porch Digital, Inc. with full power of substitution in the premises.

<TABLE>
<CAPTION>
                                                                                 Percentage               Number
Transferees                               Address                                Transferred            Transferred
-----------                               -------                                -----------            -----------


<S>                                       <C>                                    <C>                  <C>
--------------------------------------    -----------------------------------    -----------------    ----------------


--------------------------------------    -----------------------------------    -----------------    ----------------


--------------------------------------    -----------------------------------    -----------------    ----------------


--------------------------------------    -----------------------------------    -----------------    ----------------
</TABLE>


Dated:
       -------------------------    --------------------------------------------
                                    (Signature must conform to name of holder as
                                    specified on the face of the Warrant)

                                    Address:
                                            ------------------------------------

                                            ------------------------------------


                                    SIGNED IN THE PRESENCE OF:


                                    --------------------------------------------
                                                     (Name)
ACCEPTED AND AGREED:
[TRANSFEREE]



---------------------------------------
                 (Name)