UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-QSB
                                   (Mark One)

        [X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934
                         For the period ended March 31,
                                      2003

        [ ]    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
               For the transition period from _______ to _______.


                        Commission File Number 333-16031

                            FRONT PORCH DIGITAL INC.
                            ------------------------
           (Name of small business issuer as specified in its charter)

             NEVADA                                              86-0793960
             ------                                              ----------
   State or other jurisdiction                                (I.R.S. Employer
of incorporation or organization)                            Identification No.)

                               20000 Horizon Way,
                                    Suite 120
                          MT. LAUREL, NEW JERSEY 08054
                    (Address of principal executive offices)

                                 (856) 439-9950
                           (Issuer's telephone number)

Check  whether the issuer (1) 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 [ ] No [X]

As of May 22, 2003,  41,615,648  shares of the issuer's common stock,  par value
$.001, were outstanding.

Transitional Small Business Disclosure Format (check one):  Yes [  ]   No [X]


<PAGE>

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS -



                            FRONT PORCH DIGITAL, INC.
                           CONSOLIDATED BALANCE SHEETS

                                   [Unaudited]

<TABLE>
<CAPTION>
ASSETS                                                                       March 31, 2003
<S>                                                                          <C>
Current assets:
  Cash and cash equivalents                                                  $    126,722
  Accounts receivable - trade & other, net of allowance of $125,000:
    Non-affiliates                                                              1,184,804
    Affiliates                                                                    568,794
  Deferred costs                                                                   35,237
  Other current assets                                                            419,568
                                                                             ------------
Total current assets                                                            2,335,125

Restricted cash                                                                    84,311

Property and equipment, net                                                     1,000,471

Software development costs, net                                                   273,784

Software and intellectual property, net
  of accumulated amortization of $701,709                                       1,688,845

Excess cost over fair value of net assets acquired, net
  of accumulated amortization of $949,778                                       4,364,439

Other assets                                                                       45,745
                                                                             ------------
Total assets                                                                 $  9,792,720
                                                                             ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of note payable                                              $    307,500
Current lease liability                                                            18,845
Accounts payable                                                                1,561,817
Accrued expenses                                                                1,094,866
Accrued expenses - employees                                                      696,312
Deferred revenue                                                                  581,046
                                                                             ------------
Total current liabilities                                                       4,260,386

Note payable, net of current portion                                            1,121,463
Other long-term obligations, net of current portion                               438,337
Other long-term liabilities                                                        48,082

Stockholders' equity:
  Preferred stock, nonvoting, $.001 par value, 5,000,000 shares
    authorized, none issued or outstanding
Common stock, $.001 par value 50,000,000 shares authorized
  32,329,937 shares issued and outstanding                                         32,330
Additional paid in capital                                                     23,321,361
Accumulated other comprehensive income                                             66,144
Common stock to be issued                                                         750,000
Accumulated deficit                                                           (20,245,383)
                                                                             ------------
Total stockholders' equity                                                      3,924,452
                                                                             ------------

Total liabilities and stockholders' equity                                   $  9,792,720
                                                                             ============
</TABLE>


SEE ACCOMPANYING NOTES.

<PAGE>

                            FRONT PORCH DIGITAL, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (Unaudited)

                                                  Three months ended March 31,
                                                  ----------------------------
                                                      2003              2002
                                                  ----------------------------
Revenues:
  Products                                        $   869,188       $  111,200
  Services                                            510,529          138,986
  Services - affiliate                              1,048,982              -
                                                  -----------      -----------
Total revenue                                       2,428,699          250,186
Cost of revenue:
  Products                                            140,312           44,735
  Services                                            471,460           60,982
                                                  -----------      -----------
                                                      611,772          105,717
                                                  -----------      -----------
Gross margin                                        1,816,927          144,469

Selling, general and administrative                 1,403,364          766,234
Research and development                              146,124          102,849
Depreciation                                          209,642          153,096
Amortization                                          149,492           58,929
                                                  -----------      -----------
                                                    1,908,622        1,081,108
Loss from operations                                  (91,695)        (936,639)

Other income (expense):
Interest income                                           385              897
Interest expense                                     (153,536)          (4,500)
Other expense                                           1,265               -
Foreign currency transaction loss                        (702)              -
                                                  -----------      -----------
                                                     (152,588)          (3,603)
                                                  -----------      -----------
Net loss                                          $  (244,283)     $  (940,242)
                                                  ===========      ===========
Weighted average number of common
shares outstanding - basic and diluted             32,329,937       25,959,646
Loss per common share - basic and diluted             $ (0.01)         $ (0.04)
                                                  -----------      -----------


SEE ACCOMPANYING NOTES.

                                       3

<PAGE>

                            FRONT PORCH DIGITAL, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                             Quarter Ended March 31,
                                                                                       2003                          2002
                                                                                  ------------------------------------------
<S>                                                                             <C>                           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                                             (244,283)                   $ (940,242)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation & amortization                                                           359,134                       212,025
Non-cash interest expense                                                             138,750                           -
Non-cash issuance of common stock to employees and consultants                            -                          83,774
Stock option compensation cost                                                          9,259                        68,987
Gain on sale of fixed assets                                                           (9,951)                          -
Changes in operating assets and liabilities:
Increase in accounts receivable                                                       (65,202)                      (86,655)
Decrease in deferred costs                                                             53,290                           -
Decrease (increase) in other current assets                                           175,065                      (173,901)
Decrease in other assets                                                               63,600                           -
(Decrease) increase in accounts payable                                              (115,944)                      179,968
(Decrease) increase in accrued expenses                                               (88,261)                        7,332
Increase (decrease) in accrued expenses - employees                                    13,111                       (13,355)
(Decrease) increase in deferred revenue                                              (709,253)                      173,177
Other changes in operating activities                                                     -                          83,381
                                                                                -------------                 -------------
Net cash used in operating activities                                                (420,685)                     (405,509)
                                                                                -------------                 -------------

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures                                                                   (6,451)                      (13,506)
Software development costs                                                            (62,180)                      (13,088)
Proceeds from sale of fixed assets                                                     31,354                           -
Other investing activities                                                             (7,539)                          -
                                                                                -------------                 -------------
Net cash used in investing activities                                                 (44,816)                      (26,594)
                                                                                -------------                 -------------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note payable                                                                -                         350,000
Repayment of note payable and capital leases                                         (120,373)                          -
Proceeds from issuance of common stock                                                    -                          50,000
                                                                                -------------                 -------------
Net cash (used in)  provided by financing activities                                 (120,373)                      400,000
                                                                                -------------                 -------------

Effect of exchange rate fluctuations on cash and cash equivalents                      (2,561)                          -
                                                                                                                        -

Net increase (decrease) in cash and cash equivalents                                 (588,435)                      (32,103)
Cash and cash equivalents (including restricted cash), beginning of period            799,468                       393,439
                                                                                -------------                 -------------
Cash and cash equivalents (including restricted cash), end of period                  211,033                       361,336
                                                                                =============                 =============
</TABLE>


SEE ACCOMPANYING NOTES.

                                       4

<PAGE>

                            FRONT PORCH DIGITAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BASIS OF PRESENTATION

Front Porch Digital Inc. (the "Company")  enables the  conversion,  preservation
and management of analog and digital  content,  including text,  images,  audio,
graphics,  video and rich  media.  The  Company  develops  proprietary  software
products and performs  services  that convert  content into digital  formats for
subsequent  storage  and  on-demand  delivery  in the same or other  formats  or
digital  platforms.  The  software,  based  on  proprietary  and  patent-pending
technology,  enables a new  paradigm in the way  broadcasters,  content  owners,
education and law  enforcement  personnel  manage their  workflow - a shift from
tape-oriented warehousing to a fully-digital, instant access automated archive.

The Company's customers are located in the United States, Europe and Asia.

The  consolidated  financial  statements  of the Company have been prepared on a
going-concern   basis,   which   contemplates  the  realization  of  assets  and
liabilities  in the normal  course of business.  Accordingly,  the  consolidated
financial  statements  do not include any  adjustments  that might be  necessary
should the Company be unable to continue in existence.  The Company has incurred
losses  since  commencement  of  operations  in its  current  line of  business.
Although the  Company's  operating  results have  improved in 2002 and the first
quarter  of  2003,  the  Company  has made  certain  progress  toward  financial
stability as described in Note 8 Subsequent  Events, and the Company expects its
results of operations to continue to improve  throughout  2003,  there can be no
assurance  that the  Company  will not  continue  to sustain  operating  losses.
Further,  for the three months ended March 31,  2003,  the Company  incurred net
losses and negative  cash flows from  operating  activities  of $0.2 million and
$0.4  million,  respectively.  For the three months  ended March 31,  2003,  the
Company  incurred a loss from operations of $92,000.  In addition,  at March 31,
2003, the Company had a working capital  deficit of $1.9 million.  These factors
create  significant  uncertainty  about the  Company's  ability to continue as a
going concern.

During  the  first  quarter  of  2003,   management  continued   implementing  a
restructuring  of the operations of the Company that included  reorganizing  the
personnel of the Company,  reducing headcount,  reducing non-essential operating
costs and refocusing the Company's business strategy, products and services. The
Company has also undertaken an aggressive cash management  program that includes
deferral of payment of certain  expenses and the accelerated  collection of cash
payments on  contracted  revenues.  Management  of the Company  recognizes  that
additional  resources  will be required to continue as a going  concern  and, in
April 2003, secured additional capital and restructured  certain  liabilities as
described in Note 8 -- Subsequent Events. Management believes these actions will
enable the Company to obtain  sufficient  cash to  continue as a going  concern.
However,  there can be no  assurance  that the  additional  capital and improved
liquidity will be adequate to enable the Company to continue as a going concern.

The accompanying unaudited financial statements have been prepared in accordance
with accounting  principles  generally accepted in the United States for interim
financial  information  and  pursuant  to  the  rules  and  regulations  of  the
Securities  and Exchange  Commission.  Accordingly,  they do not include all the
information and footnotes required by generally accepted  accounting  principles
for  complete  financial  statements.  Management  of the Company  believes  the
disclosures  are adequate to make the information  presented not misleading.  In
the opinion of  management,  all  adjustments  considered  necessary  for a fair
presentation  have  been  included  and such  adjustments  are of a  normal  and
recurring nature. For further information, refer to


                                       5

<PAGE>

                            FRONT PORCH DIGITAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


the financial  statements and footnotes  included in the Company's Annual Report
on Form 10-KSB for the year ended December 31, 2002.

Operating  results for the three months ended March 31, 2003 are not necessarily
indicative of the operating  results  expected for the year ending  December 31,
2003.

PRINCIPLES OF CONSOLIDATION

The  consolidated  financial  statements  include  the  accounts  of Front Porch
Digital, Inc. and its wholly-owned  subsidiary (the "Company").  All significant
intercompany transactions and balances have been eliminated in consolidation.

REVENUE RECOGNITION

The Company  recognizes  revenue  when  persuasive  evidence  of an  arrangement
exists,  delivery and acceptance has occurred, the fee is fixed or determinable,
and collection is reasonably assured.

The Company licenses software under license agreements and provides professional
services, including training, installation,  consulting and maintenance. License
fee revenues  are  recognized  when a license  agreement  has been  signed,  the
software  product  has  been  shipped,  the  fees are  fixed  and  determinable,
collection is considered probable and no significant vendor obligations remain.

The  Company  allocates  revenue  to each  component  of the  contract  based on
objective  evidence of its fair value,  as established  by  management.  Because
licensing  of the  software  generally  is  not  dependent  on the  professional
services  portion of the  contract,  the  software  revenue is  recognized  upon
delivery.

Fees for  maintenance  agreements  are  recognized  ratably over the term of the
agreement.  Maintenance  is  generally  billed in advance  resulting in deferred
revenues.

The  Company  provides  software-related  professional  services.  Services  are
generally  provided on a time and  materials  basis and revenue is recognized as
the services are provided.

Revenue under service  contracts is recognized when services have been performed
and accepted, or on the proportional-performance method of accounting, depending
on the nature of the project. The extent of progress toward completion under the
proportional-performance method of accounting is measured by using the number of
sites and/or units under the contract that have been  completed and the progress
towards completion of batches in progress at period end.

STOCK-BASED COMPENSATION

The Company has elected to follow  Accounting  Principles  Board Opinion No. 25,
"Accounting  for Stock  Issued to  Employees,"  and related  interpretations  in
accounting for its employee  stock options  because the  alternative  fair value
accounting provided for under Financial  Accounting Standards Board Statement of
Financial  Accounting  Standard  (SFAS) No.  123,  "Accounting  for Stock  Based
Compensation,"  requires  the use of  option  valuation  models  that  were  not
developed for use in valuing employee stock options. The effect of applying SFAS
No. 123's fair value method to the  Company's  stock-based  award results in pro
forma net loss that is not materially  different  from the amounts  reported for
the three  months  ended  March 31, 2002 and 2003 and loss per share that is the
same as the amounts reported for the three months ended March 31, 2002 and 2003.
Pro forma  results of  operations  may not be  representative  of the effects on
reported or pro forma  results of  operations  for future  years.  For the three
months ended March 31, 2003 and 2002,  $10,000 and 69,000 of  compensation  cost
was recorded, respectively.


                                       6
<PAGE>

                            FRONT PORCH DIGITAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


The Company accounts for equity  instruments issued to non-employees in exchange
for goods or services  using the fair value method and records  expense based on
the values determined.

USE OF ESTIMATES

The  preparation of the  consolidated  financial  statements in conformity  with
accounting   principles   generally  accepted  in  the  United  States  requires
management to make estimates and assumptions  affecting the reported  amounts of
assets and liabilities  and the disclosure of contingent  assets and liabilities
at the date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting  period.  Actual results could differ
from those estimates.

RECLASSIFICATIONS

Certain  reclassifications  have been made to prior year amounts and balances to
conform with the 2003 presentation.

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In December  2002, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standard  ("SFAS") No. 148,  "Accounting for
Stock-Based  Compensation  -- Transition  and Disclosure -- an amendment of FASB
Statement  No.  123."  SFAS  No.  148  amends  SFAS  No.  123,  "Accounting  for
Stock-Based  Compensation," to provide  alternative  methods of transition for a
voluntary  change to the fair value based method of accounting  for  stock-based
employee  compensation.   In  addition,  SFAS  No.  148  amends  the  disclosure
requirements of SFAS No. 123 to require prominent disclosures in both annual and
interim  financial  statements  about the method of accounting  for  stock-based
employee compensation and the effect of the method used on reported results. The
Company  has  not  adopted  SFAS  No.  148 in  its  accounting  for  stock-based
compensation.   However  it  has  updated  its  disclosure  to  conform  to  the
pronouncement.


3. ACQUISITION

On  July  31,  2002,  the  Company  acquired  all of the  outstanding  stock  of
ManagedStorage International France, a French SOCIETE PAR ACTIONS SIMPLIFEE("MSI
France"), and certain assets of ManagedStorage  International,  Inc., a Delaware
corporation ("ManagedStorage"), pursuant to a Stock and Asset Purchase Agreement
dated as of July 31, 2002 (the  "Purchase  Agreement"),  between the Company and
ManagedStorage.  The consideration  paid by the Company pursuant to the Purchase
Agreement consisted of (a) 5,000,000 shares of common stock, par value $.001 per
share, of the Company (the "Company  Common  Stock"),  which were valued at $1.5
million;  (ii) a warrant for the purchase of up to  1,750,000  shares of Company
Common Stock at a price of $2.00 per share, exercisable immediately and expiring
on July 31, 2012; and (iii) a warrant for the purchase of up to 1,750,000 shares
of Company Common Stock at a price of $4.00 per share,  exercisable  immediately
and expiring on July 31,  2012.  In December  2002,  an  additional  $750,000 of
consideration  became  payable to the seller as certain  earn-out  targets  were
achieved.  This amount was  recorded  as common  stock to be issued at March 31,
2003 and, in April 2003,  2.5 million shares of common stock of the Company were
issued in satisfaction of this earn-out consideration.

Pursuant  to the terms of the  Purchase  Agreement,  the Company  acquired  from
ManagedStorage  (i) all of the issued and outstanding shares of capital stock of
MSI


                                       7

<PAGE>


                            FRONT PORCH DIGITAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

France and (ii)  certain  software  and related  intellectual  property  rights,
including   DIVArchive,   a  software   solution   designed  to  assist   media,
entertainment  and  medical  companies  in  the  preservation,   management  and
accessing of digital content consisting of large digital data files.

Pursuant  to the  Purchase  Agreement,  ManagedStorage  entered  into a  Lock-Up
Agreement   with  the   Company   whereby,   subject  to   certain   exceptions,
ManagedStorage agreed not to sell, assign, transfer, pledge or otherwise dispose
of any Company  Common  Stock owned or  acquired by it or any  interest  therein
prior to July 31, 2003, except as expressly  permitted by the Lock-Up Agreement.
In connection with the  transaction,  ManagedStorage  was granted certain demand
registration  rights with respect to the shares of Company Common Stock acquired
by ManagedStorage pursuant to the terms of the Purchase Agreement.

The acquisition has been accounted for as a purchase.  Results of operations for
the acquired entity are included in the consolidated statement of operations for
the three months ended March 31, 2003.

Intellectual  property,  which represents the DIVArchive software,  is amortized
over a three-year period. Total amortization expense related to the intellectual
property acquired was $60,000 for the three months ended March 31, 2003.

The  following  pro forma  results of  operations  of the  Company for the three
months ended March 31, 2003 and 2002 are presented to reflect the acquisition as
if it had occurred as of the beginning of the periods presented.

PRO FORMA RESULTS OF OPERATIONS:
                                                    2003             2002
                                                    ----             ----
          Revenues                              $ 2,428,000     $  1,000,000
          Loss from continuing operations           (92,000)      (1,616,000)
          Net loss                                 (244,000)      (1,653,000)
          Basic and diluted loss per share             (.01)            (.05)
          Weighted average shares outstanding    32,329,937       33,459,646


4. NOTES PAYABLE

At March 31, 2003, notes payable consisted of:

$150,000 unsecured note payable that bore interest at 9% per annum. In September
2002, the Company  recapitalized the outstanding balance and accrued interest of
an  existing  unsecured  note  payable.  The new  principal  amount of  $246,500
included the original  principal  balance of $200,000  plus accrued  interest of
$46,500.  The note was  payable in an  initial  payment  of  $45,000,  and equal
monthly  installments  of $25,000  through


                                       8

<PAGE>


                            FRONT PORCH DIGITAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


June 1, 2003, with a final payment of $8,647 on July 1, 2003. At March 31, 2002,
the remaining  principle  balance on this note was $150,000.  During April 2003,
the Company  restructured this note payable as described in Note 8 -- Subsequent
Events;

$744,000 of an unsecured non-interest bearing note payable to an employee.  This
note is payable  based on a percentage  of revenue of certain  operations of the
Company, ranging between 2% and 3% per year, to be payable in full no later than
December 31, 2004. In the event the Company exits the media conversion  business
prior to December 31,  2004,  the  remaining  balance of this note is payable on
demand.  The Company has estimated  that $170,000 will be payable in the next 12
months; and

$500,000  aggregate  principal  amount  of  convertible  secured  notes  to  two
investors that were issued on March 27, 2002.  The notes  contained a beneficial
conversion  feature as the notes included certain  anti-dilution  protection and
rights,  and they were  convertible  into common stock at a price  significantly
below the then current market price. The Company allocated $500,000 of the value
received to this  beneficial  conversion  feature,  which has been recorded as a
debt  discount and has been  amortized to interest  expense over the term of the
debt. The Company recorded non-cash interest expense related to debt discount of
$125,000  during the three  months ended March 31,  2003.  The notes  matured on
March 27, 2003, bore interest at the rate of 7% per annum,  which was payable on
a quarterly  basis,  and were secured by all of the assets of the  Company.  The
notes  were  convertible  at any time at the option of the note  holders  into a
number of shares of common stock of the Company equal to 14% of the  outstanding
shares of common stock, subject to certain anti-dilution  adjustments.  The note
holders were granted  certain rights for the  registration of these shares under
the Securities  Act of 1933, as amended,  which requires the Company to register
these  shares on the  earlier  of April  2003,  or upon the  filing  of  certain
registration  statements by the Company. The notes contained  restrictions that,
among others,  prohibited the Company from issuing new debt, paying creditors in
excess of specified  amounts,  or prepaying the notes without the consent of the
note holders.  In the event the Company  raised $2.5 million of equity  capital,
the Company could have  deposited  into an escrow account an amount equal to the
outstanding  principal and interest on the notes, at which time all restrictions
and liens on the assets of the Company would have been  released.  Upon the sale
or liquidation of substantially all of the assets of the Company,  or a business
combination in which a majority of the issued and  outstanding  shares of common
stock of the Company is  transferred,  the note holders were entitled to receive
all outstanding principal and interest on the notes and a liquidation preference
equal to three  times the amount of such  outstanding  principal  and  interest.
During  April  2003,  the  Company  converted  and  restructured  these notes as
detailed in Note 8 -- Subsequent Events.

Based on the  refinancing  described in Note 8, at March 31,  2003,  the Company
classified $307,500 of these notes payable as a current liability and $1,121,463
as a long-term liability, which included accrued interest of $35,000 and will be
due in 2004.

5. CONCENTRATION OF CREDIT RISK

The Company sells its products and services throughout the United States, Europe
and Asia. The Company  performs  periodic  credit  evaluations of its customers'
financial  condition and generally  does not require  collateral.  Credit losses
have been within management's expectations. For the three months ended March 31,
2003,  revenues  from  two  customers,  each  exceeding  10% of  total  revenue,
aggregated 43% and 11%,  respectively.  At March 31, 2003,  accounts  receivable
from the largest customer was $568,794, or 37% of total trade receivables.  This
customer is also a stockholder of the Company. In addition,  accounts receivable
from two other customers  aggregated 28% and 12% of accounts receivable at March
31,  2003.  For the  three  months  ended  March  31,  2002,  revenues  from two
customers,  each  exceeding  10% of  total  revenue,  aggregated  42%


                                       9

<PAGE>

                            FRONT PORCH DIGITAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


and   39%,   respectively.   The   Company   was  a   subcontractor   for   this
customer/stockholder   during   2002  and   2003,   which   beneficially   owned
approximately  13.5% of the  Company's  outstanding  common  stock as of May 22,
2003.

6. PER SHARE DATA

The Company  reports its earnings  (loss) per share in accordance  with the SFAS
No. 128, "Accounting for Earnings Per Share". Basic loss per share is calculated
using the net loss divided by the weighted  average  common shares  outstanding.
Shares from the  assumed  conversion  of  outstanding  warrants  and options are
omitted from the computations of diluted loss per share because the effect would
be antidilutive.

7. SEGMENT INFORMATION

SFAS  No.  131,  "Disclosures  about  Segments  of  an  Enterprise  and  Related
Information,"  establishes  standards for reporting  information about operating
segments and related  disclosures about products and services,  geographic areas
and  major  customers.  Operating  segments  are  defined  as  components  of an
enterprise  about which  separate  financial  information  is available  that is
evaluated  regularly by the chief  operating  decision  maker in deciding how to
allocate resources and in assessing performance.

The  Company's  operations  are  segregated  into two lines of  business:  media
conversion  services  and software and related  services.  The Company  operates
these  lines of  business  across the  geographic  areas of the  United  States,
Europe,  Canada and  Asia-Pacific.  Offices and  facilities are located in Mount
Laurel, New Jersey, Houston, Texas and Toulouse,  France. The Company's lines of
business are not  completely  integrated  into all  locations  and therefore the
Company  does not  currently  offer all  solutions in all markets in which it is
present.  Current efforts are underway to integrate products and services across
all markets served.

The media conversion  business segment offers a comprehensive,  integrated suite
of  enterprise  data media  solutions  ("EDMS") that can help  customers  ensure
information   preservation,   reduce  cost  and  improve   productivity  without
compromising  the  security  and  integrity  of their  stored  information.  The
Company's EDMS group has performed  professional services for over 600 customers
worldwide  in  industries  that  include  banking and  finance,  power  utility,
petroleum, pharmaceutical and government. All services offered by the EDMS group
are  performed  offline  utilizing  the  Company's   proprietary   software  and
stand-alone  hardware  devices,  at  either  the  customer  site  or  one of the
Company's  secure delivery  facilities.  These services can be performed for any
applicable  optical  and/or  tape  media  type  and  format.  Components  of the
currently  available  offerings  include tape copy and  conversion,  tape volume
management, tape data assurance, and archive generation and conversion.

The software and related services business segment offers an integrated suite of
digital media solutions that facilitate the capture, management and distribution
of digital  content.  Components of these offerings  include a desktop  encoding
system, automated video indexing and a real-time format transcoder. In addition,
the Company offers a distributed storage and archive management solution for the
entertainment  industry that simplifies the process of preserving,  managing and
accessing digital content.

Revenues,  margins and operating expenses of the Company's lines of business are
evaluated  by  management.  The  Company  does not  measure  assets  by lines of
business  as assets  are  generally  not  distinctive  to a  particular  line of
business and they are not fundamental in assessing segment performance.  Capital
expenditures are managed by segment, but only for purposes of budgeting and cash
flow  management.  General  overhead  expenses  are included  completely  in the
software and services business segment as the media conversion  segment has been
and continues to be an easily  definable,  separate,


                                       10

<PAGE>

                            FRONT PORCH DIGITAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


stand-alone  business  - no  allocations  of such  costs  are made as  allocated
indirect costs are not  considered in the  management of the business  segments.
All direct and indirect costs associated with a segment are reported within that
segment.  Summarized  operations of each of the Company's  operating segments in
the  aggregate  for the  three  months  ended  March 31,  2003 and 2002,  are as
follows:

                            MEDIA CONVERSION            SOFTWARE AND SERVICES
                      Three Months Ended March 31,  Three Months Ended March 31,
                           2003           2002          2003           2002

Revenues                $1,375,204    $  123,536     $1,053,495     $ 126,650
Gross margin             1,138,519        35,319        678,408       109,150
Gross margin %                 83%           29%            64%           86%
Income (Loss) from
continuing operations      943,891      (253,835)    (1,035,586)     (682,803)


8. SUBSEQUENT EVENTS

Subsequent to March 31, 2003, the following transactions were consummated:

In April  2003,  the  Company  issued  $645,000  aggregate  principal  amount of
unsecured convertible  promissory notes that bear interest at the rate of 8% per
annum and mature on  September  30,  2004.  Principle  and accrued  interest are
payable at maturity.  The  convertible  notes are convertible at any time at the
option of the note  holders  into  shares of common  stock of the  Company  at a
conversion  price  of  $.042  per  share,   subject  to  certain   anti-dilution
adjustments.  The  convertible  notes may be prepaid by the  Company at any time
without penalty. In the event of a prepayment by the Company, or upon payment of
principal and interest at maturity, the Company will be required to issue to the
holders of such notes five-year common stock purchase warrants pursuant to which
the holders of the  warrants  will have the right to purchase a number of shares
of  common  stock of the  Company  equal  to 5,500  shares  for each  $1,000  of
principal  balance  repaid,  at a purchase price of $0.10 per share,  subject to
certain  anti-dilution  adjustments.  The  purchase  agreement  relating  to the
convertible notes contains restrictions that, among others, prohibit the Company
from  issuing  new debt,  making  capital  expenditures  in excess of  specified
amounts,  paying dividends on the common stock or granting security interests in
assets without the consent of note holders owning a majority in principal amount
of the outstanding notes.

In April  2003,  the  holders  of the  $500,000  aggregate  principal  amount of
convertible  secured notes converted  $250,000 of the outstanding  principle and
100% of the  accrued  interest  into  6,785,715  shares of  common  stock of the
Company  pursuant  to the  conversion  terms of the  convertible  secured  notes
discussed  in Note 4. The holders of these notes also  converted  the  remaining
$250,000  principal balance on the notes into the convertible notes described in
the preceding paragraph.

During April 2003 and in connection  with the $645,000  funding and secured note
conversion  above, the Company  restructured  certain other current  liabilities
including:  (i) restructuring $530,000 of current liabilities to a single vendor
to be payable  over a  five-year  period,  with  interest  at the rate of 5% per
annum.  Principal  payments  under the agreement are fixed for the first year at
$100,000  per year.  Remaining  payments  are  subject to  certain  acceleration
clauses based upon working capital levels and capital raised. In connection with
this agreement,  the Company issued warrants to purchase up to 500,000 shares of
common stock at a price per share of $0.10 to the vendor and (ii)  restructuring
a $150,000 note payable and accrued  interest  which was due in full on June 30,
2003 into a new note that is payable  over 12 months and matures on May 1, 2004.
The note is  payable in equal  monthly  installments  beginning  May 1, 2003 and
carries an annual interest rate of 9% per


                                       11

<PAGE>


                            FRONT PORCH DIGITAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

annum.  Accrued  interest  is  payable  at  maturity.  In  connection  with this
agreement,  the  Company  issued to the  noteholder  warrants  to purchase up to
100,000 shares of common stock at a price per share of $0.10.

On April 23,  2003,  the Company sold to Eastman  Kodak  Company  ("Kodak")  the
Company's  intellectual  property  rights  relating  to the  DIVArchive  product
applications  for the medical  imaging and  information  management  market.  In
connection with such sale, Kodak paid the Company $800,000, will pay the Company
a final payment of $50,000 upon completion of certain post-closing  matters, has
offered  employment to substantially all of the Company's  personnel  associated
with the transferred assets and assumed certain software support  obligations to
the Company's existing DIVArchive customers in the medical industry.







                                       12
<PAGE>




ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
OPERATIONS

GENERAL

         When  used in this  discussion,  the words  "believes",  "anticipates",
"expects"  and similar  expressions  are  intended  to identify  forward-looking
statements.  Such statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those projected.

         The Company's business and results of operations are affected by a wide
variety of factors that could  materially  and adversely  affect the Company and
its actual  results,  including,  but not  limited to: (1) the  availability  of
additional funds to enable the Company to successfully pursue its business plan;
(2) the uncertainties related to the effectiveness of the Company's technologies
and the development of its products and services;  (3) the Company's  ability to
maintain,  attract and integrate  management  personnel;  (4) the ability of the
Company to complete the development and continued enhancement of its products in
a timely manner;  (5) the Company's  ability to effectively  market and sell its
products and services to current and new customers; (6) the Company's ability to
negotiate   and  maintain   suitable   strategic   partnerships   and  corporate
relationships;  (7) the  intensity  of  competition;  and (8)  general  economic
conditions.  As a result of these and other factors,  the Company may experience
material  fluctuations  in future  operating  results on a  quarterly  or annual
basis,  which could  materially  and adversely  affect its  business,  financial
condition, operating results and stock price.

         Any forward-looking statements herein speak only as of the date hereof.
The Company  undertakes  no  obligation  to publicly  release the results of any
revisions to these forward-looking statements that may be made to reflect events
or  circumstances  after  the  date  hereof  or to  reflect  the  occurrence  of
unanticipated events.

OVERVIEW

         The Company  enables the  conversion,  preservation  and  management of
analog and digital content,  including text, images, audio, graphics,  video and
rich media.  The Company  develops  proprietary  software  products and performs
services that convert  content into digital  formats for subsequent  storage and
on-demand  delivery  in the same or other  formats  or  digital  platforms.  The
software, which is based on proprietary and patent-pending technology, enables a
new  paradigm in the way  broadcasters,  content  owners and  education  and law
enforcement  personnel  manage  their  workflow  - a  shift  from  tape-oriented
warehousing  to  a  fully-digital,   instant  access  automated  archive.   With
additional  expertise in providing onsite,  offline data management services for
tape and optical  assets,  the Company  believes  it is uniquely  positioned  to
enable clients to preserve, protect and manage information assets.

         The Company's  customers are located in the United  States,  Europe and
Asia.

         The Company is in the early stages of executing  its business  strategy
and  anticipates  generating  significant  revenues  from  the  sale of its data
conversion and software  products  during the next 12 months.  This expansion is
contingent  upon several  factors,  including the  availability of adequate cash
resources,  the price of its products and services  relative to its competitors,
and general economic and business conditions, among other factors.

         In the fourth  quarter of 2002, the Company  initiated a  restructuring
plan in an effort to position  itself to raise the necessary  working capital to
capitalize  on its  product  and  service  portfolio,  which  has  been  gaining
widespread acceptance in the marketplace. The restructuring plan included:


                                       13
<PAGE>

o        Implementing  cost  reductions  and cost control  measures to limit new
         spending, including reducing headcount in the United States and Europe,
         reducing  salaries  and  benefits  costs,   reducing  consulting  fees,
         controlling  and  reducing  travel and  entertainment  costs,  reducing
         facility size and costs and reducing overall general operating costs.

o        Securing additional resources in executive management and operations to
         develop and implement the restructuring plan.

o        Reducing  short-term  liabilities by renegotiating with its key vendors
         and other short-term  creditors to settle  outstanding  obligations for
         reduced  amounts or extending  payment terms,  in some cases beyond one
         year.

o        Implementing  aggressive cash flow management,  including  accelerating
         significant  cash receipts  from  customers in advance of due dates and
         deferring  vendor  payables to minimize the actual cash outflows of the
         business.

o        Re-aligning existing personnel and operations to better match the costs
         of the  business  with the  business  focus  and  expected  results  of
         operations.

o        Improving  operational  management,  effectiveness  and  efficiency  to
         enable the Company to deliver on its existing  customer  contracts in a
         timely and predictable manner.

         The  following  discussion  and  analysis of  financial  condition  and
results of operations are based upon the Company's financial  statements,  which
have been prepared in accordance with accounting  principles  generally accepted
in the United States.  The  preparation of these financial  statements  requires
management to make estimates and judgments  that affect the reported  amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent
assets and liabilities.  These estimates are based on historical  experience and
on various  other  assumptions  that are  believed  to be  reasonable  under the
circumstances,  the results of which form the basis for making  judgments  about
the carrying values of assets and liabilities that are not readily apparent from
other sources.  Actual results may differ from these  estimates  under different
assumptions or conditions.

RESULTS OF  OPERATIONS - Three Months Ended March 31, 2003 Compared to the Three
Months Ended March 31, 2002

         REVENUE.  Total  revenue  for the three  months  ended  March 31,  2003
increased  $2.2 million,  to $2.4 million  compared to total revenue of $250,000
for the three months ended March 31, 2002. This increase was attributable to the
additional  revenue  generated  in both the media  conversion  and  software and
related services business segments.  Service revenues totaled $1,560,000, or 64%
of total  revenues,  for the three  months  ended  March 31, 2003 as compared to
$139,000,  or 56% of total revenues,  for the three months ended March 31, 2002.
For the three months ended March 31, 2003,  $869,000,  or 36% of total  revenue,
was  attributable  to sales of  software  and  related  products  as compared to
$111,000, or 44% of total revenue, for the three months ended March 31, 2002.

         GROSS  MARGIN.  Total  gross  margin  was  $1,817,000,  or 75% of total
revenue, for the three months ended March 31, 2003 compared to $144,000,  or 58%
of total revenue,  for the three months ended March 31, 2002.  This increase was
attributable to increased revenue from these services and the timely delivery of
these services to customers. In addition, revenues scaled to a level whereby the
direct costs of operations  can be  supported,  unlike in the prior year periods
during which revenue was marginally  able to cover cost of sales.  For the three
months ended March 31, 2003, sales of software and related products  resulted in
gross  margins of 83% and the  provision of data and video  conversion  services
resulted in gross  margins of 69%.  For the three  months  ended March 31, 2002,
sales of software and related products  resulted

                                       14

<PAGE>

in gross margins of 60% and the provision of data and video conversion  services
resulted in gross margins of 56%.

         SELLING,  GENERAL AND  ADMINISTRATIVE  EXPENSES.  Selling,  general and
administrative  expenses  for  the  three  months  ended  March  31,  2003  were
$1,403,000,  as compared to $766,000  for the three months ended March 31, 2002.
Selling,  general and  administrative  expenses for the three months ended March
31, 2003 consisted  primarily of $695,000 for salaries and related  benefits for
employees  not  directly  related to the  production  of  revenue,  $245,000  in
professional  and consulting  fees,  $95,000 for travel,  $131,000 of facilities
costs,  and  $237,000  for  general  office  expenses.   Selling,   general  and
administrative  expenses  for the three  months  ended March 31, 2002  consisted
primarily  of $550,000  for salaries  and related  benefits  for  employees  not
directly  related to the production of revenue,  $77,000 in  professional  fees,
$39,000 for travel,  $59,000 of facilities costs, and $41,000 for general office
expenses. As a result of the restructuring,  the Company's selling,  general and
administrative expenses are expected to decrease in subsequent quarters.

         RESEARCH AND DEVELOPMENT.  The Company maintains a software development
staff that designs and develops the  Company's  new products and  services.  The
Company believes that by performing most of its own software development, it can
more quickly and cost-effectively  introduce new and innovative technologies and
services.  In  addition,  the  Company  believes  it will be better  equipped to
incorporate  customer  preferences  into  its  development  plans.  The  Company
continues to devote more  resources  to the  development  of software  tools and
products that  facilitate the conversion and migration of data from legacy media
to current  technology,  convert  analog  content to multiple  digital  formats,
manage  and  reformat  digital  content on demand  and  archiving  technologies.
Research and development expenses for the three months ended March 31, 2003 were
$146,000 compared to $103,000 for the three months ended March 31, 2002.

         DEPRECIATION AND  AMORTIZATION.  Depreciation and amortization  expense
was $359,000 for the three months ended March 31, 2003  compared to $212,000 for
the three months ended March 31, 2002.  Amortization expense primarily consisted
of  amortization  of  intangible  assets.   Depreciation   expense  consists  of
depreciation of furniture, equipment, software and improvements. The increase in
depreciation  and  amortization  expenses is the result of the inclusion of such
expenses for MSI France,  which was  acquired in August  2002.  The Company will
perform an ongoing  annual  impairment  test,  as  required  under SFAS No. 142,
"Goodwill and Other  Intangible  Assets" by the Financial  Accounting  Standards
Board, at the end of the third quarter of each year.

         LOSS FROM  OPERATIONS.  For the three months ended March 31, 2003,  the
Company  reported  a loss from  operations  of $92,000  compared  to a loss from
operations of $0.9 million for the three months ended March 31, 2002.

         INTEREST  EXPENSE.  Interest  expense was $154,000 for the three months
ended March 31, 2003  compared  to $5,000 for the three  months  ended March 31,
2002.  Interest  expense for the three  months  ended  March 31,  2003  included
non-cash interest charges  aggregating  $139,000,  including a non-cash interest
charge of $125,000 related to the amortization of debt discount on the Company's
senior  secured  convertible  notes (which have since been retired) and non-cash
interest expense of $14,000 related to amortization of non-cash financing costs.

         NET LOSS.  For the three  months  ended  March 31,  2003,  the  Company
reported a net loss of $0.2 million, or ($.01) per share, compared to a net loss
of $0.9 million, or ($.04) per share, for the three months ended March 31, 2002.

         FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS. The Company conducts
business in various  countries outside the United States in which the functional
currency of the  country is not the U.S.  dollar.  As a result,  the Company has
foreign currency exchange  translation  exposure as the results of these foreign
operations  are  translated  into U.S.  dollars  in its  consolidated  financial
statements.  The effect of changes in value of the U.S. dollar compared to other
currencies,  primarily  the euro,  has been to increase  reported  revenues  and
operating  profit when the U.S. dollar

                                       15

<PAGE>

weakens and reduce these amounts when the dollar strengthens.  While the Company
looks for opportunities to reduce its exposure to foreign currency  fluctuations
against  the  U.S.  dollar,  at this  point  the  Company  has not had  adequate
financial  resources to pursue  hedging  opportunities  generally.  At March 31,
2003,  the  Company  reported  a  cumulative  translation  gain of  $66,144 as a
component of Comprehensive Loss. The Company is also subject to foreign exchange
transaction exposure when its subsidiaries transact business in a currency other
than its own functional currency. These transactions are infrequent and have not
had a significant effect on the consolidated financial statements.

LIQUIDITY AND CAPITAL RESOURCES

         In April 2003, the Company issued $645,000  aggregate  principal amount
of unsecured  convertible  promissory notes that bear interest at the rate of 8%
per annum and mature on September 30, 2004.  Principle and accrued  interest are
payable at maturity.  The  convertible  notes are convertible at any time at the
option of the note  holders  into  shares of common  stock of the  Company  at a
conversion  price  of  $.042  per  share,   subject  to  certain   anti-dilution
adjustments.  The  convertible  notes may be prepaid by the  Company at any time
without penalty. In the event of a prepayment by the Company, or upon payment of
principal and interest at maturity, the Company will be required to issue to the
holders of such notes five-year common stock purchase warrants pursuant to which
the holders of the  warrants  will have the right to purchase a number of shares
of  common  stock of the  Company  equal  to 5,500  shares  for each  $1,000  of
principal  balance  repaid,  at a purchase price of $0.10 per share,  subject to
certain  anti-dilution  adjustments.  The  purchase  agreement  relating  to the
convertible notes contains restrictions that, among others, prohibit the Company
from  issuing  new debt,  making  capital  expenditures  in excess of  specified
amounts,  paying dividends on the common stock or granting security interests in
assets without the consent of note holders owning a majority in principal amount
of the outstanding notes.

         In April 2003, the holders of the $500,000  aggregate  principal amount
of convertible secured notes converted $250,000 of the outstanding principle and
100% of the  accrued  interest  into  6,785,715  shares of  common  stock of the
Company  pursuant  to the  conversion  terms of the  convertible  secured  notes
discussed  in Note 4. The holders of these notes also  converted  the  remaining
$250,000  principal balance on the notes into the convertible notes described in
the preceding paragraph.

         During  April 2003 and in  connection  with the  $645,000  funding  and
secured note conversion  above, the Company  restructured  certain other current
liabilities  including:  (i) restructuring  $530,000 of current liabilities to a
single vendor to be payable over a five-year  period,  with interest at the rate
of 5% per annum.  Principal payments under the agreement are fixed for the first
year  at  $100,000  per  year.   Remaining   payments  are  subject  to  certain
acceleration  clauses based upon working capital levels and capital  raised.  In
connection  with this  agreement,  the Company issued warrants to purchase up to
500,000  shares of common  stock at a price per share of $0.10 to the vendor and
(ii) restructuring a $150,000 note payable and accrued interest which was due in
full on June 30, 2003 into a new note that is payable over 12 months and matures
on May 1, 2004. The note is payable in equal monthly installments  beginning May
1, 2003 and carries an annual interest rate of 9% per annum. Accrued interest is
payable at maturity.  In connection with this  agreement,  the Company issued to
the  noteholder  warrants to purchase up to 100,000  shares of common stock at a
price per share of $0.10.

         On April 23, 2003, the Company sold to Eastman Kodak Company  ("Kodak")
the Company's  intellectual  property rights relating to the DIVArchive  product
applications  for the medical  imaging and  information  management  market.  In
connection with such sale, Kodak paid the Company $800,000, will pay the Company
a final  payment of $50,000 upon  completion of the  transition  process and has
offered  employment to substantially all of the Company's  personnel  associated
with the transferred assets and assumed


                                       16

<PAGE>

certain  software  support  obligations  to the  Company's  existing  DIVArchive
customers in the medical industry.

         As of March 31, 2003, the Company had liquid assets  (unrestricted cash
and cash equivalents and accounts receivable) of $1.9 million and current assets
of $2.3 million. Current liabilities of $4.3 million at March 31, 2003 consisted
of $1.6 million of accounts payable; $1.1 million of accrued expenses;  $696,000
of accrued expenses to employees;  $581,000 of deferred revenue, which consisted
of progress payments received on engagements currently in progress;  $308,000 of
current  portion of notes  payable and $19,000 of current lease  liability.  The
Company's  working capital deficit was $1.9 million as of March 31, 2003 for the
reasons described above.

         The  Company  used net cash of $0.4  million  in  operating  activities
during the three  months  ended March 31, 2003 and used net cash of $0.4 million
in operating  activities during the three months ended March 31, 2002, primarily
as a result of the net losses incurred during the periods.

         During the three months ended March 31, 2003,  the Company used $45,000
in  investing  activities,  of which  $6,000 was used for capital  expenditures,
$62,000 was used for the  development  of the Company's  suite of video software
solutions, and $8,000 was used in other investing activities, offset by proceeds
from the sale of fixed  assets of $31,000.  During the three  months ended March
31, 2002, the Company used $27,000 in investing activities, of which $14,000 was
used for capital  expenditures  and $13,000 was used for the  development of the
Company's suite of video software solutions.

         The Company  used  $120,000 in  financing  activities  during the three
months ended March 31, 2003, which consisted solely of principal repayments made
on notes  payable and capital  leases.  During the three  months ended March 31,
2002,  financing  activities  provided $400,000,  which consisted of $350,000 of
borrowings on notes payable and $50,000 of proceeds from the issuance of 400,000
shares of unregistered common stock to an individual investor.

         The Company  expects  capital  expenditures  to be  approximately  $0.5
million  during  the next  twelve  months.  It is  expected  that the  Company's
principal uses of cash will be to provide working capital and to finance capital
expenditures and for other general corporate  purposes,  including financing its
sales and marketing strategy.  The amount of spending in each respective area is
dependent upon the total capital available to the Company.

         The Company expects that anticipated cash flow from operations combined
with its cash and cash equivalents at May 22, 2003 will be sufficient to operate
for at least the next 12 months.  However,  continued  operating  losses and the
early  stage of the  Company's  business,  as well as  potential  changes in the
business and competitive environment,  continue to present a significant risk to
the Company's long-term success.  These conditions raise substantial doubt about
the  Company's  ability to continue as a going  concern.  The  Company's  actual
financial  results may differ  materially  from the stated  plan of  operations.
Factors which may cause a change from the Company's plan of operations vary, but
include, without limitation,  decisions of the Company's management and board of
directors not to pursue the stated plan of operations  based on its reassessment
of the plan,  and general  economic  conditions.  Additionally,  there can be no
assurance  that the  Company's  business  will  generate  cash flows at or above
current levels. Accordingly, the Company may choose to defer capital expenditure
plans and extend vendor payments for additional cash flow flexibility.

  ITEM 3. CONTROLS AND PROCEDURES

         (a) Based upon an evaluation  performed  within 90 days of this Report,
our Chief Executive  Officer  ("CEO") and Chief  Financial  Officer ("CFO") have
each  concluded  that our  disclosure  controls and  procedures are effective to
ensure  that


                                       17

<PAGE>

material  information  relating  to our  Company  is made  known to  management,
including  the CEO and CFO,  particularly  during the period  when our  periodic
reports are being  prepared,  and that our internal  controls  are  effective to
provide  reasonable   assurances  that  our  financial  condition,   results  of
operations and cash flows are fairly presented in all material respects.

         (b) The CEO and CFO each note  that,  since the date of his  evaluation
until  the date of this  Report,  there  have  been no  significant  changes  in
internal controls or in other factors that could  significantly  affect internal
controls,   including  any   corrective   actions  with  regard  to  significant
deficiencies and material weaknesses.








                                       18
<PAGE>


PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS:

On or about March 21, 2003, Giancarlo Gaggero, a former employee of the Company,
and Data Strategies  International,  Inc., a company owned and controlled by Mr.
Gaggero,  filed a suit  against  the  Company  in the  District  Court of Harris
County,  Texas  alleging  breach by the Company of an asset purchase and related
agreements  between Data Strategies and the Company and breach by the Company of
an  employment  agreement  between Mr.  Gaggero and the Company.  Mr.  Gaggero's
employment with the Company was terminated on March 5, 2003. The plaintiffs seek
monetary  damages  of  approximately  $253,000  plus  interest  and  costs and a
declaration that they are excused from performance under the agreements from and
after January 2001. The Company responded to the complaint on April 17, 2003 and
requested that the case be moved from state court to federal court jurisdiction.
The Company  believes  certain of the claims are without merit,  with respect to
which the Company  intends to defend the action  vigorously,  and is considering
certain counterclaims against the plaintiffs. An outcome in this litigation that
is adverse to the Company,  cost  associated  with defending the lawsuit and the
diversion  of  management's  time and  resources  to defend  the  lawsuit  could
seriously harm the Company's business and its financial condition.

In  addition  to the  proceeding  described  above,  the  Company is involved in
certain  other  disputes  that arise in the  ordinary  course of  business.  The
Company  believes that no current dispute will have a material adverse effect on
its financial condition or results of operations.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K:

         The following exhibits are filed herewith:

         (a)      Exhibits

                  99.1  Certification of Chief Executive  Officer pursuant to 18
                        U.S.C.  1350, as adopted  pursuant to Section 906 of the
                        Sarbanes-Oxley Act of 2002.

                  99.2  Certification of Chief Financial  Officer pursuant to 18
                        U.S.C.  1350, as adopted  pursuant to Section 906 of the
                        Sarbanes-Oxley Act of 2002.

         (b)      Current Reports on Form 8-K or 8-K/A

                  The Company  filed a Current  Report on Form 8-K dated January
                  8, 2003  reporting  several  executive  officer  changes.  The
                  changes announced included the resignation of Paul McKnight as
                  Chief  Financial  Officer,  the election of Matthew Richman as
                  Chief Financial Officer and the appointment of Michael Knaisch
                  as Chief Operating Officer of the Company.

                  The Company filed a Current  Report on Form 8-K dated March 1,
                  2003  announcing the  resignation of David Cohen as a director
                  of the Company.


                                       19
<PAGE>


                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned,  thereunto
duly authorized.

Dated:  May 27, 2003                FRONT PORCH DIGITAL INC.

                                    By: /s/ DONALD MAGGI
                                        -------------------
                                        Donald Maggi
                                        Chief Executive Officer
                                   (principal executive officer)

                                    By: /s/ MATTHEW RICHMAN
                                        -------------------
                                        Matthew Richman
                                        Chief Financial Officer and Treasurer
                                    (principal financial and accounting officer)







                                       20
<PAGE>


                  Certification of Principal Executive Officer
                           Pursuant to 18 U.S.C. 1350
                 (SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002)

I, Donald Maggi, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Front Porch Digital
Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.


                                                  By:  /s/ Donald Maggi
                                                       -------------------------
                                                  Name: Donald Maggi
                                                  Title: Chief Executive Officer

May 27, 2003


<PAGE>


                  CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
                           Pursuant to 18 U.S.C. 1350
                 (SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002)

I, Matthew Richman, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Front Porch Digital
Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

                                           By:  /s/ Matthew Richman
                                                --------------------------------
                                           Name: Matthew Richman Title:
                                           Chief Financial Officer and Treasurer

May 27, 2003