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 June 30, 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 August 11, 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 SHEET
                                   (Unaudited)

<TABLE>
<CAPTION>
ASSETS                                                                             June 30, 2003
<S>                                                                                 <C>
Current assets:
  Cash and cash equivalents                                                         $    604,431
  Accounts receivable - trade & other, net of allowance of $175,000:
Non-affiliates                                                                         1,609,809
Affiliates                                                                               324,740
  Deferred costs                                                                          44,530
  Other current assets                                                                   435,098
                                                                                    ------------
Total current assets                                                                   3,018,608

Restricted cash                                                                           89,308

Property and equipment, net                                                              862,034

Software development costs, net                                                          326,655

Software and intellectual property, net
 of accumulated amortization of $808,065                                               1,028,732

Excess cost over fair value of net assets acquired, net
 of accumulated amortization of $949,778                                               1,182,289

Other assets                                                                              64,042
                                                                                    ------------
Total assets                                                                        $  6,571,668
                                                                                    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of note payable                                                     $    303,333
Current portion of other long term liability                                             100,000
Current lease liability                                                                    2,589
Accounts payable                                                                         808,181
Accrued expenses                                                                       1,119,629
Accrued expenses - employees                                                             705,239
Deferred revenue                                                                         367,487
                                                                                    ------------
Total current liabilities                                                              3,406,458

Note payable, net of current portion                                                     715,392
Other long-term liabilities, net of current portion                                      422,318
Other long-term liabilities                                                               50,931

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
   41,615,652 shares issued and outstanding                                               41,615
Additional paid in capital                                                            25,367,405
Accumulated other comprehensive income                                                    33,623
Common stock to be issued                                                                     --
Accumulated deficit                                                                  (23,466,074)
                                                                                    ------------
Total stockholders' equity                                                             1,976,569
                                                                                    ------------

Total liabilities and stockholders' equity                                          $  6,571,668
                                                                                    ============
</TABLE>

SEE ACCOMPANYING NOTES.

                                       2
<PAGE>

                      FRONT PORCH DIGITAL, INC.
                Consolidated Statements of Operations
                             (Unaudited)

<TABLE>
<CAPTION>
                                                                 Three months ended June 30,            Six months ended June 30,
                                                               ---------------------------------------------------------------------
                                                                  2003                2002               2003               2002
                                                               ---------------------------------------------------------------------
<S>                                                            <C>                <C>                <C>                <C>
Revenues:
  Products                                                     $   228,486        $    95,256        $   930,272        $   206,456
  Services                                                       1,456,511            684,907          1,926,684            823,893
  Services - affiliate                                             386,498                 --          1,435,480                 --
                                                               -----------        -----------        -----------        -----------
Total revenue                                                    2,071,495            780,163          4,292,436          1,030,349

Cost of revenue:
  Products                                                          44,877             35,475            100,634             80,210
  Services                                                         495,475            277,883            886,238            249,176
                                                               -----------        -----------        -----------        -----------
                                                                   540,352            313,358            986,872            329,386
                                                               -----------        -----------        -----------        -----------
Gross margin                                                     1,531,143            466,805          3,305,564            700,963


Selling, general and administrative                              1,112,727            805,562          2,164,402          1,661,484
Research and development                                            10,290            115,928             43,163            218,777
Depreciation                                                       207,702            153,096            402,776            306,192
Amortization                                                       146,052             58,929            295,544            117,858
                                                               -----------        -----------        -----------        -----------
                                                                 1,476,771          1,133,515          2,905,885          2,304,311

Operating income (loss)                                             54,372           (666,710)           399,679         (1,603,348)

Other income (expense):
Interest income                                                        412                504                797              1,400
Interest expense                                                  (208,857)           (13,438)          (362,392)           (17,938)
Other expense                                                       (1,346)                --                (80)                --
Transaction loss                                                    (2,536)                --             (3,237)                --
Loss on impairment of goodwill and intellectual property        (3,335,848)                --         (3,335,848)                --
                                                               -----------        -----------        -----------        -----------
Total other expense                                             (3,548,175)           (12,934)        (3,700,760)           (16,538)

Loss from continuing operations                                 (3,493,803)          (679,644)        (3,301,081)        (1,619,886)

Loss on operations of discontinued operation                      (313,844)                --           (750,846)                --
Gain on sale of discontinued operation                             586,955                 --            586,955                 --
                                                               -----------        -----------        -----------        -----------
Net loss                                                       $(3,220,692)       $  (679,644)       $(3,464,972)       $(1,619,886)
                                                               ===========        ===========        ===========        ===========

Weighted average shares outstanding - basic and diluted         39,370,754         26,807,923         35,869,795         26,386,128

Earnings per share - basic and diluted:
Loss from continuing operations                                $     (0.09)       $     (0.03)       $     (0.09)       $     (0.06)
Net income                                                     $     (0.08)       $     (0.03)       $     (0.10)       $     (0.06)
</TABLE>

SEE ACCOMPANYING NOTES.

                                       3
<PAGE>

                            FRONT PORCH DIGITAL, INC.
                      Consolidated Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                Six Months Ended June 30,
                                                                                                 2003               2002
                                                                                             --------------------------------
<S>                                                                                          <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                                                     $(3,464,972)        $(1,619,886)
  Loss from discontinued operations                                                              750,846                  --
  Gain on sale of discontinued operations                                                       (586,955)                 --
                                                                                             -----------         -----------
Loss from continuing operations                                                               (3,301,081)         (1,619,886)
Adjustments to reconcile net loss to net cash used in operating activities:
  Depreciation & amortization                                                                    698,319             424,050
  Non-cash interest expense                                                                      310,691                  --
  Impairment of goodwill and intellectual property related to Media Services business          3,335,848                  --
  Non-cash issuance of common stock to employees and consultants                                      --             357,556
  Stock option compensation cost                                                                   9,259              68,987
  Bad Debt Expense                                                                                50,000                  --
  Gain on sale of fixed assets                                                                    (9,951)                 --
  Changes in operating assets and liabilities:
    Increase in accounts receivable - affiliate                                                   (2,414)                 --
    Increase in accounts receivable                                                             (494,465)            (97,346)
    Decrease in deferred costs                                                                    43,997                  --
    Decrease (increase) in other current assets                                                  159,535             (13,337)
    Decrease in other assets                                                                      33,548                  --
    (Decrease) increase in accounts payable                                                     (836,725)             52,823
    Decrease in accrued expenses                                                                 (64,778)            (19,362)
    Increase (decrease) in accrued expenses - employees                                           95,470             (75,682)
    Decrease in deferred revenue                                                                (959,488)           (159,085)
    Other changes in operating activities                                                             --             165,877
                                                                                             -----------         -----------
Net cash used in operating activities by continuing operations                                  (932,235)           (915,405)
                                                                                             -----------         -----------

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures                                                                             (86,507)            (50,406)
Cash received from sale of discontinued operations                                               800,000                  --
Software development costs                                                                      (151,275)            (43,634)
Proceeds from sale of fixed assets                                                                39,534                  --
                                                                                             -----------         -----------
Net cash provided by (used in) investing activities from continuing operations                   601,752             (94,040)
                                                                                             -----------         -----------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable                                                                      645,000             600,000
Repayment of note payable and capital leases                                                     (68,780)                 --
Proceeds from issuance of common stock                                                                --              50,000
                                                                                             -----------         -----------
Net cash provided by financing activities from continuing operations                             576,220             650,000
                                                                                             -----------         -----------

Net cash used by discontinued operation                                                         (316,384)                 --

Effect of exchange rate fluctuations on cash and cash equivalents                                (35,082)                 --
                                                                                             -----------         -----------

Net decrease in cash and cash equivalents                                                       (105,729)           (359,445)
Cash and cash equivalents, beginning of period                                                   799,468             393,439
                                                                                             -----------         -----------
Cash and cash equivalents, end of period                                                     $   693,739         $    33,994
                                                                                             ===========         ===========
</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,   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.

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 continued to improve in the first
six months of 2003, and the Company has improved its overall financial  position
and  liquidity  during that period,  there can be no assurance  that the Company
will not continue to sustain operating losses.

In May 2003, the Company sold its DIVArchive Medical operations to Eastman Kodak
Company  ("Kodak") and has accounted for the gain on the sale and the operations
of the business as discontinued  operations.  As a result, the operating results
of the DIVArchive  Medical component are excluded from operating income and loss
from  continuing  operations  and are  reported  as a  separate  line  item as a
component of net income for the three and six months ended June 30, 2003.

For the six months ended June 30, 2003, the Company generated a net loss of $3.5
million. Excluding the charge of $3.3 million for the impairment of goodwill and
intellectual  property related to the Company's media services  business and net
losses from discontinued  operations of $164,000,  net income for the six months
ended June 30, 2003 was $35,000  (as  compared to a loss of $1.6  million in the
prior year  period).  Included in net income for the period was a  non-recurring
gain on the sale of discontinued  operations of $587,000  related to the sale of
the  DIVArchive  Medical  business to Kodak.  For the six months  ended June 30,
2003, the Company  generated  negative cash flow from  continuing  operations of
$0.9  million  and had an ending cash  balance at June 30, 2003 of $0.7  million
(including restricted cash).

For the three months ended June 30,  2003,  the Company  generated a net loss of
$3.2  million.  Excluding  the  charge of $3.3  million  for the  impairment  of
goodwill and intellectual  property  related to the media services  business and
the net gain from discontinued  operations of $273,000,  the Company generated a
net loss for the three  months ended June 30, 2003 of $158,000 (as compared to a
loss of $0.7 million in the prior year period). Included in the net loss for the
period  is a  non-recurring  gain on the  sale  of  discontinued  operations  of
$587,000  related to the sale of the DIVArchive  Medical  business and a loss on
operations  of  discontinued  operations  of  $314,000.  The  Company  generated
negative cash flow from  continuing  operations  for the three months ended June
30, 2003 of $0.5 million. In addition,  at June 30, 2003, the Company had a cash
balance of $0.7 million,  but a working  capital  deficit of $.4 million  (which
deficit amounted to $1.9


                                       5
<PAGE>

                            Front Porch Digital, Inc.
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

million at March 31, 2003). These factors create  significant  uncertainty about
the Company's ability to continue as a going concern.

During  the  second  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. As
of August 2003, this restructuring was largely complete, and management believes
the Company's  operating cost levels are adequate and appropriate to support its
operations  and  working  capital  needs.  The  Company is now  focusing  on the
expansion of its  DIVArchive  Broadcast  operations  in the United States and is
continuing to hire personnel for those operations.  As a result, operating costs
are expected to increase.  In April 2003, the Company secured additional capital
through the sale of convertible notes, restructured certain liabilities and sold
the DIVArchive Medical operations to Kodak for $850,000 in cash and the transfer
of certain liabilities and operations. Management believes these actions enabled
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 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 and six months ended
June 30, 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.  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  portions of the  contract,  the software  revenue is  recognized  upon
delivery.


                                       6
<PAGE>

                            Front Porch Digital, Inc.
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

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  awards results in pro
forma  net loss and loss per share  that is not  materially  different  from the
amounts  reported.  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 June 30, 2003 and 2002, $0 and $62,000,  respectively  of
compensation cost was recorded. For the six months ended June 30, 2003 and 2002,
$10,000 and $131,000 respectively of compensation cost was recorded.

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


                                       7
<PAGE>

                            Front Porch Digital, Inc.
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

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, the Company has
updated its disclosure to conform to the pronouncement.

In  January  2003,  the FASB  issued  Interpretation  No. 46,  Consolidation  of
Variable  Interest  Entities.  This  interpretation  addresses  consolidation by
business  enterprises of variable interest  entities.  The interpretation is not
expected  to have a  material  effect on the  Company's  consolidated  financial
statements.

3. NOTES PAYABLE

At June 30, 2003, notes payable consisted of:

$133,333 of an unsecured  note payable that bears  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 June 1, 2003, with a final payment
of $8,647 on July 1, 2003. At December 31, 2002, the remaining principal balance
on this note was $150,000.  Effective  April 30, 2003, the Company  restructured
the  $150,000  remaining  principal  balance  on the 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  which began on 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.  The fair value of
these  warrants  amounted to $10,000 and was  recorded as a discount to the note
and is being amortized to interest expense over the note term of one year.

$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 on this note in
the next 12 months; and

$990,000  aggregate  principal amount of unsecured  convertible  notes that were
issued in April 2003. The notes contain a beneficial  conversion  feature as the
notes include certain  anti-dilution  protection and rights, and are convertible
into Company Common Stock at a price significantly below the then current market
price. The Company  allocated  $990,000 of the value received to this beneficial
conversion  feature,  which has been  recorded as a debt  discount  and is being
amortized to interest  expense over the term of the debt.  The Company  recorded
non-cash  interest expense related to debt discount of $141,000 during the three
months ended June 30, 2003.  Proceeds  from the issuance of these notes were the
following:  $645,000  cash  proceeds  received  by the  Company;  retirement  of
$250,000 principal balance of the former secured  convertible notes that matured
on March 31, 2003 (the  remaining  $250,000  principal and accrued  interest was
converted  into  Company  Common  Stock  in  accordance  with  the  terms of the
convertible secured note); and the conversion of $95,000 in current liabilities.
The


                                       8
<PAGE>

                            Front Porch Digital, Inc.
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

convertible  notes  bear  interest  at the rate of 8% per  annum  and  mature on
September 30, 2004. Principal 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 Company  Common Stock 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 Company  Common Stock 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 $500,000 aggregate principal amount of convertible
secured  notes  converted the remaining  $250,000 of the  outstanding  principal
($250,000  of principal  was  converted  into the  unsecured  convertible  notes
described  above) and 100% of the  accrued  interest  into  6,785,715  shares of
Company Common Stock pursuant to the conversion terms of the convertible secured
notes.  In connection  with this  conversion,  the Company  recorded  $39,000 in
non-cash interest expense related to the value of the induced  conversion of the
debt.

4. SALE OF DIVARCHIVE MEDICAL OPERATIONS

On April 23, 2003, the Company sold to 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  certain  software  support   obligations  to  the  Company's   existing
DIVArchive  customers in the medical  industry.  The Company recorded a $587,000
gain on the sale in the three months ended June 30, 2003.

The DIVArchive Medical component is accounted for as a discontinued operation in
the accompanying  financial statements in accordance with Statement of Financial
Accounting  Standards (SFAS) No. 144, "Accounting for the Impairment or Disposal
of  Long-Lived  Assets."  The  results  of  operations  and  cash  flows  of the
DIVArchive  Medical  operations have been removed from the Company's  results of
continuing  operations for all periods  presented.  For the three and six months
ended  June 30,  2003,  the loss  from  operations  for the  DIVArchive  Medical
component was $314,000 and $751,000,  respectively. All related disclosures have
also been adjusted to reflect the discontinued  operation.  Summarized  selected
financial information from discontinued  operations for the three and six months
ended June 30, 2003 (excluding the net gain) is as follows:


                                       9
<PAGE>

                            Front Porch Digital, Inc.
                   Notes to Consolidated Financial Statements
                                   (Unaudited)


RESULTS OF OPERATIONS - DIVARCHIVE MEDICAL OPERATIONS:

<TABLE>
<CAPTION>
                                                                             June 30, 2003
                                                            -----------------------------------------------
                                                              Three Months Ended        Six Months Ended
                                                            -----------------------   ---------------------
<S>                                                               <C>                      <C>
              Revenues                                            $  32,000                $ 239,000
              Gross margin                                            4,000                   47,000
              Loss from DIVArchive Medical operations
                                                                   (318,000)                (798,000)
                                                                  ---------                ---------
                                                                  $(314,000)               $(751,000)
                                                                  =========                =========
</TABLE>


Summarized  components  of the  gain  on the  sale  of  the  DIVArchive  Medical
component were as follows:

         Cash received and liabilities transferred                  $ 800,000
         Receivable from Kodak                                         50,000
         Liabilities transferred                                      138,000
         Intellectual property and goodwill sold                     (401,000)
                                                                    ---------
         Gain on sale of DIVArchive Medical component               $ 587,000
                                                                    =========


In April 2003, as a result of the sale of the DIVArchive Medical component,  the
Company performed an impairment  analysis of the remaining  DIVArchive  goodwill
and  intellectual  property that was not sold in the  transaction and determined
that no impairment of the assets was warranted.

5. LOSS ON IMPAIRMENT  OF GOODWILL AND  INTELLECTUAL  PROPERTY - MEDIA  SERVICES
SEGMENT

At June 30,  2003,  as a result of  changes  in the  business  environment,  the
Company  recorded  a loss of $3.3  million on the  impairment  of  goodwill  and
intellectual  property related to the media services segment to reflect the fair
value of the business based upon a valuation analysis using discontinued  future
cash flows. This amount was excluded from operating income,  but was included in
loss from continuing operations in the statement of operations for the three and
six months ended June 30, 2003. Included in the loss is:

Impairment of intellectual property           $  362,000
Impairment of goodwill                         2,974,000
                                              ----------
Total impairment recorded                     $3,336,000
                                              ==========

6. 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 six months ended June 30,
2003,  revenues  from  two  customers,  each  exceeding  10% of  total  revenue,
aggregated 32% and 20%, respectively. At June 30, 2003, accounts receivable from
the largest  customer  was  $325,000,  or 17% of total trade  receivables.  This
customer is also a stockholder of the Company. In addition,  accounts receivable
from two other customers  aggregated 26% and 20% of accounts  receivable at June
30, 2003.  For the six months ended June 30, 2002,  revenues from two customers,
each exceeding 10% of total revenue,  aggregated 54% and 15%, 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 August 11, 2003.


                                       10
<PAGE>

                            Front Porch Digital, Inc.
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

7. 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.
For the three and six  months  ended  June 30,  2003 and 2002,  shares  from the
assumed conversion of outstanding  convertible  notes,  warrants and options are
omitted from the  computations of diluted  earnings per share because the effect
would be anti-dilutive.

8. 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,


                                       11
<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 and six months ended June 30, 2003 and 2002,  are as
follows:

                             MEDIA CONVERSION          SOFTWARE AND SERVICES
                        Three Months Ended June 30,  Three Months Ended June 30,
                             2003           2002          2003          2002

Revenues                  $1,680,854    $  691,885       $390,641     $ 88,278
Gross margin               1,314,905       389,113        216,238       77,692
Gross margin %                   78%           56%            55%          88%
Operating income (loss)    1,177,338       199,583     (1,122,967)    (866,293)



                            MEDIA CONVERSION           SOFTWARE AND SERVICES
                        Six Months Ended June 30,    Six Months Ended June 30,
                           2003           2002           2003         2002

Revenues                $3,056,058    $  815,421     $1,236,378     $ 214,928
Gross margin             2,453,424       514,121        852,140       186,842
Gross margin %                 80%           63%            69%           87%
Operating income (loss)  2,121,229       (54,252)    (1,721,549)   (1,549,096)


At June 30, 2003, the Company  recorded a loss of $3.3 million on the impairment
of goodwill and  intellectual  property related to the media services segment to
reflect the decrease in the fair value of the goodwill.  The  impairment  charge
was excluded from operating  income (loss) above,  but was included in loss from
continuing  operations  in the  statement  of  operations  for the three and six
months ended June 30, 2003.



                                       12
<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR 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:

     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


                                       13
<PAGE>


          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.

During the three months ended June 30, 2003,  the following  significant  events
occurred:

     o    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 certain software support obligations to
          the Company's existing  DIVArchive  customers in the medical industry.
          The Company  recorded a $587,000  gain on the sale in the three months
          ended  June  30,  2003.  The  operations  of  the  DIVArchive  Medical
          component  was  accounted  for  as  discontinued   operations  in  the
          accompanying financial statements.  The results of operations and cash
          flows for the DIVArchive  Medical  operations  have been excluded from
          the  Company's  results  of  continuing  operations  for  all  periods
          presented.  For the three and six months ended June 30, 2003, the loss
          from operations for the DIVArchive  Medical component was $314,000 and
          $751,000, respectively.

     o    In April 2003, the Company issued $990,000 aggregate  principal amount
          of unsecured  convertible notes.  Payment for these notes included the
          following:  $645,000 cash proceeds  received by the Company;  $250,000
          principal  balance  of the  former  secured  convertible  notes  which
          matured on March 31, 2003;  and the  conversion  of $95,000 in current
          liabilities. The convertible notes bear interest at the rate of 8% per
          annum and mature on September 30, 2004. Principal 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.


                                       14
<PAGE>


     o    In April 2003, the holders of the $500,000 aggregate  principal amount
          of convertible  secured notes converted the remaining  $250,000 of the
          outstanding  principal  ($250,000 of principal was converted  into the
          unsecured  convertible  notes described above) 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.  In
          connection  with this  conversion,  the  Company  recorded  $39,000 in
          non-cash  interest  expense  related  to  the  value  of  the  induced
          conversion of the debt.

     o    During the three months ended June 30, 2003, the Company  successfully
          restructured the following:  (i) $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  will issue to the vendor  warrants  to purchase up to 500,000
          shares  of  common  stock at a price  per  share  of $0.10  and (ii) 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.  The fair  value of these  warrants  amounted  to
          $10,000  and was  recorded  as a  discount  to the  note  and is being
          amortized to interest expense over the note term of one year.

     o    At June 30, 2003, the Company recorded a non-recurring  charge of $3.3
          million for the  impairment  of  goodwill  and  intellectual  property
          related to the media services business segment.

The items  described  above  demonstrate  the  Company's  efforts to refocus its
business on the broadcast  space and  specifically in the sale of the DIVArchive
and  transcoder  products.  The sale of the DIVArchive  Medical  business in the
second  quarter  of 2003  and the loss on the  impairment  of the  goodwill  and
intellectual  property of the media services  business segment are indicative of
these efforts. The impairment of goodwill and intellectual  property recorded in
the media services  business  segment brought the intangible asset balances to a
level that management  believes properly reflects the fair value of the business
segment.  The sale of the DIVArchive Medical business component generated a gain
for the Company and  significantly  reduced the  operating  costs in France to a
more appropriate level relative to broadcast revenues.

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 CONTINUING  OPERATIONS - Three Months Ended June 30, 2003 Compared to
the Three Months Ended June 30, 2002

         REVENUE.  Total  revenue  for the  three  months  ended  June 30,  2003
increased  $1.3 million to $2.1  million,  compared to total revenue of $780,000
for the  three  months  ended  June 30,  2002.  This  increase  in  revenue  was
attributable to significantly higher revenue generated from the media conversion
business  segment  ($1.7  million in segment  revenue for the three months ended
June 30,  2003 as  compared  to $0.7  million  for the prior  year  period)  and
additional  revenue  generated  in the software  and related


                                       15
<PAGE>


services business segment from DIVArchive broadcast sales, totaling $0.3 million
for the three  months  ended June 30,  2003 (the  DIVArchive  revenues  excluded
DIVArchive  Medical  revenue of $32,000 for the three months ended June 30, 2003
that has been accounted for as a discontinued  operation).  Revenue generated in
the software and related services business segment in the United States remained
relatively  unchanged for the three months ended June 30, 2003. Service revenues
totaled  $1,900,000,  or 89% of total revenues,  for the three months ended June
30, 2003 as compared to $685,000, or 88% of total revenues, for the three months
ended June 30, 2002. For the three months ended June 30, 2003, $200,000,  or 11%
of total revenue,  was  attributable to product revenues as compared to $95,000,
or 12% of total revenue, for the three months ended June 30, 2002.

         GROSS  MARGIN.  Total gross  margin was $1.5  million,  or 74% of total
revenue,  for the three months ended June 30, 2003 compared to $467,000,  or 60%
of total  revenue,  for the three months ended June 30, 2002.  This increase was
attributable to the increased  revenues  discussed above and the timely delivery
of services to customers.  In addition,  revenues  scaled to a level whereby the
direct  costs of  operations  were  supported,  unlike in the prior year  period
during which revenue was marginally  able to cover cost of sales.  For the three
months ended June 30, 2003, sales of software and related  products  resulted in
gross  margins of 55% and the  provision of data and media  conversion  services
resulted in gross  margins of 78%.  For the three  months  ended June 30,  2002,
sales of software and related products  resulted in gross margins of 88% and the
provision of data and media  conversion  services  resulted in gross  margins of
56%.

         SELLING,  GENERAL AND  ADMINISTRATIVE  EXPENSES.  Selling,  general and
administrative  expenses  for the three  months  ended  June 30,  2003 were $1.1
million,  as compared to $0.8  million for the three months ended June 30, 2002.
Selling, general and administrative expenses for the three months ended June 30,
2003  consisted  primarily of $502,000  for  salaries  and related  benefits for
employees  not  directly  related to the  production  of  revenue,  $270,000  in
professional  and consulting  fees,  $91,000 for travel,  $101,000 of facilities
costs,  $50,000 for bad debt expense,  and $97,000 for general office  expenses.
Selling, general and administrative expenses for the three months ended June 30,
2002  consisted  primarily of $308,000  for  salaries  and related  benefits for
employees  not  directly  related to the  production  of  revenue,  $220,000  in
professional fees, $37,000 for travel, $60,000 of facilities costs, and $180,000
for general office expenses.

         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 its  solutions  that
convert analog content to multiple digital formats,  manage and reformat digital
content on demand and  archiving  technologies  and software  tools and products
that  facilitate  the  conversion  and  migration  of data from legacy  media to
current technology. Research and development expenses for the three months ended
June 30, 2003 were $10,000  compared to $116,000 for the three months ended June
30, 2002. The decrease in expense in 2003 is directly related to the increase in
projects  which will provide  future  benefit to the company and have passed the
point of  technological  feasibility.  As a  result,  significantly  more of the
Company's costs of its research and development efforts are being capitalized as
software development costs and amortized to expense over a three-year period.

         DEPRECIATION AND  AMORTIZATION.  Depreciation and amortization  expense
was $354,000  for the three months ended June 30, 2003  compared to $212,000 for
the three months ended June 30, 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 was the result of the inclusion of such
expenses for MSI France, which was acquired in August 2002.


                                       16
<PAGE>


         OPERATING INCOME.  For the three months ended June 30, 2003,  operating
income  totaled  $54,000 as compared to an operating loss of $.7 million for the
three months ended June 30, 2003. The increase in operating income was primarily
due to the increased  revenues from the media  conversion  business  segment and
sales related to the Company's DIVArchive broadcast solutions.

         LOSS ON IMPAIRMENT OF GOODWILL.  The Company performs an ongoing annual
impairment test, as required under SFAS No. 142,  "Goodwill and Other Intangible
Assets" by the Financial  Accounting  Standards  Board,  on the first day of the
fourth quarter of each year or as conditions  warrant. As such, during the three
months ended June 30, 2003:

     o    as a result of changes in the media conversion  business,  the Company
          performed an  impairment  analysis of the  recorded  goodwill for that
          business segment, and, as a result,  recorded a loss on the impairment
          of goodwill of $2.8 million at June 30, 2003.

     o    in April  2003,  as a result  of the  sale of the  DIVArchive  Medical
          component,  the  Company  performed  an  impairment  analysis  of  the
          remaining DIVArchive goodwill and intellectual property and determined
          that no impairment of the assets was warranted.

         LOSS ON IMPAIRMENT OF INTELLECTUAL  PROPERTY. As a result of changes in
the media conversion business and in conjunction with the SFAS No. 142 analysis,
the Company recorded an impairment  change of $362,000 on intellectual  property
consistent with SFAS No. 144.

         INTEREST  EXPENSE.  Interest  expense was $209,000 for the three months
ended June 30,  2003  compared to $13,000  for the three  months  ended June 30,
2002.  Interest  expense  for the three  months  ended  June 30,  2003  included
non-cash interest charges  aggregating  $185,000,  including a non-cash interest
charge of $141,000 related to the amortization of debt discount on the Company's
unsecured convertible notes, $39,000 of non-cash interest expense related to the
induced  conversion of debt and non-cash  interest  expense of $5,000 related to
amortization of non-cash financing costs.

         LOSS FROM  CONTINUING  OPERATIONS.  For the three months ended June 30,
2003,  the Company  reported a loss from  continuing  operations of $3.5 million
compared  to a loss from  continuing  operations  of $0.7  million for the three
months ended June 30, 2002. Included in the loss for the three months ended June
30, 2003 was a loss on the impairment of goodwill and  intellectual  property of
$3.3 million.

         LOSS FROM DISCONTINUED OPERATIONS.  For the three months ended June 30,
2003, the Company reported a $314,000 loss from  discontinued  operations of its
DIVArchive Medical component.

         GAIN ON SALE OF DIVARCHIVE MEDICAL BUSINESS. For the three months ended
June 30, 2003, the Company reported a gain on the sale of its DIVArchive Medical
component of $587,000.

         NET  LOSS.  For the three  months  ended  June 30,  2003,  the  Company
reported a net loss of $3.2 million, or ($.08) per share, compared to a net loss
of $.7 million,  or ($.03) per share,  for the three months ended June 30, 2002.
Included in the loss for the three  months ended June 30, 2003 was a loss on the
impairment of goodwill and  intellectual  property of $3.3 million,  a loss from
discontinued  operations  of  $314,000  and a gain on the  sale of  discontinued
operations of $587,000.

RESULTS OF  CONTINUING  OPERATIONS - Six Months Ended June 30, 2003  Compared to
the Six Months Ended June 30, 2002

         REVENUE. Total revenue for the six months ended June 30, 2003 increased
$3.3 million to $4.3 million,  compared to total revenue of $1.0 million for the
six months ended June 30, 2002.  This  increase in revenue was  attributable  to
significantly  higher  revenue  generated  from the  media  conversion  business
segment ($3.1 million in segment  revenue for the six months ended June 30, 2003
as compared to $0.8  million for the prior year period) and  additional  revenue
generated in the software and related services  business segment from DIVArchive
broadcast  sales,  totaling  $0.7 million for the six months ended June 30, 2003
(the DIVArchive revenues excluded DIVArchive


                                       17
<PAGE>


Medical  revenue of $240,000 for the six months  ended June 30, 2003,  which has
been  accounted  for as a  discontinued  operation).  Revenue  generated  in the
software and related  services  business  segment in the United States increased
approximately  $0.3  million  for the six months  ended June 30,  2003.  Service
revenues  totaled $3.4  million,  or 78% of total  revenues,  for the six months
ended June 30, 2003 as compared to $.8 million or 80% of total revenues, for the
six months  ended June 30, 2002.  For the six months  ended June 30, 2003,  $0.9
million,  or 22% of total  revenue,  was  attributable  to sales of software and
related  products as compared to $.2 million,  or 20% of total revenue,  for the
six months ended June 30, 2002.

         GROSS  MARGIN.  Total gross  margin was $3.3  million,  or 77% of total
revenue,  for the six months ended June 30, 2003 compared to $.7 million, or 68%
of total  revenue,  for the six months  ended June 30, 2002.  This  increase was
attributable to the increased  revenues  discussed above and the timely delivery
of services to customers.  In addition,  revenues  scaled to a level whereby the
direct  costs of  operations  were  supported,  unlike in the prior year  period
during which  revenue was  marginally  able to cover cost of sales.  For the six
months ended June 30, 2003, sales of software and related  products  resulted in
gross  margins of 69% and the  provision of data and media  conversion  services
resulted in gross margins of 80%. For the six months ended June 30, 2002,  sales
of  software  and  related  products  resulted  in gross  margins of 87% and the
provision of data and media  conversion  services  resulted in gross  margins of
63%.

         SELLING,  GENERAL AND  ADMINISTRATIVE  EXPENSES.  Selling,  general and
administrative  expenses  for the six  months  ended  June 30,  2003  were  $2.2
million,  as compared to $1.7  million for the six months  ended June 30,  2002.
Selling,  general and administrative  expenses for the six months ended June 30,
2003  consisted  primarily of $986,000  for  salaries  and related  benefits for
employees  not  directly  related to the  production  of  revenue,  $493,000  in
professional  and consulting fees,  $157,000 for travel,  $188,000 of facilities
costs,  $50,000 for bad debt expense,  and $291,000 for general office expenses.
Selling,  general and administrative  expenses for the six months ended June 30,
2002  consisted  primarily of $741,000  for  salaries  and related  benefits for
employees  not  directly  related to the  production  of  revenue,  $537,000  in
professional  fees,  $73,000  for  travel,  $118,000 of  facilities  costs,  and
$191,000 for general office expenses.

         RESEARCH AND DEVELOPMENT.  As discussed above, the Company  maintains a
software  development staff that designs and develops the Company's new products
and services.  Research and  development  expenses for the six months ended June
30, 2003 were  $43,000  compared to $219,000  for the six months  ended June 30,
2002.  The  decrease in expense in 2003 is directly  related to the  increase in
projects  which will provide  future  benefit to the company and have passed the
point of  technological  feasibility.  As a  result,  significantly  more of the
Company's costs of its research and development efforts are being capitalized as
software development costs and amortized to expense over a three-year period.

         DEPRECIATION AND  AMORTIZATION.  Depreciation and amortization  expense
was $698,000 for the six months ended June 30, 2003 compared to $424,000 for the
six months  ended June 30, 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  resulted from the inclusion in the current period of
such expenses for MSI France, which was acquired in August 2002.

         OPERATING  INCOME.  For the six months ended June 30,  2003,  operating
income totaled $0.4 million as compared to an operating loss of $1.6 million for
the six  months  ended June 30,  2003.  The  increase  in  operating  income was
primarily  due to the  increased  revenues  from the media  conversion  business
segment and sales from the Company's DIVArchive broadcast solutions.

         INTEREST  EXPENSE.  Interest  expense was  $362,000  for the six months
ended June 30, 2003  compared to $18,000 for the six months ended June 30, 2002.
Interest  expense  for the six months  ended  June 30,  2003  included  non-cash
interest charges aggregating  $324,000,  including a non-cash interest charge of
$266,000  related  to  the


                                       18
<PAGE>


amortization  of debt discount on the Company's  convertible  note  instruments,
$39,000 of non-cash  interest expense related to the induced  conversion of debt
and non-cash  interest  expense of $19,000  related to  amortization of non-cash
financing costs.

         LOSS FROM  CONTINUING  OPERATIONS.  For the six  months  ended June 30,
2003, the Company reported a loss from continuing  operations of $3.3 million as
compared to a loss from operations of $1.6 million for the six months ended June
30,  2002.  Included in the loss for the three  months ended June 30, 2003 was a
loss on the impairment of goodwill and intellectual property of $3.3 million, as
discussed above.

         NET LOSS. For the six months ended June 30, 2003, the Company  reported
a net loss of $3.5 million, or ($.10) per share,  compared to a net loss of $1.6
million,  or ($.06) per share, for the six months ended June 30, 2002.  Included
in the  loss  for  the  three  months  ended  June  30,  2003  was a loss on the
impairment of goodwill and  intellectual  property of $3.3 million,  a loss from
discontinued  operations  of  $751,000  and a gain on the  sale of  discontinued
operations of $587,000.

         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 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 June 30, 2003, the Company  reported a translation
loss of  $33,623 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

         On April 15, 2003,  the Company  issued  $990,000  aggregate  principal
amount of unsecured convertible notes. Proceeds to the Company from the issuance
of these notes  included the following:  $645,000 cash proceeds  received by the
Company;  the  retirement of $250,000  principal  balance of the former  secured
convertible  notes  that  matured  on March  31,  2003 (the  remaining  $250,000
principal  and accrued  interest was  converted  into common stock in accordance
with the terms of the convertible  secured note);  and the conversion of $95,000
in current  liabilities.  The convertible  notes bear interest at the rate of 8%
per annum and mature on September 30, 2004.  Principal 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 the remaining $250,000 of the outstanding
principal  ($250,000 of principal was converted  into the unsecured  convertible
notes described above) and 100% of the accrued interest into 6,785,715 shares of
common


                                       19
<PAGE>


stock of the Company pursuant to the conversion terms of the convertible secured
notes.  In connection  with this  conversion,  the Company  recorded  $39,000 in
non-cash interest expense related to the value of the induced  conversion of the
debt.

         During the three months ended June 30, 2003,  the Company  successfully
restructured  the  following:  (i) $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 will issue warrants to purchase up to 500,000 shares
of common  stock at a price per share of $0.10 to the vendor and (ii) 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.
The fair value of these  warrants  amounted  to $10,000  and was  recorded  as a
discount to the note and is being  amortized  to interest  expense over the note
term of one year.

         On April 23,  2003,  the  Company  sold to Eastman  Kodak  Company  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 certain software support  obligations to
the Company's existing DIVArchive customers in the medical industry.

         As a result of the issuance of the convertible  notes in April 2003, at
June 30, 2003, on a diluted basis in accordance with generally  accepted account
principles,  the Company had  authorized  the  issuance of a number of shares of
common stock that exceeded its authorized 50 million common shares.  The Company
expects to remedy this through a shareholder vote prior to year end.

         As of June 30, 2003, the Company had liquid assets  (unrestricted  cash
and cash equivalents and accounts receivable) of $2.5 million and current assets
of $3.0 million.  Current liabilities of $3.4 million at June 30, 2003 consisted
of $0.8 million of accounts payable; $1.1 million of accrued expenses;  $705,000
of accrued expenses to employees;  $367,000 of deferred revenue, which consisted
of progress payments received on engagements currently in progress;  $403,000 of
current  portion of notes  payable and $3,000 of current  lease  liability.  The
Company's  working  capital  deficit was $0.4 million as of June 30 2003 for the
reasons described above.

         The  Company  used net cash of $0.9  million  in  operating  activities
during the six months  ended June 30, 2003 and used net cash of $0.9  million in
operating  activities during the six months ended June 30, 2002,  primarily as a
result of the net loss incurred  during the 2002 period.  In 2003,  cash used in
operating  activities was primarily driven by the loss for the period,  adjusted
for  a  $3.3  million   non-cash  charge  on  the  impairment  of  goodwill  and
intellectual  property,  and offset by significant  payments of liabilities  not
related to the  ongoing  operating  expenses,  significant  decrease in deferred
revenues  largely due to the recognition of revenues in 2003 which were deferred
at December 31,  2002,  and an increase in accounts  receivable  due to a slight
slowdown in collections on certain contracts due to them reaching completion and
reconciling.  The  Company  expects to fully  collect  the  balance of  accounts
receivable at June 30, 2003.

         The Company used net cash of $316,000 in discontinued operations during
the six months ended June 30, 2003.


                                       20
<PAGE>


         During  the six  months  ended  June 30,  2003,  the  Company  provided
$602,000  from  investing  activities,  of which  $87,000  was used for  capital
expenditures and $151,000 was used for the development of the Company's suite of
video  software  solutions,  offset by proceeds of $800,000 from the sale of the
DIVArchive  Medical  operations  and  proceeds of $40,000 from the sale of fixed
assets.  During the six months ended June 30, 2002,  the Company used $94,000 in
investing  activities,  of which $50,000 was used for capital  expenditures  and
$44,000 was used for the  development  of the Company's  suite of video software
solutions.

         The Company provided $576,000 from financing  activities during the six
months ended June 30,  2003,  which  consisted of $645,000 in proceeds  from the
issuance in April 2003 of notes payable,  offset by principal repayments made on
notes  payable and capital  leases of $69,000.  During the six months ended June
30, 2002, financing activities provided $650,000, which consisted of $600,000 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 August 14,  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  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.



                                       21
<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 in addition to the action taken by
the Company  described  below.  An outcome in this litigation that is adverse to
the Company,  costs  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.  On July 30, 2003, the Company
filed suit in the District Court of Denton County, Texas against Mr. Gaggero and
one of his  associates  seeking  damages  relating to claims of  defamation  and
business disparagement, tortious interference with business relations, breach of
fiduciary duty and breach of contract.

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 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

In April 2003,  the Company issued  $645,000  aggregate  principal  amount of 8%
unsecured convertible  promissory notes (the "8% Notes") to a group of investors
primarily consisting of existing shareholders and management.  See Note 3 in the
Notes to Consolidated  Financial Statements and Item 2. Management's  Discussion
and Analysis or Plan of Operations for further information.

In April 2003,  $250,000 aggregate  principal amount of outstanding  convertible
notes and all accrued  interest were converted  into 6,785,715  shares of common
stock and the remaining $250,000 principal amount of the outstanding convertible
notes  was  exchanged  for 8%  Notes.  See Note 3 in the  Notes to  Consolidated
Financial Statements and Item 2. Management's Discussion and Analysis or Plan of
Operations for further information.

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

                  The following exhibits are filed herewith:

         (a)      Exhibits

                  10.1     Employment Agreement dated as of June 1, 2003 between
                           the Company and Michael Knaisch.

                  10.2     Employment Agreement dated as of June 1, 2003 between
                           the Company and Matthew Richman.

                  31.1     Certification of Chief Executive  Officer pursuant to
                           18 U.S.C. 1350, as adopted pursuant to Section 302 of
                           the Sarbanes-Oxley Act of 2002.


                                       22
<PAGE>


                  31.2     Certification of Chief Financial  Officer pursuant to
                           18 U.S.C. 1350, as adopted pursuant to Section 302 of
                           the Sarbanes-Oxley Act of 2002.

                  32.1     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.

                  32.2     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

                  None













                                       23
<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:  August 19, 2003            FRONT PORCH DIGITAL INC.

                                   By: /s/ MICHAEL KNAISCH
                                       -----------------------------
                                       Michael Knaisch
                                       Chief Executive Officer
                                   (principal executive officer)


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

<PAGE>


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

I, Michael Knaisch, certify that:

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

2.   Based on my knowledge, this 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
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this 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 report;

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

     a)   Designed such disclosure controls and procedures, or caused such
          disclosure controls and procedures to be designed under our
          supervision, 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 report is being prepared;

     b)   Evaluated the effectiveness of the registrant's disclosure controls
          and procedures and presented in this report our conclusions about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     c)   Disclosed in this report any change in the registrant's internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter (the registrant's fourth fiscal quarter in
          the case of an annual report) that has materially affected, or is
          reasonably likely to materially affect, the registrant's internal
          control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     a)   All significant deficiencies and material weaknesses in the design or
          operation of internal control over financial reporting which are
          reasonably likely to adversely affect the registrant's ability to
          record, process, summarize and report financial information; and

     b)   Any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          control over financial reporting.

                                           By: /s/ MICHAEL KNAISCH
                                               ----------------------
                                               Name:  Michael Knaisch
                                               Title: Chief Executive Officer

August 19, 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 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
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this 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 report;

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

     a)   Designed such disclosure controls and procedures, or caused such
          disclosure controls and procedures to be designed under our
          supervision, 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 report is being prepared;

     b)   Evaluated the effectiveness of the registrant's disclosure controls
          and procedures and presented in this report our conclusions about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     c)   Disclosed in this report any change in the registrant's internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter (the registrant's fourth fiscal quarter in
          the case of an annual report) that has materially affected, or is
          reasonably likely to materially affect, the registrant's internal
          control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     a)   All significant deficiencies and material weaknesses in the design or
          operation of internal control over financial reporting which are
          reasonably likely to adversely affect the registrant's ability to
          record, process, summarize and report financial information; and

     b)   Any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          control over financial reporting.

                                         By: /s/ MATTHEW RICHMAN
                                             ----------------------
                                             Name:  Matthew Richman
                                             Title: Chief Financial Officer

August 19, 2003