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, 2002


          [ ]    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 [X] No [ ]

As of July 31, 2002,  28,716,842  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 -


















<PAGE>

                                     FRONT PORCH DIGITAL, INC.
                                           BALANCE SHEET
                                           JUNE 30, 2002

                                            [Unaudited]
ASSETS

Current assets:
  Cash and cash equivalents                                        $     33,994
  Accounts receivable - trade & other                                   272,595
  Other current assets                                                  270,728
                                                                   ------------
Total current assets                                                    577,317

Property and equipment, net                                             984,023

Software development costs, net                                         202,863

Software and intellectual property, net
 of accumulated amortization of $402,000                              1,248,426

Excess cost over fair value of net assets acquired, net
 of accumulated amortization of $945,000                              3,740,801

Other assets                                                             32,044
                                                                   ------------
Total assets                                                       $  6,785,474
                                                                   ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Current portion of note payable - employee                       $    160,000
  Notes payable                                                         800,000
  Accounts payable                                                    1,145,207
  Accrued expenses                                                      454,428
  Accrued expenses - employees                                          289,959
  Accrued vacation                                                      132,561
  Deferred revenue                                                      620,115
  Customer deposits                                                      63,861
                                                                   ------------
Total current liabilities                                             3,666,131

Note payable - employee, net of current portion                         583,963

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
   27,260,962 shares issued and outstanding                              27,262
  Additional paid in capital                                         20,828,468
  Accumulated deficit                                               (18,320,350)
                                                                   ------------
Total stockholders' equity                                            2,535,380

                                                                   ------------
Total liabilities and stockholders' equity                         $  6,785,474
                                                                   ============






SEE ACCOMPANYING NOTES                 2
<PAGE>


                                          FRONT PORCH DIGITAL, INC.
                                           STATEMENTS OF OPERATIONS
                                                 [Unaudited]


<TABLE>
<CAPTION>
                                                          Three months ended June 30,              Six months ended June 30,
                                                            2002                2001               2002                2001
                                                     --------------------------------------------------------------------------
<S>                                                        <C>                <C>                 <C>                <C>
Revenues:
  Products                                                   $95,256            $10,980            $206,456            $48,960
  Services                                                   684,907              6,090             823,893             57,900
  Services - affiliate                                                                                                 169,716
                                                     --------------------------------------------------------------------------
Total revenue                                                780,163             17,070           1,030,349            276,576

Cost of revenue:
  Products                                                    35,475              5,500              80,210             22,998
  Services                                                   277,883            146,008             249,176            312,744
                                                     --------------------------------------------------------------------------
                                                             313,358            151,508             329,386            335,742
                                                     --------------------------------------------------------------------------
Gross margin (loss)                                          466,805           (134,438)            700,963            (59,166)
                                                     --------------------------------------------------------------------------


Selling, general and administrative                          805,562          1,681,758           1,661,484          3,183,680
Research and development                                     115,928            157,843             218,777            410,064
Depreciation                                                 153,096            133,271             306,192            283,085
Amortization                                                  58,929            256,756             117,858            513,512
                                                     --------------------------------------------------------------------------
                                                           1,133,515          2,229,628           2,304,311          4,390,341
                                                     --------------------------------------------------------------------------
Loss from operations                                        (666,710)        (2,364,066)         (1,603,348)        (4,449,507)

Other income (expense):
Interest income                                                  504              4,898               1,400             29,004
Interest expense                                             (13,438)            (4,500)            (17,938)            (9,000)
                                                     --------------------------------------------------------------------------
                                                             (12,934)               398             (16,538)            20,004
                                                      --------------------------------------------------------------------------
Net loss                                                    (679,644)        (2,363,668)         (1,619,886)        (4,429,503)
                                                     ==========================================================================

Weighted average number of common
shares outstanding - basic and diluted                    26,807,923         24,572,008          26,386,128         24,569,419

Loss per common share - basic and diluted               $      (0.03)      $      (0.10)       $      (0.06)      $    $ (0.18)
                                                     --------------------------------------------------------------------------
</TABLE>














SEE ACCOMPANYING NOTES                 3
<PAGE>


                            Front Porch Digital, Inc.
                            Statements of Cash Flows
                                   (unaudited)


<TABLE>
<CAPTION>
                                                                              Six Months Ended June 30,
                                                                                  2002           2001
                                                                           -----------------------------
<S>                                                                           <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                                      ($1,619,886)   ($4,429,503)
Adjustments to reconcile net loss to net cash used in operating activities:
     Depreciation and amortization                                                424,050        796,597
     Non-cash issuance of common stock to employees and consultants               357,556           --
     Stock option compensation cost                                                68,987        654,056
     Changes in operating assets and liabilities:
         Decrease in accounts receivable - affiliate                                 --          218,010
         Increase in accounts receivable                                          (97,346)      (368,201)
         Increase in other current assets                                         (13,337)       (23,395)
         Increase in accounts payable                                              52,823        334,900
         (Decrease) increase in accrued expenses                                  (19,362)        62,995
         (Decrease) in accrued expenses - employees                               (62,041)       200,000
         (Decrease) in accrued vacation                                           (13,641)        45,001
         (Decrease) increase in deferred revenue                                 (159,085)       359,336
          Increase in customer deposits                                            63,861           --
          Other                                                                   102,016        (26,775)
                                                                           -----------------------------
Net cash used in operating activities                                            (915,405)    (2,176,979)
                                                                           -----------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures                                                              (50,406)      (215,871)
Software development costs                                                        (43,634)      (121,974)
Other investing activities                                                           --          (28,881)
                                                                           -----------------------------
Net cash used in investing activities                                             (94,040)      (366,726)
                                                                           -----------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note payable                                                        600,000           --
Proceeds from issuance of common stock                                             50,000        250,000
                                                                           -----------------------------
Net cash provided by financing activities                                         650,000        250,000
                                                                           -----------------------------

Net decrease in cash and cash equivalents                                        (359,445)    (2,293,705)
Cash and cash equivalents, beginning of period                                    393,439      2,444,527
                                                                           -----------------------------
Cash and cash equivalents, end of period                                      $    33,994    $   150,822
                                                                           =============================
</TABLE>



SEE ACCOMPANYING NOTES                 4
<PAGE>


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


1.  ORGANIZATION AND BASIS OF PRESENTATION

Front Porch  Digital Inc. (the  "Company") is in the emerging  market of digital
information  asset  management.  The  Company  utilizes  a suite of  proprietary
products and services that enable the conversion of analog and digital  content,
including  text,  images,  audio,  graphics,  video and rich  media,  into other
digital formats or platforms.  The Company's  software-based  methodologies  and
intellectual property are incorporated throughout its service offerings to allow
content to be  captured,  converted,  managed and  distributed  in digital  form
efficiently and cost effectively.

The Company's customers are primarily located within the United States.

The 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 financial statements do not include
any adjustments that might be necessary should the Company be unable to continue
in  existence.  For the six months  ended June 30,  2002,  the Company  incurred
losses and negative  cash flows from  operating  activities  of $1.6 million and
$915,000,  respectively.  The Company has incurred losses since  commencement of
operations in its current line of business and expects losses to continue during
2002.  Further,  at June 30, 2002, the Company has a working  capital deficit of
$3.1 million.  These factors create significant  uncertainty about the Company's
ability to continue as a going concern.

During 2001, the Company began  marketing its suite of data and video  solutions
to the  marketplace  and since June 2001,  has been awarded new contracts  worth
approximately $4.5 million. The Company has completed approximately $2.4 million
of these  contracts  through June 30, 2002 and expects to complete the remainder
during 2002. Management of the Company recognizes that additional resources will
be  required to continue  as a going  concern  and has been  seeking  additional
sources of capital. The Company has implemented cash saving measures,  including
the  deferral of payment of certain  expenses.  Management  believes  that these
actions will enable the Company to obtain sufficient cash to continue as a going
concern.  However,  there can be no assurance that sufficient additional capital
will be available on terms that are acceptable to the Company.

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, 2001.

Operating  results for the six months  ended June 30,  2002 are not  necessarily
indicative of the operating  results  expected for the year ending  December 31,
2002.

Certain  reclassifications  have been made to prior year amounts and balances to
conform with the 2002 presentation.

                                       5
<PAGE>


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

2. INTANGIBLE ASSETS

Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142
no longer permits the amortization of goodwill and  indefinite-lived  intangible
assets.  Instead,  these  assets must be reviewed  annually  for  impairment  in
accordance with this statement. Accordingly, the Company has ceased amortization
of all goodwill as of January 1, 2002. During the six months ended June 30,2002,
the Company completed the initial impairment test as required under SFAS No. 142
and  determined  that  the fair  value of its  reporting  units  exceeded  their
carrying values as of January 1,2002. The Company will perform an ongoing annual
impairment  test,  as required  under SFAS No. 142,  during the third quarter of
each year.

The Company's net loss and loss per share for the six months ended June 30, 2001
adjusted to exclude goodwill amortization was $4,033,849 and $.16, respectively.

3. NOTES PAYABLE

At June 30, 2002, notes payable consisted of:

$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;

$200,000 of unsecured  notes  payable that bear interest at 9% per annum and are
payable on demand;

$100,000 of an unsecured note payable that bears interest at
7% per annum and matures September, 2002; and

$500,000  aggregate  principal  amount  of  convertible  secured  notes  to  two
investors.  The notes mature on March 27, 2003,  bear interest at the rate of 7%
per annum,  which is payable on a quarterly basis, and are secured by all assets
of the Company.  The notes are convertible at any time at the option of the note
holders into a number of shares of common  stock of the Company  equal to 10% of
the  outstanding  shares of  common  stock,  subject  to  certain  anti-dilution
adjustments.  The note holders were granted certain rights for the  registration
of these shares under the Securities Act of 1933, as amended, which requires the
Company to  register  these  shares on the  earlier of April  2003,  or upon the
filing of certain  registration  statements  by the Company.  The notes  contain
restrictions  that,  among  others,  prohibit the Company from issuing new debt,
paying creditors in excess of specified amounts,  or prepaying the notes without
the consent of the note holders. In the event the Company raises $2.5 million of
equity  capital,  the Company may deposit into an escrow account an amount equal
to the  outstanding  principal  and  interest  on the  notes,  at which time all
restrictions  and liens on the assets of the Company will be released.  Upon the
sale or  liquidation  of  substantially  all of the assets of the Company,  or a
business combination in which a majority of the issued and outstanding shares of
common  stock of the Company is  transferred,  the note  holders are entitled to
receive all  outstanding  principal  and interest on the notes and a liquidation
preference  equal to three times the amount of such  outstanding  principal  and
interest.




                                       6
<PAGE>


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

4. SIGNIFICANT CUSTOMERS

For the six  months  ended  June 30,  2002,  revenue  from two  customers,  each
exceeding  10% of  total  revenue,  aggregated  54%  and 15% of  total  revenue,
respectively.  At June  30,  2002,  these  customers  accounted  for 32% and 6%,
respectively, of accounts receivable.

For the six  months  ended  June 30,  2001,  revenue  from two  customers,  each
exceeding  10% of  total  revenue,  aggregated  65%  and 11% of  total  revenue,
respectively.  The Company was a subcontractor  for its largest  customer during
the six  months  ended  June 30,  2001,  which  owned  approximately  25% of the
outstanding common stock of the Company as of June 30, 2001.

5. PER SHARE DATA

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

6. SUBSEQUENT EVENT

On July 31, 2002,  the Company  acquired all the  outstanding  shares of capital
stock of  ManagedStorage  International  France,  a French  SOCIETE  PAR ACTIONS
SIMPLIFEE ("MSI France"),  and certain assets of  ManagedStorage  International,
Inc., a Delaware corporation  ("ManagedStorage"),  pursuant to a Stock and Asset
Purchase  Agreement  dated  as  of  July  31,  2002,  between  the  Company  and
ManagedStorage.  The consideration  paid by the Company pursuant to the Purchase
Agreement consisted of (i) 5,000,000 shares of common stock of the Company; (ii)
a warrant for the  purchase  of up to  1,750,000  shares of common  stock of the
Company at a price of $2.00 per share,  exercisable  immediately and expiring on
July 31, 2012; and (iii) a warrant for the purchase of up to 1,750,000 shares of
common  stock  of the  Company  at a  price  of  $4.00  per  share,  exercisable
immediately  and expiring on July 31, 2012. In addition,  the Company  agreed to
issue and deliver up to 2,500,000  additional shares of common stock pursuant to
the terms of an earn-out as more fully described in the Purchase Agreement.

Pursuant  to the terms of the  Purchase  Agreement,  the Company  acquired  from
ManagedStorage  (i) all of the issued and outstanding shares of capital stock of
MSI France and (ii) certain software and related  intellectual  property rights,
including   DIVArchive,   a  software   solution   designed  to  assist   media,
entertainment  and  medical  companies  in  the  preservation,   management  and
accessing of digital content consisting of large digital data files.






                                       7
<PAGE>



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

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 of its proposed 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

         Front Porch  Digital Inc. is a leader in the  conversion,  preservation
and management of analog and digital  content,  including text,  images,  audio,
graphics,  video and rich media. The Company has developed  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.   This  software,   which  is  based  on  proprietary   and
patent-pending  technology,  enables  a new  paradigm  in the way  broadcasters,
content  owners,  and medical,  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 intends to use these proprietary technologies to accelerate
revenue growth and generate positive cash flows. Management has recently focused
on (i) completing the development of its products and service offerings that are
designed  to  facilitate  the  distribution  of  digital  video  content,   (ii)
developing  sales and  marketing  programs to build  awareness of the  Company's
product and service  offerings  and (iii)  building  an  infrastructure  that is
capable of effectively meeting anticipated demand for the Company's products and
services.

         The Company is in the early stages of executing  its business  strategy
and anticipates  beginning  numerous new engagements  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.

                                       8
<PAGE>



RESULTS OF OPERATIONS

         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 offset 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.

FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001.

For the three  months ended June 30,  2002,  the Company  reported a net loss of
$680,000, or ($.03) per share, compared to a net loss of $2.4 million, or ($.10)
per share, for the three months ended June 30, 2001.

         REVENUE.  Total  revenue  for the three  months  ended June 30, 2002 of
$780,000 has increased  from total revenue of $17,000 for the three months ended
June 30, 2001.  For the three months  ended June 30,  2002,  $95,000,  or 12% of
total revenue,  was attributable to sales of software and related products.  The
remaining  $685,000,  or 88%,  was  attributable  to data and  video  conversion
services.  Substantially  all of the  Company's  revenue has been  derived  from
customers in the United States.

         GROSS  MARGIN.  Total gross margin was $467,000 or 60% of total revenue
for the three  months  ended June 30, 2002  compared to negative  ($134,000)  or
(788%) of total  revenue for the three months ended June 30, 2001.  The increase
in total gross margin was  principally  due to increased  throughput  within the
Company's  service  delivery  function.  In June 2001,  the Company  reduced its
headcount  within the service  delivery  group by 45% and took other  actions to
reduce  costs.  For the three months ended June 30, 2002,  sales of software and
related products  resulted in gross margins of 63% and the provision of data and
video conversion services resulted in gross margins of 59%. For the three months
ended June 30, 2001,  sales of software and related  products  resulted in gross
margins of 50% and the provision of data and video conversion  services resulted
in  negative  gross  margins of  (2,298%).  The Company  plans to  significantly
increase its revenue,  and therefore  expects  expenses in this category to also
increase substantially.

         SELLING,  GENERAL AND  ADMINISTRATIVE  EXPENSES.  Selling,  general and
administrative  expenses for the three months ended June 30, 2002 were  $806,000
compared to $1.7 million for the three months ended June 30, 2001.  The decrease
in these  expenses  was  primarily  related to an overall  reduction in employee
headcount,  including the elimination of certain  positions;  the closing of the
office in Boulder,  Colorado;  and the  relocation of the New Jersey office to a
smaller facility.  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  and  consulting  fees,  $37,000 for travel,
$60,000 of facilities costs, and $180,000 for general office expenses.  Selling,
general and  administrative  expenses  for the three  months ended June 30, 2001
consisted  primarily  of  $1,146,000  for  salaries  and  related  benefits  for
employees  not  directly  related to the  production  of  revenue,  $204,000  in
professional  fees,  $105,000  for  travel,  $88,000 of  facilities  costs,  and
$138,000  for  general  office  expenses.  When the Company  secures  additional
funding,  it plans to increase its sales and marketing  efforts and, to a lesser
extent, continue to build its infrastructure and, therefore, expects expenses in
this category to increase significantly.

                                       9
<PAGE>



         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. During the second
quarter of 2001, the Company focused its  development  efforts on the completion
of software  tools and products that  facilitate the conversion and migration of
data from legacy media to current  technology,  the conversion of analog content
to multiple  digital  formats,  and the management and  reformatting  of digital
content on demand.  In the third  quarter of 2001,  upon the  completion  of its
initial development  efforts, the Company introduced its suite of video software
solutions.  Development  efforts during the first half of 2002 have been focused
on adding  features  and  functionality  to enhance the  competitiveness  of the
products.  Research and development expenses for the three months ended June 30,
2002 were  $116,000  compared to $158,000  for the three  months  ended June 30,
2001.

         DEPRECIATION AND  AMORTIZATION.  Depreciation and amortization  expense
was $212,000  for the three months ended June 30, 2002  compared to $390,000 for
the  three  months  ended  June 30,  2001.  Amortization  expense  consisted  of
amortization  of the excess cost of the media services  operations over the fair
value of the net assets acquired and other  intangible  assets.  The decrease in
these  expenses  was  primarily  attributable  to the  issuance  in July 2001 of
Statement of Financial  Accounting  Standard (SFAS) No. 142, "Goodwill and Other
Intangible Assets" by the Financial  Accounting  Standards Board, which requires
that all  amortization  of goodwill as a charge to  earnings  ($198,000  for the
three months ended June 30, 2001) be eliminated.  Depreciation  expense consists
of depreciation of furniture, equipment, software and improvements.

FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001.

For the six months ended June 30, 2002, the Company  reported a net loss of $1.6
million, or ($.06) per share,  compared to a net loss of $4.4 million, or ($.18)
per share, for the six months ended June 30, 2001.

         REVENUE.  Total  revenue  for the six months  ended  June 30,  2002 was
$1,030,000,  an  increase  of 272% from total  revenue of  $277,000  for the six
months  ended June 30,  2001.  Revenue  from the sale of  software  and  related
products  for the six  months  increased  $157,000,  or 320%,  over the year ago
period  due to the  introduction  of  the  Company's  suite  of  video  software
solutions  late in the  third  quarter  of  2001.  Revenue  generated  from  the
provision of data and video  conversion  services  for the six months  increased
$596,000,  or 261%, over the year ago period primarily due delays experienced by
customers  in  providing   the  data  to  be  converted  in  the  prior  period.
Substantially  all of the Company's  revenue has been derived from  customers in
the United States.

         GROSS MARGIN. For the six months ended June 30, 2002, revenue generated
from the  provision  of data and video  conversion  services  resulted  in gross
margins of  $575,000,  or 70% of service  revenue,  compared  to a gross loss of
$(85,000),  or (37%),  for the six months  ended June 30,  2001.  The gross loss
generated from the provision of data and video  conversion  services  during the
six months ended June 30, 2001 was below the Company's  anticipated gross margin
and resulted from the excess capacity that existed within the Company's  service
delivery function at that time.

          For the six months ended June 30, 2002,  sales of software and related
products  resulted  in gross  margins of  $126,000,  or 61% of product  revenue,
compared  to  $26,000,  or 53%,  for the six months  ended June 30,  2001.  This
increase was due to the  introduction  of the Company's  suite of video software
solutions late in the third quarter of 2001.

         The Company plans to increase  substantially  its sales of software and
related  products and services,  and therefore  expects costs of revenue also to
increase substantially.

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<PAGE>


         SELLING,  GENERAL AND  ADMINISTRATIVE  EXPENSES.  Selling,  general and
administrative expenses for the six months ended June 30, 2002 were $1.7 million
compared to $3.2 million for the six months ended June 30, 2001. The decrease in
these  expenses  was  primarily  related to an  overall  reduction  in  employee
headcount,  including the elimination of certain  positions;  the closing of the
office in Boulder,  Colorado;  and the  relocation of the New Jersey office to a
smaller  facility.  Selling,  general and  administrative  expenses  for the six
months  ended June 30, 2002  consisted  of  $741,000  for  salaries  and related
benefits  for  employees  not  directly  related to the  production  of revenue,
$537,000 in  professional  and  consulting  fees,  $191,000  for general  office
expenses, $118,000 of facilities costs, and $73,000 for travel. Selling, general
and administrative  expenses for the six months ended June 30, 2001 consisted of
$2.0  million for  salaries  and related  benefits  for  employees  not directly
related to the production of revenue,  $440,000 in professional  fees,  $235,000
for travel,  $168,000  of  facilities  costs and  $369,000  for  general  office
expenses. Should the Company secure additional funding, it plans to increase its
sales and marketing  efforts and, to a lesser  extent,  to continue to build its
infrastructure  and,  therefore,  expects  expenses in this category to increase
significantly.

         RESEARCH AND DEVELOPMENT.  As discussed above, the Company  maintains a
software  development staff that designs and develops the Company's new products
and  services.  Development  efforts  during  the  first  half of 2002 have been
focused on adding features and functionality to enhance the  competitiveness  of
the Company's products.  Research and development expenses decreased to $219,000
for the six months  ended June 30, 2002 from  $410,000  for the six months ended
June 30, 2001.

         DEPRECIATION AND  AMORTIZATION.  Depreciation and amortization  expense
was  $424,000  for the six months  ended June 30, 2002 and  $797,000 for the six
months  ended June 30,  2001.  The  decrease  in these  expenses  was  primarily
attributable  to the issuance in July 2001 of Statement of Financial  Accounting
Standard (SFAS) No. 142, "Goodwill and Other Intangible Assets" by the Financial
Accounting  Standards Board, which requires that all amortization of goodwill as
a charge to  earnings  ($396,000  for the six  months  ended  June 30,  2001) be
eliminated.   Depreciation  expense  consisted  of  depreciation  of  furniture,
equipment,   software  and  improvements.   Amortization  expense  consisted  of
amortization of intangible  assets,  and for the six months ended June 30, 2001,
amortization  of the excess cost of the media services  operations over the fair
value of the net assets acquired. During the six months ended June 30, 2002, The
Company completed the initial test as required under SFAS No. 142 and determined
that the fair value of its reporting  units  exceeded their carrying value as of
January 1, 2002. The Company will perform an ongoing annual  impairment test, as
required under SFAS No. 142, during the third quarter of each year.

LIQUIDITY AND CAPITAL RESOURCES

         As of June 30,  2002,  the  Company  had liquid  assets  (cash and cash
equivalents and accounts receivable) of $306,000 and current assets of $577,000.
These assets were  primarily  derived from  operating and financing  activities.
Long-term assets of $6.2 million consisted of the excess of cost over fair value
of the media services assets acquired during 2000 of $3.7 million,  software and
intellectual  property  of $1.2  million  and  property  and  equipment  of $1.0
million.

         Current  liabilities of $3.7 million at June 30, 2002 consisted of $1.1
million of accounts payable;  $620,000 of deferred  revenue,  which consisted of
progress  payments  received on engagements  currently in progress;  $800,000 of
notes payable,  $454,000 of accrued  expenses;  $290,000 of accrued  expenses to
employees,  of which  $168,000 was payable to an employee upon the closing of an
offering  that raises  gross  proceeds of at least $5 million;  $160,000 for the
current  portion of a note  payable to an  employee  that was  assumed  upon the
acquisition of the media services operations,  $133,000 of accrued vacation, and
$64,000 of customer deposits.

         The  Company's working capital deficit was $3.1  million as of June 30,
2002 for the reasons  described above.

                                       11
<PAGE>


         The Company  used net cash of $915,000 in operating  activities  during
the six months  ended June 30,  2002 and $2.2  million in  operating  activities
during the six  months  ended June 30,  2001,  primarily  as a result of the net
losses incurred during the periods.

         The Company used net cash of $94,000 in investing activities during the
six  months  ended  June 30,  2002,  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. During the six months ended June 30, 2001, the Company
used $367,000 in investing  activities,  of which  $216,000 was used for capital
expenditures and $122,000 was used for the development of the Company's suite of
video software solutions.

         Financing  activities  provided  net cash of  $650,000  during  the six
months ended June 30, 2002. In March 2002,  the Company issued 400,000 shares of
unregistered  common  stock  to  an  individual  investor  in  consideration  of
aggregate  proceeds of  $50,000.  In March and April  2002,  the Company  issued
$500,000  aggregate  principal  amount  of  convertible  secured  notes  to  two
investors. In July 2002, the Company borrowed $100,000 from one investor. During
the six  months  ended June 30,  2001,  net cash of  $250,000  was  provided  by
financing activities.

         The  current  level of cash flows  from  operating  activities  are not
sufficient  to enable the  Company to  continue  to operate  and to execute  its
business strategy.  As a result, the Company is seeking additional  capital.  In
the interim,  the Company is managing its investments in infrastructure based on
its cash position and the near term cash flow  generated  from  operations.  The
Company  anticipates  having  sufficient  cash to continue  operations  into the
fourth  quarter of 2002.  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.  If the Company is successful in raising
additional  capital,  the Company  anticipates that its operating  expenses will
increase  over the next 12 months as it  accelerates  execution  of its business
strategy. There can be no assurance that additional capital will be available on
terms  that  are  acceptable  to  the  Company.  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.

         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  marketing  strategy.
Depending  upon the  level of sales  generated  in the near  term,  the  Company
expects capital expenditures to be approximately $500,000 during the next twelve
months.  The amount of spending in each  respective  area is dependent  upon the
total capital available to the Company.








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<PAGE>



PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS -

         The Company is not subject to any material legal proceedings.

Item 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

     (c) In April 2002,  the Company sold  $150,000  aggregate  principal amount
of  convertible  secured notes to two  investors.  The notes mature on March 27,
2003, bear interest at the rate of 7% per annum, which is payable on a quarterly
basis,  and are secured by all assets of the Company.  The notes are convertible
at any time at the option of the note  holders into a number of shares of common
stock of the Company  equal to 10% of the  outstanding  shares of common  stock,
subject to certain  anti-dilution  adjustments.  The note  holders  were granted
certain rights for the  registration of these shares under the Securities Act of
1933,  as amended,  which  requires the Company to register  these shares on the
earlier of April 2003, or upon the filing of certain registration  statements by
the Company.  The notes contain  restrictions  that, among others,  prohibit the
Company from issuing new debt, paying creditors in excess of specified  amounts,
or prepaying the notes without the consent of the note holders. In the event the
Company raises $2.5 million of equity  capital,  the Company may deposit into an
escrow account an amount equal to the outstanding  principal and interest on the
notes,  at which time all  restrictions  and liens on the assets of the  Company
will be  released.  Upon the sale or  liquidation  of  substantially  all of the
assets of the  Company,  or a business  combination  in which a majority  of the
issued and outstanding shares of common stock of the Company is transferred, the
note holders are entitled to receive all  outstanding  principal and interest on
the notes and a liquidation  preference  equal to three times the amount of such
outstanding  principal  and  interest.  The notes were sold in  reliance  on the
exemption  from  registration  provided by Section 4(2) of the Securities Act of
1933, as amended (the "Securities  Act"), on the basis that the issuance did not
involve a public offering,  no underwriting fees or commissions were paid by the
Company  in  connection  with such sale and the  purchasers  represented  to the
Company that they were "accredited investors," as defined in the Securities Act.



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

                  The following exhibits are filed herewith:

                  (a)      Exhibits
                                    None

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

The Company  filed a Current  Report on Form 8-K dated July 31, 2002  announcing
the acquisition of all the outstanding shares of capital stock of ManagedStorage
International France and certain assets of ManagedStorage International, Inc.














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<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 14, 2002       FRONT PORCH DIGITAL INC.

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


                              By: /s/ PAUL MCKNIGHT
                                  -------------------------------
                                   Paul McKnight
                                   Chief Financial Officer
                                   (principal financial and accounting officer)
























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