CAUTIONARY NOTE
The following management's discussion and analysis should be read in conjunction with the accompanying Condensed Consolidated Unaudited Financial Statements and Notes thereto. This Quarterly Report on Form 10-Q may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, but not limited to:
• Any statements that are not statements of historical fact;

• Statements regarding trends in our revenues, expense levels, and liquidity and capital resources;

• Statements about the sufficiency of the proceeds from the sale of securities and cash balances to meet currently planned working capital and capital expenditure requirements for at least the next twelve months; and

• Other statements identified or qualified by words such as "likely", "will", "suggest", "may", "would", "could", "should", "expects", "anticipates", "estimates", "plans", "projects", "believes", "seeks", "intends" and other similar words that signify forward-looking statements.

These forward-looking statements represent our best judgment as of the date of the Quarterly Report on Form 10-Q, and we caution readers not to place undue reliance on such statements. Actual performance and results of operations may differ materially from those projected or suggested in the forward-looking statements due to certain risks and uncertainties, including but not limited to, the risks and uncertainties described or discussed in the section "Risk Factors" in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 3, 2009. These risks include, among others, the following:
• our history of prior losses and the lack of certainty of maintaining consistent profitability;

• our dependence on the marketing assistance of third parties to market our services;

• the possibility that we may not be able to expand to meet increased demand for our services and related products;

• the potential adverse impact that client departures may have on our financial results;

• our inability to attract and retain qualified management and technical personnel and our dependence on our executive officers and key employees;

• potential security breaches or system failures disrupting our business and the liability associated with these disruptions;

• the failure to properly develop, market or sell new products;

• the potential impact of the consolidation of the banking and financial services industry;

• the effect of adoption of government regulations on our business may be problematic;

• our need to maintain satisfactory ratings from federal depository institution regulators;

• exposure to increased compliance costs and risks associated with increasing and new regulation of corporate governance and disclosure standards;

• the liquidation preference rights and redemption rights associated with our outstanding shares of preferred stock;

• the voting rights of our preferred stock restricting our right to take certain actions;

• the potential losses we may incur from the impairment of the goodwill we have obtained from our recent acquisitions;

• our inability to obtain additional financing to grow our business;

• the concentration of our clients in a small number of industries, including the financial services industry, and changes within those industries reducing demand for our products and services;

• the failure to retain existing end-users or changes in their continued use of our services adversely affecting our operating results;

• demand for low-cost or free online financial services and competition placing significant pressure on our pricing structure and revenues;

• exposure to greater than anticipated tax liabilities;

• our quarterly financial results being subject to fluctuations and having a material adverse effect on the price of our stock;

• our limited ability to protect our proprietary technology and other rights;

• the need to redesign our products, pay royalties or enter into license agreements with third parties as a result of our infringing the proprietary rights of third parties;

• the potential obsolescence of our technology or the offering of new, more efficient means of conducting account presentation and payments services negatively impacting our business;

• errors and bugs existing in our internally developed software and systems as well as third-party products;

• the disruption of our business and the diversion of management's attention resulting from breach of contract or product liability suits;

• difficulties in integrating acquired businesses;

• our having limited knowledge of, or experience with, the industries served and products provided by our acquired businesses;

• the increase in the size of our operations and the risks described herein from acquisitions or otherwise;

• the liabilities or obligations that were not or will not be adequately disclosed from acquisitions we have made and may make;

• the claims that may arise from acquired companies giving us limited warranties and indemnities in connection with their businesses;

• the effect on the trading price of our stock from the sale of the substantial number of shares of common and convertible preferred stock outstanding, including shares issued in connection with certain acquisitions and shares that may be issued upon exercise of grants under our equity compensation plans;

• the significant amount of debt which will have to repay;

• the adverse effect to the market price of our common stock from future offerings of debt and preferred stock which would be senior to our common stock upon liquidation; and

• the acceleration of repayment of borrowed funds if a default under the terms of our credit agreement arises.

OVERVIEW
We provide outsourced web- and phone- based financial technology services branded to financial institution, biller, card issuer and creditor clients and their millions of consumer end-users. End-users may access and view their accounts online and perform various self-service functions. They may also make electronic bill payments and funds transfers utilizing our unique, real-time debit architecture, ACH and other payment methods. Our value-added relationship management services reinforce a favorable user experience and drive a profitable and competitive online channel for our clients. Further, we provide professional services, including software solutions, which enable various deployment options, a broad range of customization and other value-added services. We currently operate in two business segments - Banking and eCommerce.
Registered end-users using account presentation, payment services or both, and the payment transactions executed by those end-users are the major drivers of our revenues. Since March 31, 2008, the number of account presentation services users decreased by 18%, and the number of payment services users increased 12%, for an overall 2% increase in users. The decline in account presentation services users is primarily due to the departure of a card account presentation services client in the second quarter of 2008.

                                                                             Increase/
                                            Period Ended March 31,           (Decrease)
                                              2009            2008       Change        %
    Account presentation users (000s):
    Banking segment                            1,027          1,180        (153 )      -13 %
    eCommerce segment                          2,556          3,201        (645 )     - 20 %


    Enterprise                                 3,583          4,381        (798 )     - 18 %
    Payment services users (000s):
    Banking segment                            3,949          3,731         218          6 %
    eCommerce segment                          6,548          5,604         944         17 %


    Enterprise                                10,497          9,335       1,162         12 %
    Total users (000s):
    Banking segment                            4,739          4,709          30          1 %
    eCommerce segment                          9,104          8,805         299          3 %


    Enterprise                                13,843         13,514         329          2 %

We have long-term service contracts with most of our financial services provider clients. The majority of our revenues are recurring, though these contracts also provide for implementation, set-up and other non-recurring fees. Account presentation services revenues are based on either a monthly license fee, allowing our financial institution clients to register an unlimited number of customers, or a monthly fee for each registered customer. Payment services revenues are based on a monthly fee for each customer enrolled, a fee per executed transaction, or a combination of both. Our clients pay nearly all of our fees and then determine if or how they want to pass these costs on to their users. They typically provide account presentation services to users free of charge, as they derive significant potential benefits including account retention, delivery and paper cost savings, account consolidation and cross-selling of other products.
As a network-based service provider, we have made substantial up-front investments in infrastructure, particularly for our proprietary systems. While we continue to incur ongoing development and maintenance costs, we believe the infrastructure we have built provides us with significant operating leverage. We continue to automate processes and develop applications that allow us to make only small increases in labor and other operating costs relative to increases in customers and transactions. We believe our financial and operating performance will be based primarily on our ability to leverage additional end-users and transactions over this relatively fixed cost base. Results of Operations
The following table presents the summarized results of operations for our two reportable segments, Banking and eCommerce. We changed the way we determine operating results of the business segments during the third quarter of 2008.

Intangible asset amortization costs that previously had been unallocated are now allocated to the respective Banking or eCommerce segments. For the three months ended March 31, 2008, $2.6 million of intangible asset amortization was reclassified from unallocated to Banking and eCommerce segments. In addition, we allocated $1.9 million of system operations and other processing costs, included in costs of revenues, from the eCommerce segment to the Banking segment in the three months ended March 31, 2008, to reflect the change in the utilization of these resources. (dollars in thousands):

                                      Three Months Ended March 31,
                                      2009                    2008
                               Dollars        %        Dollars        %
                   Revenues:
                   Banking     $ 22,882        58%     $ 24,186        62%
                   eCommerce     16,358        42%       15,010        38%


                   Total       $ 39,240       100%     $ 39,196       100%




                                Dollars      Margin      Dollars      Margin
                Gross profit:
                Banking         $ 11,890         52%     $ 12,388        51%
                eCommerce          7,686        47%         7,033        47%


                Total           $ 19,576         50%     $ 19,421         50%




                                    Dollars        %        Dollars        %
              Operating expenses:
              Banking               $  6,463        37%     $  7,137        37%
              eCommerce                5,288       30%         6,007        32%
              Corporate(1)             5,829        33%        5,845        31%


              Total                 $ 17,580       100%     $ 18,989       100%




                                     Dollars      Margin      Dollars      Margin
           Income from operations:
           Banking                   $  5,427         24%     $  5,251         22%
           eCommerce                    2,398         15%        1,026         7%
           Corporate(1)                (5,829 )                 (5,845 )


           Total                     $  1,996         5%      $    432         1%

(1) Corporate expenses are primarily comprised of corporate general and administrative expenses that are not considered in the measure of segment profit or loss used to evaluate the segments.

THREE MONTHS ENDED MARCH 31, 2009 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
2008
Revenues
   We generate revenues from account presentation, payment, relationship
management and professional services and other revenues. Revenues remained
unchanged compared to the prior year quarter primarily due to the departure of
two large clients in the first quarter of 2008.

                                       Three Months Ended
                                            March 31,                      Change
                                      2009(1)       2008(1)       Difference(1)        %
  Revenues:

  Account presentation services      $    1,839     $  2,372     $          (533 )     - 22 %
  Payment services                       31,129       31,878                (749 )       -2 %
  Relationship management services        2,040        1,970                  70          4 %
  Professional services and other         4,232        2,976               1,256         42 %


  Total revenues                     $   39,240     $ 39,196     $            44          0 %


  Payment metrics:
  Banking payment transactions           39,042       41,808              (2,766 )      - 7 %
  Biller payment transactions            14,740       12,044               2,696         22 %

(1) In thousands

Account Presentation Services. Both the Banking and eCommerce segments contribute to account presentation services revenues, which decreased 22%, or $0.5 million, to $1.8 million. The decrease is due to the departure of a large card account presentation services client in April 2008.
Payment Services. Both the Banking and eCommerce segments contribute to payment services revenues, which decreased to $31.1 million for the three months ended March 31, 2009 from $31.9 million in the prior year quarter. The decrease was related to significant declines in interest rates which reduced float interest revenue by approximately $1.6 million and to the departure of a large payment services client in April 2008. The decrease in float interest was offset slightly by increased revenue related to transaction fees.
Relationship Management Services. Primarily composed of revenues from the Banking segment, relationship management services revenues increased by $0.1 million in the first quarter of 2009, or 4%. Revenues increased as a result of increases in marketing program revenue.
Professional Services and Other. Both the Banking and eCommerce segments contribute to professional services and other revenues, which increased $1.3 million, or 42%. Revenues from professional services and other fees primarily increased due to one-time professional services fees.

Costs and Expenses

                                                  Three Months Ended
                                                      March 31,                            Change
                                               2009(1)          2008(1)          Difference(1)           %
Revenues                                      $   39,240        $ 39,196        $            44             0 %
Costs of revenues                                 19,664          19,775                   (111 )          -1 %


Gross profit                                      19,576          19,421                    155             1 %
Gross margin                                          50 %            50 %
Operating expenses
General and administrative                         9,721           9,943                   (222 )          -2 %
Sales and marketing                                5,606           6,233                   (627 )         -10 %
Systems and development                            2,253           2,813                   (560 )         -20 %


Total operating expenses                          17,580          18,989                 (1,409 )          -7 %


Income from operations                             1,996             432                  1,564           362 %
Other (expense) income
Interest income                                       46             212                   (166 )        - 78 %
Interest and other expense                        (1,068 )        (2,430 )                1,362          - 56 %


Total other (expense) income                      (1,022 )        (2,218 )                1,196          - 54 %


Income (loss) before tax provision                   974          (1,786 )                2,760           155 %
Income tax provision (benefit)                       343            (381 )                  724           190 %


Net income (loss)                                    631          (1,405 )                2,036           145 %
Preferred stock accretion                          2,249           2,177                     72             3 %


Net loss available to common
stockholders                                  $   (1,618 )      $ (3,582 )      $         1,964            55 %


Net loss available to common
stockholders per share:
Basic                                         $    (0.05 )      $  (0.12 )      $          0.07            58 %
Diluted                                       $    (0.05 )      $  (0.12 )      $          0.07            58 %
Shares used in calculation of net loss
available to common stockholders per
share:
Basic                                             29,734          28,827                    907             3 %
Diluted                                           29,734          28,827                    907             3 %

Notes:

(1) In thousands except for per share amounts.

Costs of Revenues. Costs of revenues encompass the direct expenses associated with providing our services. These expenses include telecommunications, payment processing, systems operations, customer service, implementation and professional services work. Costs of revenues decreased by $0.1 million to $19.7 million for the three months ended March 31, 2009, from $19.8 million for the same period in 2008.
Gross Profit. Gross profit increased $0.2 million for the three months ended March 31, 2009 and gross margin as a percentage of revenues remained unchanged at 50%. The gross profit increase is primarily due to professional service fees offset by the decline in float interest, which has no associated cost of revenue.
General and Administrative. General and administrative expenses primarily consist of salaries for executive, administrative and financial personnel, consulting expenses and facilities costs such as office leases, insurance and depreciation. General and administrative expenses decreased $0.2 million, or 2%, to $9.7 million for the three months ended March 31, 2009 due to reduced salary and benefit expenses related to cost containment initiatives offset by costs incurred related to the proxy contest initiated by hedge fund Tennenbaum Capital Partners.

Sales and Marketing. Sales and marketing expenses include salaries and commissions paid to sales and client services personnel and other costs incurred in selling our services and products. Sales and marketing expenses decreased $0.6 million, or 10%, to $5.6 million for the three months ended March 31, 2009. The primary reason for the decrease is reduced amortization expense of $0.5 million related to our customer lists.
Systems and Development. Systems and development expenses include salaries, consulting fees and all other expenses incurred in supporting the research and development of new services and products and new technology to enhance existing products. Systems and development expenses decreased by $0.6 million, or 20%, to $2.3 million for the three months ended March 31, 2009. The decrease is primarily due to lower use of consultants, lower salary and benefit expenses, related to cost containment initiatives, and higher capitalized costs.
Income from Operations. Income from operations increased $1.6 million, or 362%, to $2.0 million for the three months ended March 31, 2009. The increase is primarily due to lower salary and benefit expenses.
Interest Income. Interest income decreased $0.2 million three months ended March 31, 2009 compared to the same period in the prior year due to lower average interest earning cash balances and lower average interest rates.
Interest and Other Expense. Interest and other expense decreased by $1.4 million for the three months ended March 31, 2009 due primarily to an expense in the prior year period of $1.4 million and no expense in the current year period related to the mark-to-market valuation of the ITS price protection.
Income Tax Provision (Benefit). We recognized tax expense for the three months ended March 31, 2009, as a result of $1.0 million of income before income taxes generated during the first quarter of 2009. Our effective tax rate for the period was 35.2%. The difference between our effective tax rate and the federal statutory rate is primarily due to permanent items and state taxes.
Preferred Stock Accretion. The accretion related to the Series A-1 Preferred Stock issued on July 3, 2006 increased slightly, or 3%, primarily due to compounding of dividends.
Net Loss Available to Common Stockholders. Net loss available to common stockholders decreased $2.0 million to a net loss of $1.6 million for the three months ended March 31, 2009, compared to net loss of $3.6 million for the three months ended March 31, 2008. Basic and diluted net loss available to common stockholders per share was $0.05 for the three months ended March 31, 2009, compared to a net loss available to common stockholders of $0.12 for the three months ended March 31, 2008. Basic and diluted shares outstanding increased by 3% primarily as a result of shares issued in connection with the exercise of stock options, issuance of restricted stock units and our employees' participation in the employee stock purchase plan.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $8.5 million for the three months ended March 31, 2009. This represented a $9.1 million increase in cash provided by operating activities compared to the same prior year period, which was primarily the result of an increase in net income (loss) of $2.0 million, elimination of a change in consumer deposit receivable and payable of $2.3 million and an increase in changes in certain other assets and liabilities of $6.2 million partially offset by a decrease in the change in the fair value of the stock price protection of $1.4 million.
Net cash used by investing activities for the three months ended March 31, 2009 was $1.7 million, which was the result of capital expenditures of $2.3 million partially offset by $0.6 million in liquidation payments received from our investment in the Columbia Strategic Cash Portfolio Fund (the "Fund").
Net cash used by financing activities was $3.0 million for the three months ended March 31, 2009, which was primarily the result of a principal payment on our 2007 Notes of $3.2 million partially offset by $0.2 million in payments received from the issuance of common stock.
We have incurred approximately $0.8 million in expenses related to a proxy contest initiated by hedge fund Tennenbaum Capital Partners ("Tennenbaum"), and we expect to incur additional proxy-related expenses in the second quarter.
Approximately $0.8 million of our investment ("investment") in the Fund is expected to liquidate over the next twelve months. This portion of the investment is classified in short-term investments at fair value on the condensed consolidated balance sheet. The remainder of the investment, or $0.6 million, is expected to liquidate beyond twelve months and as such this portion of the remaining balance in the Fund is classified in long-term other assets on the condensed consolidated balance sheet. The value of the investment was $1.4 million and $2.0 million at March 31, 2009 and December 31, 2008,

respectively. We adjusted the investment in the Fund to its estimated fair value at March 31, 2009. In addition, we received $0.6 million in liquidation payments from the Fund administrator during the three months ended March 31, 2009.
Given continuing economic uncertainty and interest rate volatility, we could experience unforeseeable impacts on our results of operations, cash flows, ability to meet debt and other contractual requirements, and other items in future periods. While there can be no guarantees as to outcome, we have developed a contingent plan to address the negative effects of these uncertainties, if they occur.
Future capital requirements will depend upon many factors, including our need to finance any future acquisitions, the timing of research and product development efforts and the expansion of our marketing effort. We expect to continue to expend significant amounts on expansion of facility infrastructure, ongoing research and development, computer and related equipment, and personnel.
We currently believe that cash on hand, investments and the cash we expect to generate from operations will be sufficient to meet our current anticipated cash requirements for at least the next twelve months. There can be no assurance that additional capital beyond the amounts currently forecasted by us will not be required or that any such required additional capital will be available on reasonable terms, if at all, at such time as required.