• 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 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.

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 and six months ended June 30, 2008, $2.6 million and $5.2 million, respectively, of intangible asset amortization was reclassified from unallocated to Banking and eCommerce segments. In addition, we allocated $2.2 million and $4.1 million, respectively, of system operations and other processing costs, included in costs of revenues, from the eCommerce segment to the Banking segment in the three and six months ended June 30, 2008, to reflect the change in the utilization of these resources. (dollars in thousands):

                        Three Months Ended June 30,                    Six Months Ended June 30,
                        2009                   2008                   2009                   2008
                 Dollars        %       Dollars        %       Dollars        %       Dollars        %
     Revenues:
     Banking     $ 23,047        61 %   $ 23,157        62 %   $ 45,929        60 %   $ 47,344        62 %
     eCommerce     14,736        39 %     13,996        38 %     31,094        40 %     29,005        38 %

     Total       $ 37,783       100 %   $ 37,153       100 %   $ 77,023       100 %   $ 76,349       100 %




                    Dollars       Margin       Dollars       Margin       Dollars       Margin       Dollars       Margin
Gross profit:
Banking             $ 11,553           50 %    $ 11,754           51 %    $ 23,447           51 %    $ 24,143           51 %
eCommerce              6,214           42 %       5,945           42 %      13,896           45 %      12,977           45 %


Total               $ 17,767           47 %    $ 17,699           48 %    $ 37,343           48 %    $ 37,120           49 %

                             Three Months Ended June 30,                    Six Months Ended June 30,
                             2009                   2008                   2009                   2008
                      Dollars        %       Dollars        %       Dollars        %       Dollars        %
Operating expenses:
Banking               $  5,953        40 %   $  7,096        41 %   $ 12,416        39 %   $ 14,234        39 %
eCommerce                5,141        35 %      5,930        34 %     10,429        32 %     11,936        33 %
Corporate(1)             3,646        25 %      4,231        25 %      9,475        29 %     10,076        28 %


Total                 $ 14,740       100 %   $ 17,257       100 %   $ 32,320       100 %   $ 36,246       100 %




                    Dollars       Margin       Dollars       Margin       Dollars       Margin        Dollars       Margin
Income from
operations:
Banking             $  5,600           24 %    $  4,658           20 %    $ 11,031           24 %    $   9,909           21 %
eCommerce              1,073            7 %          15            0 %       3,467           11 %        1,041            4 %
Corporate(1)          (3,646 )                   (4,231 )                   (9,475 )                   (10,076 )


Total               $  3,027            8 %    $    442            1 %    $  5,023            7 %    $     874            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 JUNE 30, 2009 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
                                      2008
Revenues
   We generate revenues from account presentation, payment, relationship
management and professional services and other revenues. Revenues increased
$0.6 million, or 2%, to $37.8 million for the three months ended June 30, 2009.

                                        Three Months Ended
                                             June 30,                      Change
                                       2009(1)       2008(1)       Difference(1)       %
   Revenues:
   Account presentation services      $    1,954     $  1,889     $            65        3 %
   Payment services                       30,027       30,084                 (57 )      0 %
   Relationship management services        2,000        2,047                 (47 )     (2 )%
   Professional services and other         3,802        3,133                 669       21 %


   Total revenues                     $   37,783     $ 37,153     $           630        2 %


   Payment metrics:
   Banking payment transactions           37,304       39,023              (1,719 )     (4 )%
   Biller payment transactions            15,112       12,171               2,941       24 %

Notes:

(1) In thousands

Account Presentation Services. Both the Banking and eCommerce segments contribute to account presentation services revenues, which increased $0.1 million, to $2.0 million.
Payment Services. Both the Banking and eCommerce segments contribute to payment services revenues, which decreased $0.1 million to $30.0 million for the three months ended June 30, 2009 from $30.1 million in the prior year quarter. The decrease was related to declines in interest rates which reduced float interest revenue by approximately $1.0 million and was offset by an increase in biller payment transactions.
Relationship Management Services. Primarily composed of revenues from the Banking segment, relationship management services revenues was $2.0 million in the second quarter ended 2009, which is approximately the same amount from the same period of 2008.
Professional Services and Other. Both the Banking and eCommerce segments contribute to professional services and other revenues, which increased $0.7 million, or by 21%. Revenues from professional services and other fees increased due to cancellation fees.

Costs and Expenses

                                                  Three Months Ended
                                                       June 30,                            Change
                                               2009(1)          2008(1)          Difference(1)           %
Revenues                                      $   37,783        $ 37,153        $           630             2 %
Costs of revenues                                 20,016          19,454                    562             3 %


Gross profit                                      17,767          17,699                     68             0 %
Gross margin                                          47 %            48 %
Operating expenses
General and administrative                         6,887           8,601                 (1,714 )         (20 )%
Sales and marketing                                5,722           6,427                   (705 )         (11 )%
Systems and development                            2,131           2,229                    (98 )          (4 )%


Total operating expenses                          14,740          17,257                 (2,517 )         (15 )%


Income from operations                             3,027             442                  2,585           585 %
Other (expense) income
Interest income                                       36             110                    (74 )         (67 )%
Interest and other expense                        (1,799 )        (1,707 )                   92             5 %


Total other (expense) income                      (1,763 )        (1,597 )                  166            10 %


Income (loss) before tax provision
(benefit)                                          1,264          (1,155 )                2,419           209 %
Income tax provision (benefit)                       688            (181 )                  869           480 %


Net income (loss)                                    576            (974 )                1,550           159 %
Preferred stock accretion                          2,287           2,199                     88             4 %


Net loss available to common
stockholders                                  $   (1,711 )      $ (3,173 )      $         1,462            46 %


Net loss available to common
stockholders per share:
Basic                                         $    (0.06 )      $  (0.11 )      $          0.05            45 %
Diluted                                       $    (0.06 )      $  (0.11 )      $          0.05            45 %
Shares used in calculation of net loss
available to common stockholders per
share:
Basic                                             29,908          28,998                    910             3 %
Diluted                                           29,908          28,998                    910             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 increased by $0.6 million to $20.0 million for the three months ended June 30, 2009, from $19.4 million for the same period in 2008.
Gross Profit. Gross profit increased $0.1 million for the three months ended June 30, 2009 to $17.8 million, and gross margin decreased to 47% in 2009 from 48% in 2008.
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 $1.7 million, or 20%, to $6.9 million for the three months ended June 30, 2008. The decrease was primarily due to reduced salary and benefit expenses related to cost containment initiatives and the change in estimated forfeitures of certain equity compensation awards.

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 $0.7 million, or 11%, to $5.7 million for the three months ended June 30, 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 $0.1 million, or 4%, to $2.1 million for the three months ended June 30, 2009. The decrease is primarily due to reduced benefits expense.
Income from Operations. Income from operations increased $2.6 million, or 585%, to $3.0 million for the three months ended June 30, 2009. The increase is primarily due to lower salary and benefits and reduced amortization related to our customer lists.
Interest Income. Interest income decreased $0.1 million for the three months ended June 30, 2009 due to lower average interest earning cash balances and lower average interest rates.
Interest and Other Expense. Interest and other expense increased by $0.1 million primarily due to an expense in the prior year of $0.2 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 June 30, 2009 as a result of $1.3 million of income before income taxes generated during the second quarter of 2009. Our effective tax rate for the period was 54.4%. The difference between our effective tax rate and the federal statutory rate is primarily due to permanent items and state taxes. The permanent items primarily include interest expense for the accretion of the Series A-1 Preferred Stock and changes in investment activity in the Columbia Strategic Cash Portfolio.
Preferred Stock Accretion. The accretion related to the Series A-1 Preferred Stock issued on July 3, 2006 increased primarily as a result of higher interest costs related to the escalation accrual associated with the Series A-1 Preferred Stock. The escalation accrual represents a money-market rate of interest on the accrued, but unpaid, dividends.
Net Loss Available to Common Stockholders. Net loss available to common stockholders decreased $1.5 million to a net loss of $1.7 million for the three months ended June 30, 2009, compared to a net loss of $3.2 million for the three months ended June 30, 2008. Basic and diluted net loss per share was $0.06 for the three months ended June 30, 2009, compared to basic and diluted net loss per share of $0.11 for the three months ended June 30, 2008. Basic and diluted shares outstanding increased by 3% as a result of shares issued in connection with the exercise of company-issued stock options and our employees' participation in our employee stock purchase plan.

SIX MONTHS ENDED JUNE 30, 2009 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2008
Revenues
   Revenues increased $0.7 million, or 1%, to $77.0 million for the six months
ended June 30, 2009.

                                        Six Months Ended
                                            June 30,                     Change
                                      2009(1)      2008(1)       Difference(1)        %
   Revenues:
   Account presentation services      $  3,794     $  4,261     $          (467 )     (11 )%
   Payment services                     61,155       61,962                (807 )      (1 )%
   Relationship management services      4,040        4,017                  23         1 %
   Professional services and other       8,034        6,109               1,925        32 %


   Total revenues                     $ 77,023     $ 76,349     $           674         1 %


   Payment metrics:
   Banking transactions                 76,346       80,831              (4,485 )      (6 )%
   Biller payment transactions          29,557       24,215               5,342        22 %

Notes:

(1) In thousands

Account Presentation Services. Both the Banking and eCommerce segments contribute to account presentation services revenues, which decreased 11%, or $0.5 million, to $3.8 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 $61.2 million for the six months ended June 30, 2009, from $62.0 million in the same period of the prior year. This decrease was related to significant declines in interest rates which reduced float interest revenue by approximately $2.6 million and to the departure of a large banking client in 2008. The decrease in float interest was partially offset by increased revenue related to biller payment transactions.
Relationship Management Services. Primarily composed of revenues from the Banking segment, relationship management services revenues did not change, remaining at $4.0 million for the six months ended June 30, 2009 and 2008.
Professional Services and Other. Both the Banking and eCommerce segments contribute to professional services and other revenues, which increased by $1.9 million, or by 32%. Revenues from professional services and other fees increased due to acceleration of professional service fees related to a discontinued project and cancellation fees.

Costs and Expenses

                                                  Six Months Ended
                                                      June 30,                           Change
                                              2009(1)         2008(1)          Difference(1)           %
Revenues                                      $ 77,023        $ 76,349        $           674             1 %
Costs of revenues                               39,680          39,229                    451             1 %


Gross profit                                    37,343          37,120                    223             1 %
Gross margin                                        48 %            49 %
Operating expenses
General and administrative                      16,608          18,544                 (1,936 )         (10 )%
Sales and marketing                             11,328          12,660                 (1,332 )         (11 )%
Systems and development                          4,384           5,042                   (658 )         (13 )%


Total operating expenses                        32,320          36,246                 (3,926 )         (11 )%


Income from operations                           5,023             874                  4,149           475 %
Other (expense) income
Interest income                                     82             322                   (240 )         (75 )%
Interest and other expense                      (2,866 )        (4,137 )               (1,271 )         (31 )%


Total other (expense) income                    (2,784 )        (3,815 )               (1,031 )         (27 )%


Loss before tax provision (benefit)              2,239          (2,941 )                5,180           176 %
Income tax provision (benefit)                   1,032            (562 )                1,594           284 %


Net income (loss)                                1,207          (2,379 )                3,586           151 %
Preferred stock accretion                        4,536           4,376                    160             4 %


Net loss available to common
stockholders                                  $ (3,329 )      $ (6,755 )      $         3,426            51 %


Net loss available to common
stockholders per share:
Basic                                         $  (0.11 )      $  (0.23 )      $          0.12            52 %
Diluted                                       $  (0.11 )      $  (0.23 )      $          0.12            52 %
Shares used in calculation of net loss
available to common stockholders per
share:
. . .