• 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. We currently derive approximately 80% of our revenues from payments and 20% from other services including account presentation, relationship management, professional services, and custom software solutions. 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. The operating results of these business segments exclude general corporate overhead expenses and intangible asset amortization. Within each business segment, we face differing opportunities, challenges and risks. In our Banking segment we have the opportunity to deploy the new and enhanced products we have developed to deepen the relationships we have with our existing clients. Our differentiated account presentation and payments products, as well as our ability to deliver a full suite of remote delivery financial services, provide the opportunity for us to increase market share particularly among mid-sized financial institutions. In the bank market, a very large percentage of financial institutions now offer internet banking and bill payment to their customers. We therefore face competition in our efforts to obtain new clients from other established providers of these services. The end-user base within these clients is not highly penetrated, however, so we benefit from continuing adoption increases.
Additionally, financial service providers have recently been adversely affected by significant illiquidity and credit tightening trends in the financial markets in which they operate. Unfavorable economic conditions adversely impacting those types of business could have a material adverse effect on our business.
In our eCommerce segment, there are still a significant number of potential clients who do not offer services such as those we are in a position to provide to their customer base. Further, the competition to provide these services is more fragmented than it is in the banking market. These factors provide us with the opportunity to expand our client base. We also offer an innovative debt collection product that is attractive to a number of large and mid-sized potential clients. For a portion of our eCommerce business, our revenue is tied to the value of the payment being made which exposes us to the impact of economic factors on these payments. We also continuously monitor the potential risks that we face due to the interfaces we have with, and our reliance on, various payments networks.
Across our markets, we are exposed to interest rate risk as we earn float interest in clearing accounts that hold funds collected from end-users until they are disbursed to receiving merchants or financial institutions. We also closely monitor covenant and other compliance requirements under our debt and preferred stock agreements, as well as other potential risks associated with our capital structure.
We have experienced, and expect to continue to experience, significant user and transaction growth. This growth has placed, and will continue to place, significant demands on our personnel, management and other resources. We will need to continue to expand and adapt our infrastructure, services and related products to accommodate additional clients and their end-users, increased transaction volumes and changing end-user requirements.
Registered end-users using account presentation, bill payment or both, and the payment transactions executed by those end-users are the major drivers of our revenues. At September 30, 2009 in comparison to December 31, 2008, the number of users of our account presentation services decreased 3%, and the number of users of our payment services increased 13%, for an overall 8% 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.
We have long-term service contracts with most of our 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 clients to register an unlimited number of customers, or a monthly fee for each registered customer. Payment services revenues are either 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. We invested approximately $5.0 million for the nine months September 30, 2009, and $7.4 million and $6.3 million for the years ended December 31, 2008 and 2007, respectively. These investments were made to create new products, enhance the functionality of existing products and improve our infrastructure. Product enhancements allow us to remain competitive, retain existing clients and attract new clients. New products allow us to increase revenue and attract new clients. Infrastructure investments allow us to leverage ongoing advances in technology to improve our operating efficiency and capture cost savings.
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 at the end of 2008. We allocated
$2.2 million and $6.3 million of system operations and other processing costs,
included in costs of revenues, from the eCommerce segment to the Banking segment
in the three and nine months ended September 30, 2008, respectively, to reflect
the change in the utilization of these resources. (dollars in thousands):

                   Three Months Ended September 30,                   Nine Months Ended September 30,
                     2009                     2008                     2009                     2008
              Dollars         %        Dollars        %         Dollars        %         Dollars        %
 Revenues:
 Banking     $   22,793        62%     $ 24,048        63%     $  68,723        60%     $  71,392        62%
 eCommerce       13,801        38%       14,085        37%        44,894        40%        43,090        38%

 Total       $   36,594       100%     $ 38,133       100%     $ 113,617       100%     $ 114,482       100%




                    Dollars       Margin       Dollars       Margin       Dollars       Margin       Dollars       Margin
Gross profit:
Banking             $ 11,573          51%      $ 12,118          50%      $ 35,022          51%      $ 36,260          51%
eCommerce              6,205          45%         6,436          46%        20,099          45%        19,414          45%


Total               $ 17,778          49%      $ 18,554          49%      $ 55,121          49%      $ 55,674          49%




                               Three Months Ended September 30,                      Nine Months Ended September 30,
                                2009                       2008                      2009                       2008
                        Dollars          %         Dollars         %          Dollars         %         Dollars         %
Operating expenses:
Banking                $    5,458         40%      $  6,698         41%      $  17,874         39%      $ 20,932         40%
eCommerce                   4,594         33%         5,629         34%         15,023         32%        17,565         33%
Corporate(1)                3,774         27%         4,134         25%         13,249         29%        14,210         27%


Total                  $   13,826        100%      $ 16,461        100%      $  46,146        100%      $ 52,707        100%




                    Dollars       Margin       Dollars       Margin        Dollars       Margin        Dollars       Margin
Income from
operations:
Banking             $  6,115          27%      $  5,420          23%      $  17,148          25%      $  15,328          21%
eCommerce              1,611          12%           807          6%           5,076          11%          1,849          4%
Corporate(1)          (3,774 )                   (4,134 )                   (13,249 )                   (14,210 )


Total               $  3,952          11%      $  2,093          5%       $   8,975          8%       $   2,967          3%

(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 SEPTEMBER 30, 2009 COMPARED TO THE THREE MONTHS ENDED
                               SEPTEMBER 30, 2008
Revenues
   We generate revenues from account presentation, payment, relationship
management and professional services and other revenues. Revenues decreased
$1.5 million, or 4%, to $36.6 million for the three months ended September 30,
2009.

                                        Three Months Ended
                                           September 30,                   Change
                                       2009(1)       2008(1)       Difference(1)       %
   Revenues:
   Account presentation services      $    2,083     $  1,860     $           223       12 %
   Payment services                       28,971       30,518              (1,547 )     (5 )%
   Relationship management services        2,015        2,074                 (59 )     (3 )%
   Professional services and other         3,525        3,681                (156 )     (4 )%


   Total revenues                     $   36,594     $ 38,133     $        (1,539 )     (4 )%


   Payment metrics:
   Banking payment transactions           38,524       39,062                (538 )     (1 )%
   Biller payment transactions            15,123       12,967               2,156       17 %

Notes:

(1) In thousands

Account Presentation Services. Both the Banking and eCommerce segments contribute to account presentation services revenues, which increased $0.2 million, to $2.1 million due to net new clients of approximately $0.2 million.
Payment Services. Both the Banking and eCommerce segments contribute to payment services revenues, which decreased $1.5 million to $29.0 million for the three months ended September 30, 2009 from $30.5 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 net client losses of approximately $1.3 million offset by an increase in biller payment transactions and revenue from new products.
Relationship Management Services. Primarily composed of revenues from the Banking segment, relationship management services revenues was $2.0 million in the third 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 decreased $0.2 million, or by 4%. Revenues from professional services decreased by approximately $0.3 million due to the timing of certain fees being earned in the last quarter of the current year which were earned in the 3rdquarter of the prior year. This was offset by an increase of approximately $0.1 million due to increased users and transactions for our Money HQ, Quicken, and mobile banking products.

Costs and Expenses

                                                  Three Months Ended
                                                    September 30,                          Change
                                               2009(1)          2008(1)          Difference(1)           %
Revenues                                      $   36,594        $ 38,133        $        (1,539 )          (4 )%
Costs of revenues                                 18,816          19,579                   (763 )          (4 )%


Gross profit                                      17,778          18,554                   (776 )          (4 )%
Gross margin                                          49 %            49 %
Operating expenses
General and administrative                         6,955           7,984                 (1,029 )         (13 )%
Sales and marketing                                4,624           6,021                 (1,397 )         (23 )%
Systems and development                            2,247           2,456                   (209 )          (9 )%


Total operating expenses                          13,826          16,461                 (2,635 )         (16 )%


Income from operations                             3,952           2,093                  1,859            89 %
Other (expense) income
Interest income                                       22             111                    (89 )         (80 )%
Interest and other expense                          (343 )        (1,100 )                  757            69 %


Total other (expense) income                        (321 )          (989 )                  668            68 %


Income before tax provision                        3,631           1,104                  2,527           229 %
Income tax provision                                 918             338                    580           172 %


Net income                                         2,713             766                  1,947           254 %
Preferred stock accretion                          2,325           2,237                     88             4 %


Net income (loss) available to common
stockholders                                  $      388        $ (1,471 )      $         1,859           126 %


Net income (loss) available to common
stockholders per share:
Basic                                         $     0.01        $  (0.05 )      $          0.06           120 %
Diluted                                       $     0.01        $  (0.05 )      $          0.06           120 %
Shares used in calculation of net loss
available to common stockholders per
share:
Basic                                             30,048          29,211                    837             3 %
Diluted                                           31,546          29,211                  2,335             8 %

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 $0.8 million to $18.8 million for the three months ended September 30, 2009, from $19.6 million for the same period in 2008. This decrease is primarily due to reduced staff costs of approximately $0.3 million and net client losses of approximately $0.4 million.
Gross Profit. Gross profit decreased $0.8 million for the three months ended September 30, 2009 to $17.8 million, and gross margin remained constant at 49%.
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 $1.0 million, or 13%, to $7.0 million for the three months ended September 30, 2009. The decrease was due to reduced salary and benefit expenses related to cost containment initiatives.
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 $1.4 million, or 23%, to $4.6 million for the three months ended September 30, 2009. The primary reasons for the decrease is reduced amortization expense of $0.4 million related to our customer lists, reduced salary and benefit expenses related to cost containment initiatives of approximately and reduced partnership commissions.

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 $0.2 million, or 9%, to $2.2 million for the three months ended September 30, 2009. The decrease is primarily due to reduced staff expense.
Income from Operations. Income from operations increased $1.9 million, or 89%, to $4.0 million for the three months ended September 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 September 30, 2009 due to lower average interest earning cash balances and lower average interest rates.
Interest and Other Expense. Interest and other expense decreased by $0.8 million for the three months ended September 30, 2009 primarily due to a greater increase in the fair market value of the theoretical swap derivative, in the current period compared to the prior period, of $0.5 million, and lower interest expense of $0.2 million primarily due to a lower senior note balance, as the Company continues to make quarterly principal payments.
Income Tax Provision (Benefit). We recognized tax expense for the three months ended September 30, 2009 as a result of $3.6 million of income before income taxes generated during the third quarter of 2009. Our effective tax rate for the period was 25.3%. 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 Income (Loss) Available to Common Stockholders. Net income available to common stockholders increased $1.9 million to a net income available to common stockholders of $0.4 million for the three months ended September 30, 2009, compared to a net loss available to common stockholders of $1.5 million for the three months ended September 30, 2008. Basic and diluted net income available to common stockholders per share was $0.01 for the three months ended September 30, 2009, compared to basic and diluted net loss available to common stockholders per share of $0.05 for the three months ended September 30, 2008. Basic and diluted shares outstanding increased by 3% and 8%, respectively, 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.

NINE MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER
30, 2008
Revenues
. . .