UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Online Resources Corporation
__________________________________________
(Exact name of registrant as specified in its charter)

Not Applicable
______________________________________________
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.01 Completion of Acquisition or Disposition of Assets

On December 27, 2004, Online Resources Corporation filed a Current Report on Form 8-K to report its completion of its acquisition of Incurrent Solutions, Inc. This Form 8-K is incorporated herein by this reference. This amendment is being filed to include the financial statements and pro forma financial information required by Item 9.01 of Form 8-K.

Item 9.01 Financial Statements and Exhibits

     (a) Financial statements of business acquired.

The following historical financial statements of Incurrent Solutions, Inc. are included in this report:

     (b) Pro Forma Financial Information

The following pro forma financial information is included in this report:

     (c) Exhibits

INCURRENT SOLUTIONS, INC.

BALANCE SHEETS

The accompanying notes are an integral part of these statements.

INCURRENT SOLUTIONS, INC.

STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of these statements.

INCURRENT SOLUTIONS, INC.

STATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of these statements.

Incurrent Solutions, Inc.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

September 30, 2004

NOTE A - ORGANIZATION, NATURE OF BUSINESS AND LIQUIDITY

The Company is engaged in providing software licensing, professional consulting services and maintenance and hosting services to the credit card industry primarily in the United States. The original incorporation was under the name Banksite Services, Inc. The Company changed its name to Incurrent Solutions, Inc. on February 18, 1999.

Interim Financial Information

The accompanying unaudited financial statements have been prepared in conformity with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the financial statements include all adjustments necessary (which are of a normal and recurring nature) for the fair presentation of the results of the interim periods presented. These financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2003. The results of operations for any interim period are not necessarily indicative of the results of operations for any other interim period or for a full fiscal year.

Liquidity

At September 30, 2004, the Company has an accumulated deficit of $11,516,278. Such accumulated losses have resulted principally from costs incurred in selling and marketing and from general and administrative expenses. The Company has funded its operations since inception through the use of cash obtained principally from stockholders and third party financings. These financial statements have been prepared on the basis that the Company will continue as a going concern.

The Company’s fiscal 2004 operating plan contains assumptions regarding revenues, expenses and cash flows. The achievement of the operating plan depends heavily on the timing of work performed by the Company on existing projects and the ability of the Company to obtain and perform work on new projects. Project cancellations, delays in the timing of work performed by the Company on existing projects or the inability of the Company to obtain and perform work on new projects could have an adverse impact on the Company’s ability to execute its operating plan and maintain adequate cash flow. No assurance can be given that sufficient cash will be generated from operations. In the event actual results do not meet the operations plan, management believes it could execute contingency plans to mitigate such effects. Considering the cash on hand, potential borrowings under the line of credit executed by the Company in April 2004 which extends the facility to April 2005, and based on the achievement of the operating plan and management’s actions taken to date, management believes it has the ability to continue to generate sufficient cash to satisfy its operating requirements in the normal course of business through at least January 1, 2005.

The Company is subject to all of the many risks inherent in establishing a relatively new enterprise, including changing technologies, competition from companies offering the same or similar products and services, managing growth and lack of financial resources. As with any new enterprise, there can be no assurance that the Company will achieve or sustain profitability or positive cash flow from operations.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions, such as the time to complete implementation projects, that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

The Company generates revenues from Application Service Provider (“ASP”) and consulting services. Revenues for the period ended September 30, 2004 are summarized as follows:

Incurrent Solutions, Inc.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

September 30, 2004

ASP revenues are recognized in accordance with Emerging Issues Task Force No. 00-3 and Staff Accounting Bulletin No. 101, as the Company’s hosting arrangements do not provide the customer with the contractual right to the possession of its software at any time during the hosting period without significant penalty. The Company also generates revenues from the processing of transactions on behalf of its customers. Such revenues are accumulated and billed monthly, based upon the agreed fee-per-transaction. Revenue is recognized as such transactions occur.

Maintenance revenue associated with the original ASP services agreements is unbundled and recognized ratably over the initial maintenance term, which is generally one to three years. Maintenance renewals are recognized ratably over the maintenance period, generally one to three years. Deferred maintenance revenue is comprised of payments received in advance of maintenance services, which is being recognized in revenue ratably over the term of the maintenance agreement.

Fees billed to customers for the initial setup, installation and data migration when a new contract is executed (“implementation services”) are not separable from the related hosting service and accordingly, are recognized ratably over the initial term (typically 2 - 5 years) of the agreement. Such services generally result in deferred implementation revenue, as substantially all fees are billed and collected at or near the “effective (or launch) date” of the Company’s services. The Company is able to identify the specific direct and incremental costs incurred to perform such services, and accordingly these costs are also deferred and amortized into expense over the same contract term as the corresponding revenues. If there is a loss associated with the implementation phase of an arrangement, the related revenues and costs are deferred and recognized ratably over the initial term of the agreement. Any remaining estimated costs to be incurred at the “effective date” that are direct costs associated with the implementation (such as further enhancements to functionality), are accrued and amortized ratably over the initial term of the agreement.

When the Company enters into a fixed fee consulting arrangement, such revenues are recognized as the work progresses based upon proportional level of labor and are typically billed monthly based upon actual level of effort. Revenues from training services are recognized as services are performed. All such fees are included in consulting services in the above table.

In November of 2002, the FASB issued Emerging Issues Task Force Issue 00-21, “Accounting for Revenue Arrangements with Multiple Deliverables” (“EITF 00-21”). EITF 00-21 addresses the accounting for arrangements that involve the delivery or performance of multiple projects, services or rights to use assets. This consensus is applicable to arrangements entered into on or after June 15, 2003 and permits companies to account for existing arrangements as the cumulative effect of a change in accounting principles in accordance with APB No. 20, “Accounting Changes.” The adoption of EITF 00-21 did not have a material impact on its financial statements or liquidity.

In November 2001, the FASB issued Emerging Issues Task Force Rule No. 01-14, “Income Statement Characterization of Reimbursements Received for “Out-Of-Pocket” Expenses Incurred” (“EITF 01-14”). EITF 01-14 requires that in cases where the contractor acts as a principal, reimbursements received for out-of-pocket expenses incurred be characterized as revenue and the associated costs be included as cost of services in the income statement. The Company applied EITF 01-14, as required, to all periods presented. The impact of applying this pronouncement was to increase both revenues and cost of revenues by approximately $495,675 for the period ended September 30, 2004. The implementation of EITF 01-14 had no impact upon earnings.

Certain customers are billed in advance of consulting services rendered, which amounts are included with deferred maintenance revenue, and advance billings, on the balance sheets.

NOTE C – MAJOR CUSTOMERS

The Company extends credit to its customers, which are concentrated in the banking and credit card industry, on an unsecured basis. Concentration of credit risk with respect to accounts receivable is limited because of the creditworthiness of the Company’s major customers.

The following table summarizes the customers representing over 10% of revenue or net accounts receivable:

Incurrent Solutions, Inc.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

September 30, 2004

NOTE D - STOCKHOLDER LOANS

During 2000, the Company entered into a note receivable with a founder of the Company for $45,000. The note bears interest at 8% per annum, and is repayable through bonus payment withholdings in future periods. The Company has extended the due date on the loan repayment indefinitely. During 2002, the Company fully reserved this loan receivable balance.

NOTE E - NOTES PAYABLE

Term Loan

On June 26, 2001, the Company entered into a Security and Loan Agreement (the “Agreement”) with a financial institution. Under this Agreement, the Company secured a revolving line of credit and a term note payable.

The term note bears interest at a rate of 10% per annum. Borrowings are collateralized by substantially all of the assets of the Company, as defined. The term notes are payable in monthly installments of approximately $34,000 and are due in full on October 1, 2004.

Under the Agreement, should the lender determine that there has been a material adverse change in the business, operations or condition of the Company, the Company would be considered in default and the loan would become due on demand.

Revolver

On April 24, 2003, the Company entered into a Loan and Security Agreement for a new revolving line of credit expiring in April 2004. In April 2004, the Company renewed this Agreement and can borrow up to the lesser of $1,500,000 or 80% of eligible domestic accounts receivable, as defined, net of the outstanding portion of the term note payable. At September 30, 2004 and December 31, 2003, there were no outstanding borrowings under this facility. The new revolving line of credit bears interest at the bank’s prime rate plus 2.0% per annum and is payable monthly. The minimum interest rate is 4.25% (6.75% at September 30, 2004). The term of the Agreement is one year, expiring in April 2005, and includes a tangible net worth covenant, as defined, as well as a material adverse change clause. The Company must also maintain cash on deposit with the bank and availability under the loan of not less than $300,000. The new revolving line of credit is secured by substantially all assets of the Company.

NOTE F - COMMITMENTS AND CONTINGENCIES

Future aggregate annual rental commitments under non-cancelable operating leases, primarily related to office and remote processing facilities and computer equipment, are as follows as of September 30, 2004:

There is a three year extension available at the option of the Company that would extend the lease for the office facilities through January 31, 2010. Rent expense was approximately $602,370 for period ending September 30, 2004.

The Company has employment agreements with certain employees which provide for severance and/or “change in control” provisions.

Incurrent Solutions, Inc.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

September 30, 2004

NOTE G - SUBSEQUENT EVENTS

Acquisition of Company

On October 18, 2004, the Company entered into a definitive agreement to be acquired for $15 million in cash and stock by Online Resources Corp., an outsourcer of Internet banking and payment services located in Chantilly, Virginia. The merger was consummated on December 22, 2004.

Loss of Major Customers

In October 2004, two customer ASP agreements expired and were not renewed on a long-term basis. These customers accounted for an aggregate of 24% and 27% of Company revenues for the 9 months ended September 30, 2004 and 2003, respectively.

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors of
  Incurrent Solutions, Inc.

We have audited the accompanying balance sheet of Incurrent Solutions, Inc., a New Jersey corporation, as of December 31, 2003 and the related statements of operations, changes in stockholders’ deficit and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America as established by the Auditing Standards Board of the American Institute of Certified Public Accountants. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the 2003 financial statements referred to above present fairly, in all material respects, the financial position of Incurrent Solutions, Inc. as of December 31, 2003 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note J to the financial statements, on December 22, 2004, the Company was acquired for $15 million in cash and stock by Online Resources Corporation. Additionally, in October 2004, two customer ASP agreements expired and were not renewed on a long term basis. These customers accounted for an aggregate of approximately 27% of total Company revenues in 2003.

As discussed in Note B to the consolidated financial statements, effective January 1, 2003, the Company adopted the fair value method of accounting provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation,” as amended by SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure — an amendment of FASB Statement No. 123.” The impact of adopting this statement was not significant to the financial position or operating results of the Company.

                                    /s/ Grant Thornton, LLP

Edison, New Jersey
May 27, 2004, except for the first two paragraphs of Note J, for which the date is March 8, 2005

Report of Independent Auditors

To the Board of Directors of

We have audited the accompanying balance sheet of Incurrent Solutions, Inc. as of December 31, 2002 and the related statements of operations, changes in stockholders’ deficit and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Incurrent Solutions, Inc. as of December 31, 2002 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States.

/s/ Ernst & Young LLP

MetroPark, New Jersey
April 15, 2003

INCURRENT SOLUTIONS, INC.

BALANCE SHEETS

The accompanying notes are an integral part of these statements.

INCURRENT SOLUTIONS, INC.

STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of these statements.

INCURRENT SOLUTIONS, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

The accompanying notes are an integral part of these statements.

INCURRENT SOLUTIONS, INC.

STATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of these statements.

Incurrent Solutions, Inc.

NOTES TO FINANCIAL STATEMENTS

December 31, 2003 and 2002

NOTE A — ORGANIZATION, NATURE OF BUSINESS AND LIQUIDITY

The Company is engaged in providing software licensing, professional consulting services and maintenance and hosting services to the credit card industry primarily in the United States. The original incorporation was under the name Banksite Services, Inc. The Company changed its name to Incurrent Solutions, Inc. on February 18, 1999.

Liquidity

At December 31, 2003, the Company has an accumulated deficit of $10,155,301. Such accumulated losses have resulted principally from costs incurred in selling and marketing and from general and administrative expenses. The Company has funded its operations since inception through the use of cash obtained principally from stockholders and third party financings. These financial statements have been prepared on the basis that the Company will continue as a going concern.

The Company’s fiscal 2004 operating plan contains assumptions regarding revenues, expenses and cash flows. The achievement of the operating plan depends heavily on the timing of work performed by the Company on existing projects and the ability of the Company to obtain and perform work on new projects. Project cancellations, delays in the timing of work performed by the Company on existing projects or the inability of the Company to obtain and perform work on new projects could have an adverse impact on the Company’s ability to execute its operating plan and maintain adequate cash flow. No assurance can be given that sufficient cash will be generated from operations. In the event actual results do not meet the operations plan, management believes it could execute contingency plans to mitigate such effects. Considering the cash on hand, potential borrowings under the line of credit executed by the Company in April 2004 which extends the facility to April 2005, and based on the achievement of the operating plan and management’s actions taken to date, management believes it has the ability to continue to generate sufficient cash to satisfy its operating requirements in the normal course of business through at least January 1, 2005.

The Company is subject to all of the many risks inherent in establishing a relatively new enterprise, including changing technologies, competition from companies offering the same or similar products and services, managing growth and lack of financial resources. As with any new enterprise, there can be no assurance that the Company will achieve or sustain profitability or positive cash flow from operations.

NOTE B — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

The Company generates revenues from Application Service Provider (“ASP”) and consulting services. Revenues for the years ended December 31, 2003 and 2002 are summarized as follows:

Incurrent Solutions, Inc.

NOTES TO FINANCIAL STATEMENTS (continued)

December 31, 2003 and 2002

NOTE B (continued)

ASP revenues are recognized in accordance with Emerging Issues Task Force No. 00-3 and Staff Accounting Bulletin No. 101, as the Company’s hosting arrangements do not provide the customer with the contractual right to the possession of its software at any time during the hosting period without significant penalty. The Company also generates revenues from the processing of transactions on behalf of its customers. Such revenues are accumulated and billed monthly, based upon the agreed fee-per-transaction. Revenue is recognized as such transactions occur.

Maintenance revenue associated with the original ASP services agreements is unbundled and recognized ratably over the initial maintenance term, which is generally one to three years. Maintenance renewals are recognized ratably over the maintenance period, generally one to three years. Deferred maintenance revenue is comprised of payments received in advance of maintenance services, which is being recognized in revenue ratably over the term of the maintenance agreement.

Fees billed to customers for the initial setup, installation and data migration when a new contract is executed (“implementation services”) are not separable from the related hosting service and accordingly are recognized ratably over the initial term (typically 2 — 5 years) of the agreement. Such services generally result in deferred implementation revenue, as substantially all fees are billed and collected at or near the “effective (or launch) date” of the Company’s services. The Company is able to identify the specific direct and incremental costs incurred to perform such services, and accordingly these costs are also deferred and amortized into expense over the same contract term as the corresponding revenues. If there is a loss associated with the implementation phase of an arrangement, the related revenues and costs are deferred and recognized ratably over the initial term of the agreement. Any remaining estimated costs to be incurred at the “effective date” that are direct costs associated with the implementation (such as further enhancements to functionality) are accrued and amortized ratably over the initial term of the agreement.

When the Company enters into a fixed fee consulting arrangement, such revenues are recognized as the work progresses based upon the proportional level of labor, and are typically billed monthly based upon actual level of effort. Revenues from training services are recognized as services are performed. All such fees are included in consulting services in the above table.

In November of 2002, the FASB issued Emerging Issues Task Force Issue 00-21, “Accounting for Revenue Arrangements with Multiple Deliverables” (“EITF 00-21”). EITF 00-21 addresses the accounting for arrangements that involve the delivery or performance of multiple projects, services or rights to use assets. This consensus is applicable to arrangements entered into in fiscal periods beginning after June 15, 2003 and permits companies to account for existing arrangements as the cumulative effect of a change in accounting principles in accordance with APB No. 20, “Accounting Changes.” The adoption of EITF 00-21 did not have a material impact on its financial statements or liquidity.

In November 2001, the FASB issued Emerging Issues Task Force Rule No. 01-14, “Income Statement Characterization of Reimbursements Received for “Out-Of-Pocket” Expenses Incurred” (“EITF 01-14”). EITF 01-14 requires that in cases where the contractor acts as a principal, reimbursements received for out-of-pocket expenses incurred be characterized as revenue and the associated costs be included as cost of services in the income statement. The Company applied EITF 01-14, as required, to all periods presented. The impact of applying this pronouncement was to increase both revenues and cost of revenues by approximately $0 and $325,000 for the years ended December 31, 2003 and 2002, respectively. The implementation of EITF 01-14 had no impact upon earnings.

Incurrent Solutions, Inc.

NOTES TO FINANCIAL STATEMENTS (continued)

December 31, 2003 and 2002

NOTE B (continued)

Certain customers are billed in advance of consulting services rendered, which amounts are included with deferred maintenance revenue, and advance billings, on the balance sheets.

Cash and Cash Equivalents

Cash and cash equivalents include cash and highly liquid short-term investments purchased with maturities of three months or less.

Fair Value of Financial Instruments

At December 31, 2003 and 2002, the carrying values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and notes payable approximate their fair values based on the liquidity of these financial instruments or based upon their short-term nature.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents and accounts receivable. The Company maintains cash balances and cash equivalents in financial institutions and at times amounts invested may be in excess of FDIC insurance limits. The Company has not experienced any losses on its cash and cash equivalents.

The Company extends credit to its customers, which are concentrated in the banking and credit card industry, on an unsecured basis. Concentration of credit risk with respect to accounts receivable is limited because of the creditworthiness of the Company’s major customers.

The following table summarizes the customers representing over 10% of revenue or net accounts receivable:

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable consist of amounts due to the Company from normal business activities. The Company provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables as well as historical collection information. In determining the amount of the allowance, management is required to make certain estimates and assumptions regarding the timing and amount of collection. Actual results could differ from those estimates and assumptions.

Incurrent Solutions, Inc.

NOTES TO FINANCIAL STATEMENTS (continued)

December 31, 2003 and 2002

NOTE B (continued)

Property and Equipment

Property and equipment are carried at cost and depreciated using the straight-line method over their estimated useful lives, ranging from three to seven years. Leasehold improvements are amortized on the straight-line basis over the lesser of the useful life of the asset or the lease term. Expenditures for maintenance and repairs are charged to operations as incurred.

Development costs incurred in the research and development of new software products and enhancements to existing software products are expensed as incurred until technological feasibility has been established. After technological feasibility is established, any additional development costs are capitalized in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 86, “Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed.” Such costs are amortized using the greater of the ratio that current gross revenues for a product bear to the total of current anticipated future gross revenues for the product or on a straight-line basis over the remaining economic life of the related product, once the product is placed in service. No costs were capitalized during 2002 or 2003.

Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” To determine the recoverability of its long-lived assets, the Company evaluates the estimated future undiscounted cash flows that are directly associated with and that are expected to arise as a direct result of the use and eventual disposition of the long-lived asset. If the estimated future undiscounted cash flows were to demonstrate that recoverability is probable, an impairment loss would be recognized. An impairment loss would be calculated based on the excess carrying amount of the long-lived asset over the long-lived asset’s fair value.

Income Taxes

The Company accounts for income taxes under SFAS No. 109, “Accounting for Income Taxes.” SFAS No. 109 requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and the tax basis of assets and liabilities using currently enacted tax rates.

Stock-Based Compensation

Prior to fiscal year 2003, the Company accounted for stock-based compensation in accordance with Accounting Principles Board (“APB”) Opinion 25, “Accounting for Stock Issued to Employees,” and related interpretations. Under APB Opinion 25, the difference between the quoted market price as of the date of the grant and the contractual purchase price of shares is charged to operations over the vesting period, and no compensation expense is recognized for fixed stock options with exercise prices equal to the market price of the stock on the date of grant and shares acquired by employees under the Company’s stock purchase plans. Beginning in fiscal year 2003, the Company adopted the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” as amended by SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure — an amendment of FASB Statement No. 123.” The Company selected the prospective method to transition to the fair value method of measuring stock-based compensation expense. Under the fair value-based method, the Company charges the value of all newly granted stock-based compensation to expense over the vesting period based on the computed fair value at the date of grant.

Incurrent Solutions, Inc.

NOTES TO FINANCIAL STATEMENTS (continued)

December 31, 2003 and 2002

NOTE B (continued)

Pro forma net loss and net loss per share disclosures, as if the Company recorded compensation expense based on the fair value for stock-based awards for all periods presented, have been presented in accordance with the provisions of SFAS No. 148, and are as follows for the years ended December 31, 2003 and 2002:

Research and Development Costs

Research and development costs are charged to expense as incurred.

Recent Accounting Pronouncements

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” SFAS No. 150 requires issuers to classify as liabilities (or assets in some circumstances) three classes of freestanding financial instruments that embody obligations for the issuer. Generally, the statement is effective for financial instruments entered into or modified after May 31, 2003 and is otherwise effective at the beginning of the first interim period beginning after June 15, 2003. The mandatorily redeemable provisions of this statement have been deferred until fiscal periods beginning after December 15, 2004 for instruments that are mandatorily redeemable on fixed dates and indefinitely, pending further FASB action, if the redemption date is not fixed or the payout amount is variable and not based upon an index.

While the Company has preferred stock that is redeemable, there is no unconditional obligation requiring redemption. Therefore, the adoption of SFAS No. 150 is not expected to have any material effect on the Company.

Reclassifications

Certain reclassifications have been made to prior year amounts to conform with current year presentation.

NOTE C — STOCKHOLDER LOANS

During 2000, the Company entered into a note receivable with a founder of the Company for $45,000. The note bears interest at 8% per annum, and is repayable through bonus payment withholdings in future periods. The Company has extended the due date on the loan repayment indefinitely. During 2002, the Company fully reserved this loan receivable balance.

On September 1, 2001, the officer entered into a note receivable agreement with the Company in connection with the purchase of 440,540 shares of common stock at a price of $.65 per share. The note was a noninterest-bearing nonrecourse loan with payments due over 60 months commencing October 2003. The Company cancelled this note on June 19, 2002 before any payments were made.

Incurrent Solutions, Inc.

NOTES TO FINANCIAL STATEMENTS (continued)

December 31, 2003 and 2002

NOTE D — PROPERTY AND EQUIPMENT

Property and equipment as of December 31, 2003 and 2002 consist of the following:

Depreciation and amortization expense was $851,379 and $915,444 for the years ended December 31, 2003 and 2002, respectively.

NOTE E — NOTES PAYABLE

Term Loan

On June 26, 2001, the Company entered into a Security and Loan Agreement (the “Agreement”) with a financial institution. Under this Agreement, the Company secured a revolving line of credit and a term note payable.

The term note bears interest at a rate of 10% per annum. Borrowings are collateralized by substantially all of the assets of the Company, as defined. The term notes are payable in monthly installments of approximately $34,000 and are due in full on October 1, 2004.

Under the Agreement, should the lender determine that there has been a material adverse change in the business, operations or condition of the Company, the Company would be considered in default and the loan would become due on demand.

Maturities of the term notes payable for each of the next five years are as follows:

Revolver

On April 24, 2003, the Company entered into a Loan and Security Agreement (the “New Agreement”) for a new revolving line of credit. Under the Renewed Agreement, the Company can borrow up to the lesser of $1,500,000 or 80% of eligible domestic accounts receivable, as defined, net of the outstanding portion of the term note payable. At December 31, 2003 and 2002, there were no outstanding borrowings under this facility. The new revolving line of credit bears interest at the bank’s prime rate plus 2.0% per annum and is payable monthly. The minimum interest rate is 4.25% (6% at December 31, 2003). The term of the New Agreement is one year and includes a tangible net worth covenant, as defined, as well as a material adverse change clause. The Company must also maintain cash on deposit with the bank and availability under the loan of not less than $300,000. The new revolving line of credit is secured by substantially all assets of the Company and expired April 2004. This loan was amended subsequent to year-end (see Note J).

Incurrent Solutions, Inc.

NOTES TO FINANCIAL STATEMENTS (continued)

December 31, 2003 and 2002

NOTE F — INCOME TAXES

At December 31, 2003 and 2002, the Company had available Federal net operating loss carryforwards, subject to certain limitations, of approximately $5,500,000 and $5,800,000, which may be applied against future taxable income through 2022 for Federal tax purposes. However, recent tax law changes do not allow the use of the New Jersey net operating losses to offset current taxable income. The Company’s ability to use such net operating losses may be limited by change in control provisions under Internal Revenue Code Section 382. The Company has not yet determined whether any of its NOLs are limited under IRC Section 382. At December 31, 2003 and 2002, the Company has recorded a valuation allowance of approximately $2,300,000 and $2,700,000, respectively, to fully offset the benefits of its net deferred tax assets (which consist principally of the net operating losses and certain deferred revenue and deferred implementation costs), due to the uncertainty of the Company’s ability to utilize its net operating loss carryforward.

As of December 31, 2003, the Company has approximately $2,900,000 of New Jersey loss carryforwards approved for future sale under a New Jersey Economic Development Authority program. In order to realize such benefits, the Company must apply to the NJEDA each year and meet various requirements for continued eligibility. Tax benefits will be recognized in the financial statements as specific sales are approved. During 2003, the Company sold approximately $2,900,000 of such loss carryforwards for $224,853 which is included in the benefit for income taxes in the accompanying statements of operations. The Company incurred a commission of approximately $24,000 in connection with the sale, which is included with general and administrative expenses.

Benefit (provision) for income taxes consists of:

Significant components of the Company’s deferred tax assets and liabilities are as follows:

Incurrent Solutions, Inc.

NOTES TO FINANCIAL STATEMENTS (continued)

December 31, 2003 and 2002

NOTE G — PREFERRED STOCK

The Company has authorized 2,332,468 shares of preferred stock (no par value), of which 331,390 shares have been designated Series A Cumulative Convertible Preferred Stock (the “A Preferred”) and 1,001,078 shares have been designated as Series B Cumulative Convertible Preferred Stock (the “B Preferred”). On October 13, 2000, the Company issued 318,134 (no par value) shares of the A Preferred for net proceeds of approximately $2,934,000. The Company has reserved 4,142,380 unissued shares of common stock for Series A preferred shareholders and 9,900,770 unissued shares of common stock for Series B preferred shareholders.

Preferred stock at December 31, 2003 and 2002 is calculated as follows:

Class A Preferred Stock

The rights and privileges of the A Preferred are as follows:

The A Preferred stockholders are entitled to receive cumulative dividends at an annual rate equal to 12% (compounded on a semi-annual basis) payable upon the redemption of the preferred stock or upon the liquidation, sale or merger of the Company (see below).

Upon the closing of the B Preferred in 2001, the number of shares into which each share of A Preferred is convertible, at the option of the holder, at any time, was amended from 10 shares of common stock to 12.5 shares of common stock. As such, the Company accounted for the amendment as a deemed dividend to preferred stockholders in the amount of $538,098 based on the fair market value of the additional common shares (as of October 13, 2000) into which the A Preferred stockholder may convert their preferred shares. In addition, all shares of A Preferred shall be automatically converted into shares of common stock upon the closing of an underwritten public offering in which the per share price to the public is not less than $20 and the aggregate gross proceeds to the Company are not less than $20,000,000.

The A Preferred stockholders are entitled to vote on all matters with the common stockholders as if they were one class of stock. The A Preferred stockholders are entitled to the number of votes equal to the number of shares of common stock into which each share of the A Preferred is then convertible.

In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the corporation, merger, consolidation or other business combination or sale or transfer of all or substantially all of the Company’s assets, the holders of the A Preferred then outstanding will be entitled to be paid an amount equal to $18.86 per share plus any dividends accrued but unpaid on such shares prior to any payment to common stockholders. Amounts remaining after the preference payment to the A Preferred stockholders and the B Preferred stockholders (see below) if any, will be shared on a proportional basis among all holders of common stock.

At the option of the A Preferred stockholders, at any time on or after October 1, 2005, (the Mandatory Redemption Date), subject to certain conditions, the Company shall redeem all or any part of the outstanding shares of A Preferred at a price equal to $9.43 per share plus any cumulative dividends accrued but unpaid from the original issue date to the Mandatory Redemption Date. At December 31, 2003, the redemption value is approximately $4,354,000.

At December 31, 2003 and 2002, A Preferred stock includes approximately $1,354,000 ($4.26 per share) and $887,000 ($2.79 per share) of cumulative accrued dividends, respectively.

Incurrent Solutions, Inc.

NOTES TO FINANCIAL STATEMENTS (continued)

December 31, 2003 and 2002

NOTE G (continued)

The Company is accreting (due to the original stock issuance and legal costs) the carrying value of the A Preferred to its redemption value over the period of the earliest redemption date. Accretion of approximately $13,000 was recorded during 2003 and 2002.

Class B Preferred Stock

On July 19, 2001, the Company issued 990,077 shares of B Preferred for proceeds of approximately $4,364,000, net of related issuance costs.

The rights and privileges of the B Preferred are as follows:

The B Preferred stockholders are entitled to receive cumulative dividends at an annual rate equal to 12% (compounded on a semi-annual basis) payable upon the redemption of the preferred stock or upon the liquidation, sale or merger of the Company (see below).

Each share of B Preferred is convertible, at the option of the holder, at any time, into 10 shares of common stock. In addition, all shares of B Preferred shall be automatically converted into shares of common stock upon the closing of an underwritten public offering in which the per share price to the public is not less than $20 and the aggregate gross proceeds to the Company are not less than $20,000,000.

The B Preferred stockholders are entitled to vote on all matters with the common stockholders as if they were one class of stock. The B Preferred stockholders are entitled to the number of votes equal to the number of shares of common stock into which each share of the B Preferred is then convertible.

In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the corporation, merger, consolidation or other business combination or sale or transfer of all or substantially all of the Company’s assets, the holders of the B Preferred then outstanding will be entitled to be paid an amount equal to $9.08 per share plus any dividends accrued but unpaid on such shares prior to any payment to common stockholders. Amounts remaining after the preference payment to the B Preferred stockholders and the A Preferred stockholders, if any, will be shared on a proportional basis among all holders of common stock.

At the option of the B Preferred stockholders, at any time on or after October 1, 2005, (the Mandatory Redemption Date), subject to certain conditions, the Company shall redeem all or any part of the outstanding shares of B Preferred at a price equal to the greater of (i) $4.54 per share plus any dividends accrued but unpaid from the original issue date to the Mandatory Redemption Date or (ii) the fair market value of the shares of B Preferred as of the date of redemption. At December 31, 2003, the redemption value is approximately $5,969,000.

At December 31, 2003 and 2002, B Preferred stock includes $1,474,000 ($1.49 per share) and $834,000 ($.84 per share) of cumulative accrued dividends, respectively. The Company is accreting (due to the original stock issuance and legal costs) the carrying value of the B Preferred to its redemption value over the period of the earliest redemption date. Accretion of approximately $30,000 was recorded during 2003 and 2002.

NOTE H — COMMITMENTS AND CONTINGENCIES

Future aggregate annual rental commitments under non-cancelable operating leases, primarily related to office and remote processing facilities and computer equipment, are as follows for the years ending December 31:

There is a three-year extension available at the option of the Company that would extend the lease for the office facilities through January 31, 2010. Rent expense was approximately $873,300 and $1,267,000 in 2003 and 2002, respectively.

The Company has employment agreements with certain employees which provide for severance and/or “change in control” provisions.

Incurrent Solutions, Inc.

NOTES TO FINANCIAL STATEMENTS (continued)

December 31, 2003 and 2002

NOTE I — STOCKHOLDERS’ DEFICIT

Common Stock

During 2003, the Company issued 90,000 shares of common stock to a consultant. The common stock was treated as non-cash compensation expense of $20,700 in 2003.

Stock Option Plans

Effective January 1, 2003, the Company began charging to expense the computed value of all newly granted stock-based compensation over the vesting period. The computed fair value at the date of grant is calculated using the fair value-based methodology under SFAS No. 123, as amended by SFAS No. 148.

In 1999, the Company adopted the 1999 Stock Option Plan, which provides for the Compensation Committee of the Board of Directors to grant options for up to 6,345,010 shares of common stock. The options under these plans vest between one and four years and expire 10 years from the date of grant. Unearned compensation is recorded and amortized over the vesting period for options granted at an exercise price that is below fair market value.

Stock option activity is summarized as follows:

The following table summarizes information about stock options outstanding and exercisable at December 31, 2003:

The pro forma information presented in Note B has been determined as if all employee stock options granted were accounted for under the fair value method of SFAS No. 123. The fair value for these options was estimated at the date of grant using the minimum value option-pricing model with the following weighted-average assumptions: risk-free interest rates ranging from 3.24% to 6.61%, dividend yield of 0%, and a weighted-average expected life of 7 years. The weighted-average fair value of options granted (all of which were at fair value) during 2002 is $.04 per share and for 2003 is $0.01 per share.

Incurrent Solutions, Inc.

NOTES TO FINANCIAL STATEMENTS (continued)

December 31, 2003 and 2002

NOTE I (continued)

Warrants

On June 26, 2001, the Company issued warrants to purchase 13,256 shares of A Preferred stock at a price of $9.43 per share as consideration for a term note and revolving line of credit (Note E). The fair value of the warrants ($105,756) was calculated using the Black-Scholes method and was charged to interest expense in 2001.

In connection with the closing of the B Preferred, the number of shares into which each share of A Preferred is convertible, at the option of the holder, at any time, was amended from 10 shares of common stock to 12.5 shares of common stock. As such, the Company accounted for the amendment as a deemed dividend to preferred shareholders. The fair value of the additional shares of common stock ($21,128) into which the A Preferred warrant holders can ultimately convert their preferred shares has been determined using the Black-Scholes method. At December 31, 2003, warrants to purchase 16,570 shares of B Preferred are outstanding.

On April 24, 2002, the Company issued warrants to purchase 11,001 shares of B Preferred stock at a price of $4.5451 per share as consideration for the revolving line of credit (Note E). Such warrants are outstanding at December 31, 2003. The fair value of the warrants ($27,000) was calculated using the Black-Scholes method and was charged to interest expense in 2002.

NOTE J — SUBSEQUENT EVENTS

Acquisition of Company

On October 18, 2004, the Company entered into a definitive agreement to be acquired for $15 million in cash and stock by Online Resources Corp., an outsourcer of Internet banking and payment services located in Chantilly, Virginia. The merger was consummated on December 22, 2004.

Loss of Major Customers

In October 2004, two customer ASP agreements expired and were not renewed on a long-term basis. These customers accounted for an aggregate of 27% and 31% of Company revenues in 2003 and 2002, respectively.

Revolver

On April 30, 2004, the Company entered into an amendment of its Loan and Security Agreement (the “Renewed Agreement”) with Silicon Valley Bank for a new revolving line of credit. The Renewed Agreement contains the following principal changes from the previous Agreement: