<PAGE>

                                  United States
                       Securities and Exchange Commission
                             Washington, D.C. 20549



                                    FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Period Ended July 31, 2000.

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Transition Period from ______________________ to
_________________________.

Commission file number ___0-24201________________

                              Carreker Corporation
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)



               Delaware                                 75-1622836
-----------------------------------------  -------------------------------------
    (State or other jurisdiction of          (IRS Employer Identification No.)
    incorporation or organization)

 4055 Valley View Lane, #1000
 Dallas, Texas                                          75244
-----------------------------------------  -------------------------------------
 (Address of principal executive office)              (Zip Code)


                                 (972) 458-1981
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

                             Carreker-Antinori, Inc.
--------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                             Yes   X       No
                                 -----       ----


Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.

Common Stock, $.01 Par Value --- 18,658,299 shares as of August 31, 2000.

<PAGE>

                               CARREKER CORPORATION

                                     INDEX


<TABLE>
<CAPTION>

PART I     FINANCIAL INFORMATION                                                      PAGE
                                                                                      ----
     <S>      <C>                                                                     <C>
     Item 1.  Financial Statements

              Condensed Consolidated Balance Sheets
              at July 31, 2000 and January 31, 2000                                      3

              Condensed Consolidated Statements of Operations
              for the three and six months ended July 31, 2000 and 1999                  4

              Condensed Consolidated Statements of Cash Flows
              for the six months ended July 31, 2000 and 1999                            5

              Notes to Condensed Consolidated Financial Statements                       6

     Item 2.  Management's Discussion and Analysis of Financial Condition and
              Results of Operations                                                     10

     Item 3.  Quantitative and Qualitative Disclosures about Market Risk                19


PART II    OTHER INFORMATION

     Item 1.  Legal Proceedings                                                         20

     Item 2.  Changes in Securities and Use of Proceeds                                 20

     Item 3.  Defaults Upon Senior Securities                                           20

     Item 4.  Submission of Matters to a Vote of Security Holders                       21

     Item 5.  Other Information                                                         21

     Item 6.  Exhibits and Reports on Form 8-K                                          21

SIGNATURES                                                                              22
</TABLE>


                                       2
<PAGE>

PART I  FINANCIAL INFORMATION

      ITEM 1.  FINANCIAL STATEMENTS

                              CARREKER CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                              July 31,             January 31,
                                ASSETS                                         2000                  2000
                                                                            -----------          -----------
<S>                                                                         <C>                  <C>
CURRENT ASSETS:
       Cash and cash equivalents                                              $  21,867            $  25,973
       Short term investments                                                    11,989               13,563
       Accounts receivable, net                                                  39,003               30,843
       Prepaid expenses and other current assets                                  2,347                  733
       Deferred income taxes                                                      1,269                  831
                                                                            -----------          -----------
                           Total current assets                                  76,475               71,943
Property and equipment, net of accumulated depreciation                           4,796                4,197
Software costs capitalized, net of accumulated amortization                      10,307                6,349
Other assets                                                                        895                  334
                                                                            -----------          -----------
                          Total assets                                        $  92,473            $  82,823
                                                                            ===========          ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
       Accounts payable                                                       $   2,819            $   2,089
       Accrued compensation and benefits                                          3,230                2,030
       Other accrued expenses                                                     2,704                2,583
       Income taxes payable                                                       2,010                2,310
       Deferred revenue                                                           6,708                6,401
                                                                            -----------          -----------
                         Total current liabilities                               17,471               15,413
 Deferred income taxes                                                            3,750                2,004
                                                                            -----------          -----------
                         Total liabilities                                       21,221               17,417
                                                                            -----------          -----------
STOCKHOLDERS' EQUITY:
       Preferred Stock, $.01 par value, 2,000 shares
         authorized, none issued                                                     --                   --
     Common Stock, $.01 par value, 100,000 shares authorized,
         18,657 and 18,540 shares issued, respectively                              186                  185
       Additional paid-in capital                                                45,404               44,564
       Deferred compensation                                                       (106)                (183)
       Retained earnings                                                         25,768               20,846
       Less treasury stock, at cost:
             1 common shares, as of January 31, 2000                                 --                   (6)
                                                                            -----------          -----------
                        Total stockholders' equity                               71,252               65,406
                                                                            -----------          -----------
                        Total liabilities and stockholders' equity            $  92,473            $  82,823
                                                                            ===========          ===========
</TABLE>

                             See accompanying notes.


                                       3
<PAGE>

                              CARREKER CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                      Three Months Ended      Six Months Ended
                                                                          July 31,                July 31,
                                                                    ---------------------    -------------------
                                                                      2000         1999        2000       1999
                                                                    --------     --------    --------   --------
<S>                                                                 <C>          <C>         <C>        <C>
REVENUES:
   Consulting and management service fees                           $ 21,766     $ 13,039    $ 34,876   $ 21,363
   Software license fees                                               1,840        2,762       6,013      5,855
   Software maintenance fees                                           2,713        1,764       4,995      3,266
   Software implementation fees                                        2,311        1,232       4,806      2,675
   Hardware and other fees                                                32           75          32        197
                                                                    --------     --------    --------   --------
              Total revenues                                          28,662       18,872      50,722     33,356

COSTS OF REVENUES:
   Consulting and management service fees                              9,912        6,162      18,485     11,433
   Software license fees                                               1,239          380       2,376        848
   Software maintenance fees                                             798          671       1,333      1,335
   Software implementation fees                                        1,239          808       2,456      1,454
   Hardware and other fees                                                25           60          31        161
                                                                    --------     --------    --------   --------
              Total cost of revenues                                  13,213        8,081      24,681     15,231

                                                                    --------     --------    --------   --------
GROSS PROFIT                                                          15,449       10,791      26,041     18,125
                                                                    --------     --------    --------   --------

OPERATING COSTS AND EXPENSES:
   Selling, general and administrative                                 8,821        6,114      16,419     10,932
   Research and development                                            1,445        1,356       2,429      2,674
                                                                    --------     --------    --------   --------
              Total operating costs and expenses                      10,266        7,470      18,848     13,606

Income from operations                                                 5,183        3,321       7,193      4,519
Other income                                                             374          316         746        557
                                                                    --------     --------    --------   --------

Income before provision for income taxes                               5,557        3,637       7,939      5,076
Provision for income taxes                                             2,112        1,351       3,017      1,827
                                                                    --------     --------    --------   --------
Net income                                                          $  3,445     $  2,286       4,922   $  3,249
                                                                    ========     ========    ========   ========

Basic earnings per share                                            $   0.19     $   0.12    $   0.27   $   0.18
                                                                    ========     ========    ========   ========
Diluted earnings per share                                          $   0.18     $   0.12    $   0.25   $   0.17
                                                                    ========     ========    ========   ========

Shares used in computing basic earnings per share                     18,549       18,477      18,524     18,423
Shares used in computing diluted earnings per share                   19,417       19,078      19,442     18,961
</TABLE>

                             See accompanying notes.

                                       4
<PAGE>

                              CARREKER CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                    Six Months Ended
                                                                                        July 31,
                                                                            -----------------------------
                                                                               2000               1999
                                                                            ----------         ----------
<S>                                                                         <C>                <C>
OPERATING ACTIVITIES:
     Net Income                                                             $    4,922         $    3,249
     Adjustments to reconcile net income to net cash used in operating
       activities:
         Amortization of capitalized software                                    1,694                583
         Depreciation and amortization of property and equipment                 1,186              1,026
         Amortization of deferred compensation                                     132                156
         Deferred income taxes                                                     743                 50
         Provision for doubtful accounts                                           960                133
         Changes in assets and liabilities:
               Accounts receivable                                              (9,120)            (7,197)
               Prepaid expenses and other                                       (1,291)              (574)
               Accounts payable and accrued expenses                             1,690             (1,052)
               Taxes payable                                                      (300)               928
               Deferred revenue                                                    269               (366)
                                                                            ----------         ----------
                   Net cash provided by (used in) operating activities             885             (3,064)

INVESTING ACTIVITIES:
       Purchase of short-term investments                                       (9,300)                --
       Sales and maturities of short-term investments                           10,874              4,172
       Acquisition of AIS and XPORT, net of cash acquired                       (5,268)                --
       Purchase of property and equipment and leasehold improvements            (1,732)            (2,301)
         Computer software costs capitalized                                      (358)            (1,719)
                                                                            ----------         ----------
                  Net cash provided by (used in) investing activities           (5,784)               152

FINANCING ACTIVITIES:
        Purchase of treasury stock                                                  --                 (4)
        Proceeds from stock options exercised                                      793                209
                                                                            ----------         ----------
                 Net cash provided by financing activities                         793                205

Net decrease in cash and cash equivalents                                       (4,106)            (2,707)
Cash and cash equivalents at beginning of period                                25,973             20,701
                                                                            ----------         ----------
Cash and cash equivalents at end of period                                  $   21,867         $   17,994
                                                                            ==========         ==========

Supplemental cash flow information:
    Cash paid for interest                                                  $       16         $       --
                                                                            ==========         ==========

   Cash paid for income taxes                                               $    2,545         $      809
                                                                            ==========         ==========
</TABLE>

                             See accompanying notes.

                                       5
<PAGE>

                              CARREKER CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

PART I

1.       GENERAL

                  Effective June 20, 2000, we changed our name from
         Carreker-Antinori, Inc. to Carreker Corporation.

2.       BASIS OF PRESENTATION

                  The accompanying unaudited condensed consolidated financial
         statements reflect, in the opinion of management, all adjustments
         (consisting only of normal, recurring adjustments) necessary to present
         fairly the financial position, results of operations and cash flows of
         the Company. 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 rules and regulations promulgated by the Securities and Exchange
         Commission. These statements should be read in conjunction with the
         audited financial statements and notes thereto for the years ended
         January 31, 2000, 1999, and 1998 included in the Company's Form 10-K
         for the fiscal year ended January 31, 2000 on file with the Commission.
         The results of operations for the interim periods shown herein are not
         necessarily indicative of the results to be expected for any future
         interim period or for the entire year.

3.       CASH AND CASH EQUIVALENTS

                  We consider all highly liquid investments with maturities of
         three months or less from the original purchase date to be cash
         equivalents. At July 31, 2000, cash equivalents consisted principally
         of highly liquid debt securities of corporations and municipalities.

4.       SHORT TERM INVESTMENTS

                  We consider investments with maturities of greater than three
         months, when purchased, to be short-term investments based on the
         freely tradable nature of the investments, and management's expectation
         that they will not be held for greater than one year. Short-term
         investments consist primarily of tax-exempt municipal bonds. Management
         determines the appropriate classification of debt securities at the
         time of purchase and re-evaluates such designation as of each balance
         sheet date. All debt securities have been determined by management to
         be available for sale. Available for sale securities are stated at
         amortized cost, which approximates fair value. Fair value of debt
         securities is determined based upon current market value price quotes
         by security. As of July 31, 2000 all short-term investments mature in
         less than one year.

5.       EARNINGS PER SHARE

                  Basic earnings per share is computed by using the weighted
         average number of shares of common stock outstanding during each
         period. Diluted earnings per share is computed using the weighted
         average number of shares of common stock outstanding during each
         period, and common equivalent shares consisting of stock options (using
         the treasury stock method).


                                       6
<PAGE>

                  The following table sets forth the computation of basic and
         diluted earnings per share for the three and six months ended July 31,
         2000 and 1999 (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                                   Three Months Ended      Six Months Ended
                                                                         July 31,               July 31,
                                                                   ------------------     ------------------
                                                                     2000      1999         2000       1999
                                                                   -------    -------     -------    -------
               <S>                                                 <C>        <C>         <C>        <C>
               Basic earnings per share:
                 Net income                                        $ 3,445    $ 2,286     $ 4,922    $ 3,249
                                                                   =======    =======     =======    =======
                 Weighted average shares outstanding                18,549     18,477      18,524     18,423
                                                                   =======    =======     =======    =======
                          Basic earnings per share                 $  0.19    $  0.12     $  0.27    $  0.18
                                                                   =======    =======     =======    =======
               Diluted earnings per share:
                 Net income                                        $ 3,445    $ 2,286     $ 4,922    $ 3,249
                                                                   =======    =======     =======    =======
                 Weighted average shares outstanding                18,549     18,477      18,524     18,423
                 Assumed conversion of employee
                   stock options                                       868        601         918        538
                                                                   -------    -------     -------    -------
                 Shares used in diluted earnings per share
                   calculation                                      19,417     19,078      19,442     18,961
                                                                   =======    =======     =======    =======
                          Diluted earnings per share               $  0.18    $  0.12     $  0.25    $  0.17
                                                                   =======    =======     =======    =======
</TABLE>

6.       MANAGEMENT SERVICES

                  For the three and six months ended July 31, 2000 and 1999, we
         recognized revenue for management services provided to related parties
         in the following amounts (in thousands):

<TABLE>
<CAPTION>
                                                 Three Months Ended       Six Months Ended
                                                       July 31,               July 31,
                                                 -------------------     -------------------
                                                   2000        1999       2000        1999
                                                 -------     -------     -------     -------
         <S>                                     <C>         <C>         <C>         <C>
         Infiteq, LLC                            $    --     $    30     $    --     $    51
         Payment Solutions Network, Inc.               5         180          14         359
         Electronic Check Clearing
                  House Organization                 209         238         421         505
</TABLE>

          The Company had net receivables from related parties at July 31 in the
          following amounts (in thousands):

<TABLE>
<CAPTION>
                                                                          2000        1999
                                                                         -------     -----
         <S>                                                             <C>         <C>
         Infiteq, LLC                                                    $    --     $   79
         Payment Solutions Network, Inc.                                      57        330
         Electronic Check Clearing House Organization                         85         91
</TABLE>


                                       7
<PAGE>

7.       SEGMENTS

             During January 2000, the Company revised its segment disclosures to
         reflect our focus on e-finance segments. As a result of this revision,
         segment disclosures for the current and prior periods have been
         restated.

             We have three reportable segments: PaymentSolutions, CashSolutions
         and BusinessSolutions. The segments are unique due to the focus of the
         products and services being offered. We evaluate performance and
         allocate resources based on profit or loss from operations before
         income taxes, not including gains and losses on our investment
         portfolio.

             PaymentSolutions consists primarily of eXceptions software, eTrac
         software, eRM Software and consulting, Float Management, Recon
         Solutions, eInform solutions, eTransactions consulting and software,
         FraudLink consulting and software and ECCHO management services.
         CashSolutions consists primarily of eiService, eCashPro and
         eCashInventory consulting and software and Transportation consulting.
         BusinessSolutions consists primarily of Revenue Enhancement consulting,
         along with, Enterprise Solutions consulting and Strategic Services
         consulting (eFinancial Services).

             Due to the solution approach to delivering products and services
         from multiple business segments, contracts are broken down by segment
         with few transactions between reportable segments.

             Included in corporate and unallocated are costs related to selling
         and marketing, and unallocated corporate overhead expense. Business
         segment results include costs for research and development as well as
         product royalty expense. Receivables, property and equipment and other
         assets are not included in the measures reviewed by our chief operating
         decision-maker (in thousands):

<TABLE>
<CAPTION>
                                                                         Three months ended July 31, 2000
                                                              -----------------------------------------------------
                                                                                 BusinessSolutions
                                                                             ------------------------
                                                                               Revenue     eFinancial   Corporate
                                            PaymentSolutions  CashSolutions  Enhancement     Services   Unallocated      Total
                                            ----------------  -------------  -----------  -----------   -----------   -----------
<S>                                         <C>               <C>            <C>          <C>           <C>           <C>
Revenues
  Consulting and management service fees...    $     1,057     $        30   $    14,763  $     5,916   $        --   $    21,766
  Software license fees....................          1,579             261            --           --            --         1,840
  Software maintenance fees................          2,015             698            --           --            --         2,713
  Software implementation fees.............          1,506             805            --           --            --         2,311
  Hardware and other fees..................             32              --            --           --            --            32
                                               -----------     -----------   -----------  -----------   -----------   -----------
     Total revenues........................    $     6,189     $     1,794   $    14,763  $     5,916   $        --   $    28,662
                                               ===========     ===========   ===========  ===========   ===========   ===========

Operating income (loss)....................    $    (2,640)    $      (189)  $    11,485  $     1,679   $    (5,152)  $     5,183


<CAPTION>
                                                                         Three months ended July 31, 1999
                                                              -----------------------------------------------------
                                                                                 BusinessSolutions
                                                                             ------------------------
                                                                               Revenue     eFinancial   Corporate
                                            PaymentSolutions  CashSolutions  Enhancement     Services   Unallocated      Total
                                            ----------------  -------------  -----------  -----------   -----------   -----------
<S>                                         <C>               <C>            <C>          <C>           <C>           <C>
Revenues
  Consulting and management service fees...    $     1,569     $       772   $     6,245  $     4,453   $        --   $    13,039
  Software license fees....................          2,150             612            --           --            --         2,762
  Software maintenance fees................          1,390             374            --           --            --         1,764
  Software implementation fees.............          1,037             195            --           --            --         1,232
  Hardware and other fees..................             75              --            --           --            --            75
                                               -----------     -----------   -----------  -----------   -----------   -----------
     Total revenues........................    $     6,221     $     1,953   $     6,245  $     4,453   $        --   $    18,872
                                               ===========     ===========   ===========  ===========   ===========   ===========

Operating income (loss)....................    $        17     $       223   $     4,829  $     1,648   $    (3,396)  $     3,321
</TABLE>

                                       8
<PAGE>

<TABLE>
<CAPTION>
                                                                           Six months ended July 31, 2000
                                                              -----------------------------------------------------
                                                                                 BusinessSolutions
                                                                             ------------------------
                                                                               Revenue     eFinancial   Corporate
                                            PaymentSolutions  CashSolutions  Enhancement     Services   Unallocated      Total
                                            ----------------  -------------  -----------  -----------   -----------   -----------
<S>                                         <C>               <C>            <C>          <C>           <C>           <C>
Revenues
  Consulting and management service fees...  $     2,327     $        73   $    20,484   $   11,992   $        --   $    34,876
  Software license fees....................        4,590           1,423            --           --            --         6,013
  Software maintenance fees................        3,756           1,239            --           --            --         4,995
  Software implementation fees.............        3,173           1,633            --           --            --         4,806
  Hardware and other fees..................           32              --            --           --            --            32
                                             -----------     -----------   -----------  -----------   -----------   -----------
     Total revenues........................  $    13,878     $     4,368   $    20,484  $    11,992   $        --   $    50,722
                                             ===========     ===========   ===========  ===========   ===========   ===========

Operating income (loss)....................  $    (2,283)    $        23   $    14,800  $     3,871   $    (9,218)  $     7,193


<CAPTION>
                                                                           Six months ended July 31, 1999
                                                              -----------------------------------------------------
                                                                                 BusinessSolutions
                                                                             ------------------------
                                                                               Revenue     eFinancial   Corporate
                                            PaymentSolutions  CashSolutions  Enhancement     Services   Unallocated      Total
                                            ----------------  -------------  -----------  -----------   -----------   -----------
<S>                                         <C>               <C>            <C>          <C>           <C>           <C>
Revenues
  Consulting and management service fees...  $     2,889     $     1,604   $     9,251  $     7,619   $        --   $    21,363
  Software license fees....................        4,005           1,850            --           --            --         5,855
  Software maintenance fees................        2,553             713            --           --            --         3,266
  Software implementation fees.............        2,252             423            --           --            --         2,675
  Hardware and other fees..................          197              --            --           --            --           197
                                             -----------     -----------   -----------  -----------   -----------   -----------
       Total revenues......................  $    11,896     $     4,590   $     9,251  $     7,619   $        --   $    33,356
                                             ===========     ===========   ===========  ===========   ===========   ===========
Operating income (loss)....................  $       337     $     1,275   $     6,655  $     2,383   $    (6,131)  $     4,519
</TABLE>

               Revenues of $17,730,000 from two major customers accounted for
         61.9% of total revenues in the three months ended July 31, 2000.
         Revenues of $8,743,000 from two major customers accounted for 46.3% of
         total revenues in the three months ended July 31, 1999. Revenues of
         $23,177,000 from two major customers accounted for 45.7% of total
         revenues for the six months ended July 31, 2000. Revenues of
         $14,729,000 from two major customers accounted for 44.2% of total
         revenues for the six months ended July 31, 1999.


8.       ACQUISITIONS

               On February 10, 2000 we acquired all of the outstanding stock of
         Automated Integrated Solutions, Inc., an Ontario Company ("AIS") for
         $2.3 million in cash and additional cash payments to AIS shareholders
         of up to $2.0 million based on achievement of specified revenue targets
         over three years. The transaction was accounted for as a purchase
         transaction with $2.3 million of the purchase price allocated to
         capitalized software and will be amortized over a four year period.

               On May 29, 2000 we acquired all of the outstanding stock of
         X-Port Software, Inc., an Ontario Company ("X-Port") for $3.0 million
         in cash. The transaction was accounted for as a purchase transaction
         with approximately $3.0 million of the purchase price allocated to
         capitalized software and will be amortized over a four year period.

               In connection with the acquisition of X-Port, we entered into a
         separate agreement with the former owner of X-Port for consulting and
         development services through 2003. The payments for consulting total
         $616,000 over the three year period and the development services fees
         total $1.0 million with an additional $400,000 if certain project
         milestones are met.

                                       9
<PAGE>

     ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
             RESULTS OF OPERATIONS

       OVERVIEW

                  We are a leading provider of integrated consulting and
         software solutions that enable banks to maximize their electronic
         finance (e-finance) opportunities, increase their revenues, reduce
         their costs and enhance their delivery of customer services. We were
         founded in 1978 to provide consulting services to banks, and
         subsequently integrated software products into our banking solutions.
         With our acquisition of Antinori Software, Inc. ("ASI") in 1997, we
         were able to significantly enhance our portfolio of software products.
         Additionally, we acquired Genisys Operations, Inc. in 1999, Automated
         Integrated Solutions, Inc. ("AIS") in February 2000 and X-Port
         Software, Inc. ("X-Port") in May 2000 which provided incremental
         added-value to our product offerings. The acquisitions of ASI and
         Genisys each were accounted for as a pooling-of-interests, and
         accordingly, our Condensed Consolidated Financial Statements and notes
         thereto, as well as all other financial and statistical data presented
         in this Form 10-Q, have been restated to include the financial position
         and results of operations for ASI and Genisys for all periods
         presented.

                  MARKETS: A substantial majority of our revenues are generated
         from contracts with banks with assets over $50 billion ("Tier I Banks")
         and banks with assets of between $5 billion and $50 billion ("Tier II
         Banks"). We seek to establish long-term relationships with our
         customers that will lead to ongoing projects utilizing our solutions.

                  SOURCE OF REVENUES: We derive our revenues from consulting and
         management service fees, software license fees, software implementation
         fees, software maintenance and hardware and other sales. While many
         customer contracts provide for both the performance of consulting
         services and the license of related software, some customer contracts
         require only the performance of consulting services or only a software
         license (and, at the election of the customer, related implementation
         services and/or annual software maintenance services). We enter into
         these contracts with our customers on a project-by-project basis.

                  PRODUCTS AND SERVICES: We offer a wide range of
         industry-leading solutions that enable banks to maximize their
         e-finance opportunities, increase their revenues and reduce their
         costs. Combining consulting services with proprietary technology
         applications, we help banks improve their current operations and
         realize their full potential from the Internet economy.

                  Our offerings, uniquely tailored to the needs of the banking
         industry, fall into three complementary groups of powerful,
         Internet-ready solutions. The three groups, PaymentSolutions,
         CashSolutions and BusinessSolutions, offer a combination of products
         and services that, when combined, deliver optimal benefits. These
         products and services are:

<TABLE>
<CAPTION>

                          PAYMENTSOLUTIONS              CASHSOLUTIONS            BUSINESSSOLUTIONS
                          ----------------              -------------            -----------------
                          <C>                          <C>                      <C>
                             FraudLink                    eiService             Revenue Enhancement
                             eXceptions                 eCashInventory          Enterprise Solutions
                                eRM                     Transportation           Strategic Services
                               eTrac                      eCash Pro
                              eInform
                           eTransactions
                          Float Management
                          Recon Solutions
</TABLE>

         The PAYMENTSOLUTIONS group addresses the needs of a critical function
         of banks, the processing of payments made by one party to another. This
         includes the identification and mitigation of fraudulent payments,
         handling irregular items such as checks returned unpaid (exceptions),
         maintaining a record of past transactions (archiving), responding to
         related customer inquiries (research) and correcting any errors that
         are discovered (adjustments). Our PAYMENTSOLUTIONS segment approaches
         these key functions in the context of improving operational efficiency
         and a gradual transition from the paper-based payment systems to
         electronics.

                                       10

<PAGE>

                  FRAUDLINK offers a comprehensive, automated approach to
         solving the growing problem of fraudulent financial transactions, with
         solutions specifically designed to protect banks against bad checks
         drawn on them for payment, fraudulent items deposited with them for
         credit, and check kiting.

         PRODUCTS & SERVICES OFFERED:       FRAUDLINK ONUS, FRAUDLINK DEPOSIT,
                                            FRAUDLINK KITE, FRAUDLINK
                                            POSITIVEPAY, FRAUDLINK TRACKER,
                                            FRAUDLINK PC, FRAUDLINK HOLD

                  EXCEPTIONS is designed to reduce the number of exceptions that
         banks experience, while using technology to transform traditionally
         labor-intensive bank operations into efficient elements of the total
         e-payment transaction chain. It features a unique combination of
         automated check research, photo retrieval and adjustment solutions,
         together with a flexible workflow engine.

         PRODUCTS & SERVICES OFFERED:       CHECKFLOW 1ST EDITION

                  ERM provides powerful tools for customer relationship
         management in an e-finance environment. This wide-ranging electronic
         relationship management infrastructure is a web-enabled decision
         support system that incorporates exception management, risk management,
         treasury services and document image archival and retrieval.

         PRODUCTS & SERVICES OFFERED:       ERM EXCEPTIONSMANAGEMENT, ERM RISK
                                            MANAGEMENT, ERM TREASURY
                                            SERVICES, ERM IMAGE REQUESTOR

                  ETRAC is an automated track and trace system designed to
         monitor items from the time they enter a bank's processing stream to
         final disposition. Among other benefits, this enables a bank to improve
         labor productivity by channeling resources to where they are most
         needed, i.e., potential workflow bottlenecks. Items tracked range from
         checks, cash and microfilm records to internal bank mail.

         PRODUCTS & SERVICES OFFERED:       RECEIVE SENTRY, RECORDS

                  EINFORM focuses on performance measurement using the
         historical data generated by eTrac. End-users can use this historical
         data for the purposes of generating key performance indicators, item
         processing volume data, productivity statistics, and quality control
         benchmarks.

         PRODUCTS & SERVICES OFFERED:       EILUMEN, EIPERFORM, EISTATS,
                                            EIMICR, EIQUALITY, EIMETRICS

                  ETRANSACTIONS enables the transition away from paper-based
         payment systems to electronics by automating key elements of the
         processing stream, as well as improving a bank's yield from float
         management. The aim is to reduce and eventually eliminate the movement
         of paper payment instruments through the system, automate error-prone
         payment processing functions, consolidate payment information and
         provide a measure of fraud prevention.

         Products & Services Offered:       CHECKLINK, CHECKLINK PC, DEPOSIT
                                            MANAGER, BRANCH TRUNCATION
                                            MANAGEMENT, CNOTES

                  FLOAT MANAGEMENT impacts funding requirements and overall
         profitability by properly managing a bank's float through float
         analysis, pricing and a comprehensive consulting practice. It analyzes
         float-related issues to improve profitability, reporting, workflow and
         check-clearing operations. It provides critical activity summaries,
         aids in creating multiple availability and pricing schedules as well as
         pinpointing the cost/profitability of any transaction or relationship.

         SERVICES OFFERED:                  ANALYSIS, PRICING, CONSULTING

                  RECON SOLUTIONS addresses the crucial daily activity of
         balancing and reconciling financial transactions. It redefines
         reconciliation processes through technology and process improvements.
         In addition to recommendations that improve automation, control and
         risk management practices, we employ a highly configurable matching
         engine, Bankrec-TM- Corporate, to provide significant gains in
         efficiency and control.

         SERVICES OFFERED:                  BANKREC

                                       11

<PAGE>

         The CASHSOLUTIONS group optimizes inventory management of a bank's
         cash-on-hand, how much, when and where it is needed. Web-based software
         solutions dramatically reduce the amount of cash banks need to hold in
         reserve accounts and as cash-on-hand, while ensuring a high level of
         customer service through timely replenishment of cash in ATMs.

                  EISERVICE advances ATM monitoring and management through the
         use of Internet connectivity to provide electronic notification of cash
         and/or servicing needs. Scalable to the largest ATM networks, it
         forecasts cash and servicing needs, dispatches vendors for cash
         replenishment and maintenance services, records completed work and
         reconciles vendor invoices, all via an electronic communication
         infrastructure.

         PRODUCTS & SERVICES OFFERED:       EIMANAGER, EIGATEWAY, EIFORECASTER

                  ECASHINVENTORY reduces the amount of non-earning assets
         required in reserve accounts and as cash-on-hand to meet operating
         needs. Using both technology and process reengineering, it provides
         management tools for forecasting, tracking and optimizing a bank's
         inventory of currency. This comprehensive group of solutions frees
         underutilized money for more productive uses.

         PRODUCTS & SERVICES OFFERED:       CASHFORECASTER, CASHTRACKER, RESERVE
                                            LINK, RESERVE LINKPLUS

                  TRANSPORTATION focuses on reducing armored car transportation
         costs incurred by banks in moving cash between locations and
         replenishing ATMs. It optimizes armored car utilization based on ATM
         locations and usage, route structures and delivery frequency, as well
         as ATM deposit processing requirements.

         PRODUCTS & SERVICES OFFERED:       OPTIMIZER, CONSULTING

                  ECASHPRO helps meet the budgetary challenges of centralized
         currency processing with a blend of reengineering consulting and
         technology. Proprietary software reduces transaction cost of
         centralized currency and ATM deposit processing, provides cash
         reductions of 20-35% throughout the vault network, establishes a
         standardized inventory measurement process and reduces branch and vault
         FTE as well as improving Internet-based customer reporting.

         SERVICES OFFERED:                  EVAULT MASTER II, EDEPOSIT MASTER,
                                            EVAULT FORECASTER

         The BUSINESS SOLUTIONS group offers a range of consulting services that
         enable banks to improve their day-to-day operations and conceive,
         implement and fund their e-finance initiatives.
 .
                  REVENUE ENHANCEMENT consulting enables a bank to improve
         workflows, internal operational processes and customer pricing
         structures. Opportunities to improve performance are identified through
         a systematic evaluation of existing policies and procedures in a range
         of functional areas.

         SERVICES OFFERED:                  REVENUE ENHANCEMENT

                  ENTERPRISE SOLUTIONS provides conversion, consolidation and
         integration consulting on a bank-wide basis. These services are
         particularly in demand in the context of continuing acquisition and
         merger activity in the banking industry, and the pressure on banks to
         define and implement their e-finance strategies.

         SERVICES OFFERED:                  EFINANCIALSERVICEPRODUCTMANAGEMENT,
                                            EFINANCIASERVICEIT,
                                            EFINANCIALSERVICEFINANCIAL,
                                            EFINANCIALSERVICEINTEGRATION

                  STRATEGIC SERVICES are offered to banks to assist them in
         developing and implementing a comprehensive e-finance strategy. The
         scope of work includes defining objectives, detailing a migration path
         and time frame and recommending a complete array of enabling
         technologies.

         SERVICES OFFERED:                  ESTRATEGICMODELING,
                                            ESTRATEGICFINANCECONSULTING,
                                            ESTRATEGICINTEGRATEDSALES

                                       12

<PAGE>

                  PRICING METHODS AND REVENUE RECOGNITION: We employ varying
         pricing methods for each of our four primary sources of revenue,
         resulting in a number of different revenue recognition practices.
         Consulting and management services are priced on (i) a time and
         materials basis (revenue is recognized as the services are performed),
         (ii) a fixed-price basis (revenue is recognized on a
         percentage-of-completion basis) and (iii) on a value-priced basis. In
         the case of value-priced contracts, we are paid, on an agreed upon
         basis with the customer, either a specified percentage of the projected
         increased revenues or decreased costs that are expected to be derived
         by the customer generally over a period of up to twelve months
         following implementation of our solution, or the actual increased
         revenues and/or decreased costs experienced by the customer generally
         over a period of up to twelve months following implementation of our
         solution, subject in either case to a ceiling, if any is agreed to, on
         the total amount of payments to be made to us. Revenues generated in
         connection with value-priced contracts based upon projected results are
         recognized only upon completion of all services and evidenced by a
         signed agreement upon the actual fee to be paid (even though billings
         for such services may be delayed by mutual agreement for periods not to
         exceed twelve months). When fees are to be paid based on a percentage
         of actual revenues or savings, revenues are recognized only upon the
         completion of all services and as the amounts of actual revenues or
         savings are confirmed to us by the customer. Software license fees are
         priced on a fixed-price basis (with revenue recognized upon delivery,
         subject to certain conditions), on a value-priced basis (with revenue
         recognized in a fashion similar to that for consulting and management
         service fees) and in some cases on a per-transaction basis (with the
         related revenue being recognized and due on a monthly basis). Software
         maintenance and implementation fees are priced on a time and materials
         basis or on a fixed-price basis, and the related revenues are
         recognized on the basis consistent with that applied to consulting and
         management service fees. Finally, hardware sales are priced on the
         basis of our cost plus a specified percentage, and related revenues are
         recognized upon shipment of the hardware.

                  All statements other than statements of historical fact
         contained in this report, including statements in this "Management's
         Discussion and Analysis of Financial Condition and Results of
         Operations" concerning our financial position and liquidity, results of
         operations, prospects for future growth, and other matters are
         forward-looking statements. Although we believe that the expectations
         reflected in such forward-looking statements are reasonable, no
         assurance can be given that such expectations will prove correct.
         Factors that could cause our results to differ materially from the
         results discussed in, or contemplated by, such forward-looking
         statements include the risks described under "Risk Factors" in the
         Company's Form 10-K for the fiscal year ended January 31, 2000, on file
         with the Commission. Such risks include, without limitation, the risks
         associated with our dependence on the banking industry, fluctuations in
         quarterly operating results, customer concentration, customer project
         risks, our ability to manage growth, market acceptance of our
         solutions, the absence of long-term agreements with customers, the
         potential for software and/or solutions defects, competition within the
         markets in which we compete our use of independent contractors, our
         dependence on key personnel, our ability to attract and retain
         qualified personnel, the impact of technological advances on our
         business, our dependence on proprietary technology and the risks
         associated with infringement, Year 2000 issues, the potential for
         liability claims, the risks associated with potential strategic
         alliances or acquisitions, government regulation and the risks
         associated with international operations. All forward-looking
         statements in this report are expressly qualified in their entirety by
         the cautionary statements in this paragraph, in "Risk Factors" (as set
         forth in the aforementioned Form 10-K) and elsewhere in this report.

                                       13

<PAGE>

       RESULTS OF OPERATIONS

                  The following table sets forth for the periods indicated, the
         percentages that selected items in the unaudited condensed consolidated
         statements of operations bear to total revenues. The period to period
         comparisons of financial results are not necessarily indicative of
         future results.

<TABLE>
<CAPTION>
                                                                Three Months Ended                 Six Months Ended
                                                                     July 31,                          July 31,
                                                            ---------------------------       ----------------------------
                                                                2000          1999                2000           1999
                                                            -------------  ------------       -------------   ------------
     <S>                                                    <C>            <C>                <C>             <C>
     Revenues:
          Consulting and management service fees                75.9 %         69.2  %             68.8  %        64.0  %
            Software license fees                                6.4           14.6                11.9           17.6
            Software maintenance fees                            9.5            9.3                 9.8            9.8
            Software implementation fees                         8.1            6.5                 9.5            8.0
            Hardware and other fees                               .1             .4                  --             .6
                                                            -------------  ------------       -------------   ------------
                         Total revenues                        100.0          100.0               100.0          100.0

     Costs of revenues:
            Consulting and management service fees              34.6           32.7                36.5           34.3
            Software license fees                                4.3            2.0                 4.7            2.5
            Software maintenance fees                            2.8            3.6                 2.6            4.0
            Software implementation fees                         4.3            4.3                 4.8            4.4
            Hardware and other fees                               .1             .3                  .1             .5
                                                            -------------  ------------       -------------   ------------
     Total cost of revenues                                     46.1           42.9                48.7           45.7

                                                            -------------  ------------       -------------   ------------
     Gross Profit                                               53.9           57.1                51.3           54.3
                                                            -------------  ------------       -------------   ------------

     Operating costs and expenses:
            Selling general and administrative                  30.8           32.4                32.3           32.7
            Research and development                             5.0            7.2                 4.8            8.0
                                                            -------------  ------------       -------------   ------------
     Total operating costs and expenses                         35.8           39.6                37.1           40.7

     Income from operations                                     18.1           17.6                14.2           13.6

     Other income (expense)                                      1.3            1.7                 1.5            1.7
                                                            -------------  ------------       -------------   ------------

     Income before provisions for income taxes                  19.4           19.3                15.7           15.3
     Provision from income taxes                                 7.4            7.2                 6.0            5.5

                                                            -------------  ------------       -------------   ------------
     Net income                                                 12.0   %       12.1  %              9.7  %         9.8  %
                                                            =============  ============       =============   ============
</TABLE>



                                       14

<PAGE>

         REVENUES

                  REVENUES: Our total revenues increased 51.9% to $28.7 million
         for the quarter ended July 31, 2000 from $18.9 million for the quarter
         ended July 31, 1999. The Company's total revenues increased 51.8% to
         $50.7 million for the six months ended July 31, 2000 from $33.4 million
         for the six months ended July 31, 1999.

                  CONSULTING AND MANAGEMENT SERVICE FEES: Revenues from
         consulting and management service fees increased 67.7% to $21.8 million
         for the quarter ended July 31, 2000 from $13.0 million for the quarter
         ended July 31, 1999. Revenues from consulting and management service
         fees increased 63.1% to $34.9 million for the six months ended July 31,
         2000 from $21.4 million for the six months ended July 31, 1999.
         Consulting and management service fees have grown primarily as a result
         of continued demand for eFinancial Services as well as value priced
         Revenue Enhancement consulting. We have expanded the use of value
         priced engagements due to their improved margins as well as their
         favorable reception from customers. Revenue Enhancement engagements
         increased to $14.8 million for the quarter ended July 31, 2000 from
         $6.2 million for the quarter ended July 31, 1999 and $20.5 million for
         the six months ended July 31, 2000 from $9.3 million for the six months
         ended July 31, 1999. Revenues related to value priced opportunities
         tend to fluctuate period-to-period and are likely to fluctuate in
         future periods.

                  SOFTWARE LICENSE FEES: Revenues from software license fees
         decreased 35.7% to $1.8 million for the quarter ended July 31, 2000
         from $2.8 million for the quarter ended July 31, 1999. Revenues from
         software license fees increased 1.7% to $6.0 million for the six months
         ended July 31, 2000 from $5.9 million for the six months ended July 31,
         1999. Softness in software license fee growth for the first six months
         is due to a carryover affect of Y2K, where customers delayed new
         software decisions until their internal issues were fully addressed. We
         also experienced delays in new licenses of our CheckFlow product.
         Additionally, the migration of new and existing software products such
         as eRM, eCashInventory and eiService are being licensed on an ASP
         ("Application Service Provider") model which will provide for recurring
         revenue over an extended timeframe versus the traditional one-time
         perpetual license fee.

                  SOFTWARE MAINTENANCE FEES: Revenues from software maintenance
         fees increased 50% to $2.7 million for the quarter ended July 31, 2000
         from $1.8 million for the quarter ended July 31, 1999. Revenues from
         software maintenance fees increased 51.5% to $5.0 million for the six
         months ended July 31, 2000 from $3.3 million for the six months ended
         July 31, 1999. Increases in software maintenance has been driven by
         increased software sales during the three months ended January 31, 2000
         resulting in the growth of the number of customers and products under
         maintenance contracts. Additionally, increases in software maintenance
         fees have been driven by the acquisition of new products mainly within
         the PaymentSolutions group with an existing install base.

                  SOFTWARE IMPLEMENTATION FEES: Revenues from software
         implementation fees increased 91.7% to $2.3 million for the quarter
         ended July 31, 2000 from $1.2 million for the quarter ended July 31,
         1999. Revenues from software implementation fees increased 77.8% to
         $4.8 million for the six months ended July 31, 2000 from $2.7 million
         for the six months ended July 31, 1999. Increases in software
         implementation fees have been driven by the increased sales level of
         software licenses experienced during the three months ended January 31,
         2000, resulting in a growth in the number of customers requiring
         implementation services.

                  HARDWARE SALES: Revenues from hardware were $32,000 for the
         quarter ended July 31, 2000 compared to revenues of $75,000 for the
         quarter ended July 31, 1999. Revenues from hardware were $32,000 for
         the six months ended July 31, 2000 compared to $197,000 for the six
         months ended July 31, 1999. The Company sells hardware at the request
         of its customers, but does not consider hardware sales to be a
         meaningful part of its business.


                                       15
<PAGE>

     COST OF REVENUES

                  COST OF CONSULTING AND MANAGEMENT SERVICES: Cost of consulting
         and management services increased 59.7% to $9.9 million for the quarter
         ended July 31, 2000 from $6.2 million for the quarter ended July 31,
         1999. Cost of consulting and management services increased 62.3% to
         $18.5 million for the six months ended July 31, 2000 from $11.4 million
         for the six months ended July 31, 1999. Cost of consulting and
         management services as a percentage of consulting and management
         service fees decreased to 45.5% for the three months ended July 31,
         2000 from 47.3% for the three months ended July 31, 1999. Cost of
         consulting and management services as a percentage of consulting and
         management service fees decreased to 53.0% for the six months ended
         July 31, 2000 from 53.5% for the six months ended July 31, 1999.
         Increases in the cost of consulting and management services were due
         primarily to increased costs associated with related personnel cost.
         Reductions in the cost of consulting and management services as a
         percentage of consulting and management services fees reflects
         continued growth in value price engagements. Cost of consulting and
         management services consists primarily of personnel costs associated
         with time and material contracts and value priced efforts.

                  COST OF SOFTWARE LICENSES: Cost of software licenses increased
         215.8% to $1.2 million for the quarter ended July 31, 2000 from
         $380,000 for the quarter ended July 31, 1999. Cost of software licenses
         increased 183.0% to $2.4 million for the six months ended July 31, 2000
         from $848,000 for the six months ended July 31, 1999. Cost of software
         licenses as a percentage of software license fees increased to 67.3%
         for the three months ended July 31, 2000 from 13.8% for the three
         months ended July 31, 1999. Cost of the software licenses as a
         percentage of software license fees increased to 39.5% for the six
         months ended July 31, 2000 from 14.5% for the six months ended July 31,
         1999. Costs of software licenses includes amortization costs relating
         to capitalized software, as well as royalty costs associated with sales
         of ePaymentSolutions and eCashSolutions software products. Increases in
         cost of software licenses as a percentage of software license fees
         reflect a decrease in software license fees. Additionally, an increase
         in royalties paid of $220,000 resulting from changes in the mix of
         products sold during the period. Finally, increases in amortization of
         capitalized software costs of $640,000 relative to certain software
         products purchased or reaching general release status during the three
         months ended July 31, 2000.

                  COST OF SOFTWARE MAINTENANCE: Cost of software maintenance
         increased 18.9% to $798,000 for the quarter ended July 31, 2000 from
         $671,000 for the quarter ended July 31, 1999. Cost of software
         maintenance remained unchanged at $1.3 million for the six month
         periods ended July 31, 2000 and 1999, respectively. Cost of software
         maintenance consists primarily of personnel costs associated with
         providing customer support for software products sold and royalty
         costs. Increases in costs associated with software maintenance reflect
         an increase of royalty costs of $100,000 during the three months ended
         July 31, 2000.

                  COST OF SOFTWARE IMPLEMENTATION: Cost of software
         implementation increased 48.5% to $1.2 million for the quarter ended
         July 31, 2000 from $808,000 for the quarter ended July 31, 1999. Cost
         of software implementation increased 66.7% to $2.5 million for the six
         months ended July 31, 2000 from $1.5 million for the six months ended
         July 31, 1999. Cost of software implementation as a percentage of
         related fees decreased to 53.6% for the quarter ended July 31, 2000
         from 65.6% for the quarter ended July 31, 1999. Cost of software
         implementation as a percentage of related fees decreased to 51.1% for
         the six months ended July 31, 2000 from 54.4% for the six months ended
         July 31, 1999. Cost of software implementation consists primarily of
         personnel costs associated with implementation, training, and providing
         customer support for software products sold. Increases in costs
         associated with software implementation reflect increased personnel
         costs to support increased revenue.

                  COST OF HARDWARE: Cost of hardware decreased to $25,000 for
         the quarter ended July 31, 2000 from $60,000 for the quarter ended July
         31, 1999. Cost of hardware decreased 80.7% to $31,000 for the six
         months ended July 31, 2000 from $161,000 for the six months ended July
         31, 1999. Decreases for the quarter and six months ended July 31, 2000
         is reflective of reductions in the amount of hardware sold during the
         quarter and six months period.

                                       16

<PAGE>

     OPERATING COSTS AND EXPENSES

                  SELLING GENERAL AND ADMINISTRATIVE: Selling general and
         administrative expenses increased 44.3% to $8.8 million for the quarter
         ended July 31, 2000 from $6.1 million for the quarter ended July 31,
         1999. Selling general and administrative expenses increased 50.5% to
         $16.4 million for the six months ended July 31, 2000 from $10.9 million
         for the six months ended July 31, 1999. Selling, general and
         administrative expenses generally consist of personnel costs associated
         with selling, marketing, general management, software management
         provision for doubtful accounts as well as fees for professional
         services and other related costs. The increase in these expenses
         reflected growth in additional management, marketing, and
         administrative staff over the prior periods to support our expanding
         operations as well as costs associated with the acquisition of AIS and
         Xport. Additionally an increase in the provision for doubtful accounts
         was necessary to mitigate accounts receivable exposure from both
         related parties and our banking customer base.

                  RESEARCH AND DEVELOPMENT: Research and development expenses
         were unchanged at $1.4 million for the quarters ended July 31, 2000 and
         1999, respectively. Research and development expenses decreased 11.1%
         to $2.4 million for the six months ended July 31, 2000 from $2.7
         million for the six months ended July 31, 1999. The decrease reflects a
         lower rate of research and development spending particularly in the
         three months ended April 30, 2000.

                  OTHER INCOME: Other income increased 18.4% to $374,000 for the
         quarter ended July 31, 2000 from $316,000 for the quarter ended July
         31, 1999. Other income increased 33.9% to $746,000 for the six months
         ended July 31, 2000 from $557,000 for the six months ended July 31,
         1999. Other income consists primarily of interest income on tax-exempt
         short-term investments. The increases in the dollar amount of other
         income were primarily due to interest earned on higher balances of
         cash, cash equivalents and short-term investments on hand during the
         current quarter.

                  PROVISION FOR INCOME TAXES: The provision for income taxes is
         based on the estimated annual effective tax rate, and includes federal
         state and foreign income taxes. Our effective income tax rate was 38.0%
         for the three months ended July 31, 2000 compared to 37.1% for the
         three months ended July 31, 1999. Our effective income tax rate was
         38.0% for the six months ended July 31, 2000 compared to 36.0% for the
         six months ended July 31, 1999. Increases in the estimated annual
         effective rate resulted from reductions in tax-exempt income as a
         percent of total taxable income.













                                       17

<PAGE>

     LIQUIDITY AND CAPITAL RESOURCES

                  As of July 31, 2000, we had $59.0 million of working capital,
         including $21.9 million in cash and cash equivalents, as compared to
         $56.5 million of working capital as of January 31, 2000, including
         $26.0 million of cash and cash equivalents. Operating activities
         provided $885,000 of available cash for the six months ended July 31,
         2000 as compared to consuming $3.1 million for the six months ended
         July 31, 1999, largely through growth in net income of $1.7 million,
         increase of non-cash expenses of $2.8 million, growth in accounts
         payable of $2.7 million, and offset by increase in accounts receivable
         of $1.9 million.

                  Average days' sales outstanding fluctuate for a variety of
         reasons, including the timing of billings specified by contractual
         agreement, and receivables for expense reimbursements.

                  The following table contains the quarterly days sales
         outstanding (DSO) with a comparative column which adds reimbursed
         expenses to the revenue portion of the computation:

<TABLE>
<CAPTION>
                                                                             DSO Including Expense
                           Quarter Ended                   DSO                  Reimbursements*
                    ------------------------------    -----------------    -----------------------------
                    <S>                               <C>                  <C>
                           July 31, 1999                   169                        155
                         October 31, 1999                  177                        160
                         January 31, 2000                  131                        119
                          April 30, 2000                   142                        128
                           July 31, 2000                   123                        112

</TABLE>

                  * Includes reimbursements for travel and out of pocket
         expenses which are not considered revenue, but are included in
         outstanding receivables.

                  Cash used in investing activities during the six months ended
         July 31, 2000, of $5.8 million was used to purchase $1.7 million of
         property and equipment and $5.3 million invested in the acquisition of
         AIS and X-Port, offset by sales of $1.6 million of short-term
         investments.

                  Cash provided by financing activities for the six months ended
         July 31, 2000, was $793,000 and resulted from the exercise of stock
         options.

                  Our future liquidity and capital requirements will depend upon
         numerous factors. We believe our current cash and cash equivalents and
         short-tern investment balances and cash generated from operations will
         be sufficient to meet our operating and capital requirements through at
         least the next twelve months. However, there can be no assurance that
         we will not require additional financing within this time frame. Our
         forecast of the period of time through which our financial resources
         will be adequate to support our operations is a forward-looking
         statement that involves risk and uncertainties, and actual results
         could vary. Our failure to raise capital when needed could have a
         material adverse effect on our business, financial condition and
         results of operation.










                                       18

<PAGE>

         RECENTLY ISSUED ACCOUNTING STANDARDS

                  In June 1998, the Financial Accounting Standards Board issued
         SFAS No. 133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
         ACTIVITIES" (SFAS 133). SFAS 133, as amended, is effective for us
         beginning February 1, 2001. We do not currently utilize derivative
         financial instruments. Therefore, we do not expect that the adoption of
         SFAS 133 will have a material impact on our results of operation or
         financial position.

                  The Accounting Standards Executive Committee of the American
         Institute of Certified Public Accountants has issued Statement of
         Position ("SOP") No. 98-9, "MODIFICATION OF SOP 97-2, SOFTWARE REVENUE
         RECOGNITION, WITH RESPECT TO CERTAIN TRANSACTIONS" ("SOP 98-9"), which
         amends certain provisions of Statement of Position No. 97-2 "SOFTWARE
         REVENUE RECOGNITION" ("SOP 97-2"). SOP 98-9 requires the use of the
         residual method when vendor specific objective evidence of fair value
         does not exist for one or more delivered elements in an arrangement,
         but there is vendor specific objective evidence of the fair values of
         all undelivered elements in a multiple element arrangement. SOP 98-9
         was effective for us on February 1, 2000 and did not materially impact
         our operating results for the three and six months ended July 31, 2000.

                  In December 1999, the Securities and Exchange Commission
         released Staff Accounting Bulletin No. 101, "Revenue Recognition in
         Financial Statements" ("SAB 101"). This bulletin summarizes certain
         views of the staff of the Securities and Exchange Commission (the
         "Staff") on applying generally accepted accounting principals to
         revenue recognition in financial statements. In June 2000, the Staff
         issued Staff Accounting Bulletin No. 101B, "Second Amendment: Revenue
         Recognition in Financial Statements". SAB 101B delays the
         implementation of SAB 101 until the quarter ended January 31, 2001.
         Based on our initial evaluation, we do not expect the application of
         SAB 101, as amended, to have a material impact on our financial
         position or results of operations.

     ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

                  INTEREST RATES. We invest our cash in a variety of financial
         instruments, primarily tax advantaged variable rate and fixed rate
         obligations of state and local municipalities, and educational entities
         and agencies. These investments are denominated in U.S. dollars.

                  We account for our investment instruments in accordance with
         Statement of Financial Accounting Standards No. 115, "Accounting for
         Certain Investments in Debt and Equity Securities" ("SFAS 115"). All of
         the cash equivalents and short-term investments are treated as
         available-for-sale under SFAS 115.

                  Investments in both fixed rate and floating rate interest
         earning instruments carry a degree of interest rate risk. Fixed rate
         securities may have their fair market value adversely impacted due to a
         rise in interest rates, while floating rate securities may produce less
         income than expected if interest rates fall. Due in part to these
         factors, our future investment income may fall short of expectations
         due to changes in interest rates or we may suffer losses in principal
         if forced to sell securities which have seen a decline in market value
         due to changes in interest rates. Our investment securities are held
         for purposes other than trading. The weighted-average interest rate on
         investment securities at July 31, 2000 was 4.9%. Amortized costs of
         short-term investments held at July 31, 2000 was $12.0 million, which
         approximates fair value.





                                       19

<PAGE>

PART II   OTHER INFORMATION

     ITEM 1.    LEGAL PROCEEDINGS

               We and Knowledge Based Systems, Inc. ("KBSI") began to jointly
         develop the CashForecaster suite of products in 1996. KBSI is our
         "Preferred Developer" of Synthetic Algorithm-based components for
         CashForecaster. CashForecaster is the only product that we jointly
         developed with KBSI. Other programming services were provided by KBSI
         on an hourly basis for certain of our other cash inventory management
         software products.

               We and KBSI have a dispute over ownership rights to the jointly
         developed products and other products for which KBSI has provided
         programming services. We have been attempting to enforce the existing
         development contract with KBSI or establish a new contractual
         arrangement. Due to a lack of progress on settling our dispute with
         KBSI, we filed a lawsuit in the State District Court in Dallas County,
         Texas on August 4, 2000 seeking injunctive relief to prevent KBSI from
         using or disclosing our confidential information and trade secrets and
         to prevent KBSI from failing to perform certain contractual
         obligations. In addition to the filing of the lawsuit, we also
         initiated arbitration proceedings to arbitrate certain contractual
         issues under our contract with KBSI and damages relating to these
         issues.

               On September 1, 2000 KBSI removed the lawsuit to the United
         States District Court for the Northern District of Texas and has since
         filed an answer and counterclaim. In its counterclaim KBSI seeks
         declaratory relief to the effect that it owns certain cash inventory
         management software and source codes, which includes the CashForecaster
         suite of products. KBSI also alleges copyright infringement, breach of
         contract, fraud and tortious interference with contract for which it
         seeks unspecified actual and exemplary monetary damages.

               We intend to vigorously pursue our claims and defend KBSI's
         counterclaims. This lawsuit and the related arbitration are not
         expected to have a material effect on our financial position or results
         of operations.

               We are pursuing several initiatives to mitigate the risk of the
         KBSI relationship. These initiatives include (1) development of new
         cash forecasting products on a web-enabled platform, and (2)
         replacement of KBSI as the provider of the algorithm-based components
         of cash forecasting products.


     ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

         None


     ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

         None






                                       20

<PAGE>

     ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

               At our Annual Meeting of Stockholders held on June 20, 2000, four
         proposals were adopted by our stockholders: (1) the election of three
         directors as Class II directors for terms expiring at the Annual
         Meeting of Stockholders in 2003 as described in our Proxy Statement for
         the Annual Meeting; (2) the ratification of the appointment of Ernst
         Young LLP as independent certified public accountants of the Company
         for the fiscal year ending January 31, 2001; (3) the approval of an
         amendment to our Certificate of Incorporation changing our name to
         "Carreker Corporation"; and (4) the approval to amend and restate the
         Company's 1994 Long Term Incentive Plan to (a) make an additional
         1,000,000 shares of Common Stock available for issuance under the Plan
         and (b) change the formula for calculating the annual increase in the
         number of shares of Common Stock available under the Plan.

               The number of shares cast for and against as well as the number
         of abstentions as to each of these matters (other than the election of
         directors) are as follows:

<TABLE>
<CAPTION>

        Proposal                                                     Shares for        Shares Against      Abstentions
        --------                                                     ----------        --------------      -----------
        <S>                                                          <C>               <C>                 <C>
        Ratification of accounts                                     16,822,369             5,062             5,725
        Amendment to Certificate of Incorporation                    14,447,786           2,381,595           3,775
        Amendment to 1994 Long Term Incentive Plan                   11,096,992           2,030,373          336,620

</TABLE>

     ITEM 5.  OTHER INFORMATION

               On February 10,2000 we acquired all of the outstanding stock of
         Automated Integrated Solutions, Inc., an Ontario Company ("AIS") for
         $2.3 million in cash and additional cash payments to AIS shareholders
         of up to $2.0 million based on achievement of specified revenue targets
         over three years. The transaction was accounted for as a purchase
         transaction with $2.3 million of the purchase price allocated to
         Capitalized Software.

               On May 29,2000 we acquired all of the outstanding stock of X-Port
         Software, Inc., an Ontario Company ("X-Port") for $3.0 million in cash.
         The transaction was accounted for as a purchase transaction with
         approximately $3.0 million of the purchase price allocated to
         Capitalized Software.

               In connection with the acquisition of X-Port, we entered into a
         separate agreement with the former owner of X-Port for consulting and
         development services through 2003. The payments for consulting total
         $616,000 over the three year period and the development services fees
         total $1.0 million with an additional $400,000 if certain project
         milestones are met.

               Effective July 17, 2000 Ronald R. Antinori resigned from the
         Company's Board of Directors to pursue other opportunities. The vacancy
         on the Board created by Mr. Antinori's resignation has not been filled
         at the present time.



     ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

               (a) Exhibits

                   NUMBER            EXHIBIT DESCRIPTION
                   ------            -------------------
                   27.1              Financial Data Schedule

               (b) Reports on Form 8-K
                   None



                                       21

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.


                              CARREKER CORPORATION




By:              /s/ John D. Carreker, Jr.        Date: September 14, 2000
  ------------------------------------------            ------------------------
    John D. Carreker, Jr.
    Chairman of the Board and
    Chief Executive Officer




By:             /s/ Terry L. Gage                 Date: September 14, 2000
  ------------------------------------------            ------------------------
    Terry L. Gage
    Executive Vice President and
    Chief Financial Officer











                                       22