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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K/A
 Amendment No. 3
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2005
 OR
 o
    
    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: 000-24931
 S1 CORPORATION
 (Exact name of registrant as specified in its charter)
 Delaware
(State or other jurisdiction of
incorporation or organization)
    
    58-2395199
(I.R.S. Employer
Identification No.)3500 Lenox Road, NE, Suite 200
Atlanta, Georgia
(Address of principal executive offices)
    
    30326
(Zip Code)
 Registrants telephone number, including area code: (404) 923-3500
 Securities registered pursuant to Section 12(b) of the Act:
 Securities registered pursuant to Section 12(g) of the Act:
 o þ
 o þ
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  o þ o
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   Documents Incorporated by Reference




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EXPLANATORY NOTE
    1




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Table of Contents
 Item 11. Executive Compensation
    
    
    3Item 13. Certain Relationships and Related Transactions
    
    
    10Item 15. Exhibits and Financial Statement Schedules
    
    
    11Signature
    
    
    14
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ITEM 11. EXECUTIVE COMPENSATION
 Executive and Director Compensation
  Summary Compensation Table
 Annual Compensation
    
    
    
    
    
    Long TermCompensationSecuritiesOther Annual
    
    Underlying
    
    All OtherSalary
    
    Bonus
    
    Compensation
    
    Options
    
    CompensationName and Principal Position
    
    Year
    
    ($)
    
    ($)
    
    ($)
    
    (#)
    
    ($) (a)Jaime W. Ellertson (b)
    
    
    2005
    
    
    
    320,616
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,769Chief Executive Officer and
    
    
    2004
    
    
    
    570,000
    
    
    
    355,460
    
    
    
    60,000
    
    
    
    239,000
    
    
    
    8,629Director
    
    
    2003
    
    
    
    592,500
    
    
    
    248,400
    
    
    
    
    
    
    
    350,000
    
    
    
    7,142James S. Mahan III (c)
    
    
    2005
    
    
    
    512,500
    
    
    
    
    
    
    
    138,800
    
    
    
    400,000
    
    
    
    6,548Chief Executive Officer and
    
    
    2004
    
    
    
    450,000
    
    
    
    
    
    
    
    36,730
    
    
    
    100,000
    
    
    
    6,159Chairman of the Board
    
    
    2003
    
    
    
    450,000
    
    
    
    
    
    
    
    86,411
    
    
    
    30,000
    
    
    
    7,734Matthew Hale (d)
    
    
    2005
    
    
    
    271,042
    
    
    
    
    
    
    
    
    
    
    
    200,000
    
    
    
    11,352President of North
    
    
    2004
    
    
    
    268,125
    
    
    
    165,000
    
    
    
    
    
    
    
    89,000
    
    
    
    8,204America Retail
Banking, Global Wholesale
Banking, and Insurance
Markets
    
    
    2003
    
    
    
    273,281
    
    
    
    103,500
    
    
    
    
    
    
    
    150,000
    
    
    
    9,901
 3




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(a)
    
    All other compensation includes matching contributions to S1s 401(k) plan and life and
health insurance premiums. 401(k) contributions for 2005 and 2003 were $750 and $2,625 for Mr.
Mahan, and were $3,746 and $4,927 for Mr. Hale. Mr. Ellertson did not participate in the
401(k) plan. In 2004, there were no matching contributions made to the 401(k) plan. The
insurance premiums for 2005, 2004 and 2003 were $4,769, $8,629 and $7,142 for Mr. Ellertson;
$5,798, $6,159 and $5,109 for Mr. Mahan; and $7,606, $8,204 and $4,975 for Mr. Hale.
 (b)
    
    Mr. Ellertson has not served as S1s Chief Executive Officer since July 24, 2005. In
connection with Mr. Ellertsons termination, he is entitled to receive termination benefits
described in his employment agreement. In 2005, no such payments were made to Mr. Ellertson.
However, we will honor the terms of the employment agreement and expect to begin paying Mr.
Ellertsons termination benefits during 2006. Payments under this agreement are expected to
be approximately $1.7 million.
 (c)
    
    In July 2005, Mr. Mahan was appointed Chief Executive Officer. In connection with this
appointment, we offered Mr. Mahan a commuter allowance in lieu of relocation reimbursement.
We have agreed to reimburse Mr. Mahan up to $500,000 during the time he serves as Chief
Executive Officer. During 2005, we reimbursed Mr. Mahan $138,800 under this agreement. In
2004 and 2003, we reimbursed Mr. Mahan for the management fees paid in connection with his
fractional interest in an airplane that he uses for personal use in lieu of an annual bonus.
This amounted to $36,730 and $86,411 in 2004 and 2003, respectively. There was no such
reimbursement in 2005.
 (d)
    
    Mr. Hale has served as President of North America Retail Banking, Global Wholesale Banking,
and Insurance Markets from since October 2005. Prior to October 2005, Mr. Hale served as
Chief Financial Officer.
  Option Grants
  Option Grants in Last Fiscal Year
 Potential Realizable Value atAssumed Annual Rates ofStock Price Appreciation forIndividual Grants
    
    Option Term% of TotalNumber of
    
    Options
    
    WeightedSecurities
    
    Granted to
    
    AverageUnderlying
    
    Employees in
    
    Exercise orOptions
    
    Fiscal Year
    
    Base Price
    
    ExpirationName
    
    Granted (#)
    
    (%)
    
    ($/share)
    
    Date
    
    5%
    
    10%Jaime W. Ellertson (c)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    James S. Mahan, III (a)
    
    
    400,000
    
    
    
    13.9
    %
    
    $
    4.15
    
    
    
    11/08/2015
    
    
    $
    1,043,965
    
    
    $
    2,645,612Matthew Hale (b)
    
    
    200,000
    
    
    
    6.9
    %
    
    $
    4.15
    
    
    
    11/08/2015
    
    
    $
    521,983
    
    
    $
    1,322,806
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(a)
    
    Mr. Mahan was awarded one option grant totaling 400,000 options. 200,000 of the options
granted to Mr. Mahan in 2005 vest annually in four equal installments beginning November 8,
2006; 100,000 vest when our stock price reaches $8.00 per share; and 100,000 vest when our
stock price reaches $10.00 per share.
 (b)
    
    Options granted to Mr. Hale in 2005 vest annually in four equal installments beginning
November 8, 2006.
  2005 Option Exercises and Values
  Aggregated Option Exercises in 2005 and Fiscal Year-End Option Values
 Value ofUnexercised in theNumber of Securities
    
    Money Options atValue
    
    Underlying Unexercised
    
    FY-endShares Acquired
    
    Realized ($)
    

Options at FY-end (#)
    

($) (b)Name
    
    on Exercise (#)
    
    (a)
    
    Exercisable/Unexercisable
    
    Exercisable/UnexercisableJaime W. Ellertson
    
    
    
    
    
    
    
    
    
    
    2,039,527 / -0-
    
    
    $
    268,900 /$-0-James S. Mahan, III
    
    
    
    
    
    
    
    
    
    
    1,915,000 / 565,000
    
    
    $
    11,700 / 91,700Matthew Hale
    
    
    
    
    
    
    
    
    
    
    379,760 / 371,750
    
    
    $
    58,500 / 98,500
 
 (a)
    
    Based on the market value of our common stock at date of exercise, less the exercise
price.(b)
    
    Based on the closing price per share of our common stock on December 31, 2005 of $4.35 on the
Nasdaq National Market, less the exercise price, of all unexercised stock options having an
adjusted exercise price less than that market value.(c)
    
    Mr. Ellertson was not an executive officer of the Company at December 31, 2005.
 Employment Agreements
  Executive
    
    Date of Agreement
    
    2006 Base Salary
    
    2006 Target BonusJames S. Mahan, III
    
    April 30, 2001
    
    $
    400,000
    
    
    
    Matthew Hale
    
    October 5, 2001
    
    $
    275,125
    
    
    $
    150,000
  5




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

    base salary reviews no less frequently than annually and may be increased at the
discretion of S1;

    annual bonuses, payable no later than the end of the first fiscal quarter following the
end of each fiscal year of S1 based on the attainment of specific S1 performance targets as
may be agreed upon by each of them and S1. The annual bonuses will be designed so that upon
meeting specified minimum thresholds the executives will be entitled to receive reduced
bonus amounts if the agreed-upon targets are partially attained;

    participation in any retirement, deferred compensation, fringe benefit or welfare
benefit plan of S1, including any plan providing for employee stock purchases, pension or
retirement income, retirement savings, employee stock ownership, deferred compensation or
medical, prescription, dental, disability, employee life, group life, accidental death or
travel accident insurance benefits that S1 may adopt for the benefit of executive
employees;
 6




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

    relocation expenses (including temporary living expenses for up to five months) that he
paid or incurred in moving to Atlanta, plus a tax gross-up amount with respect to taxes
imposed on such payment or reimbursement, including taxes imposed on the gross-up amount;
and

    payment or reimbursement for dues, including initiation fees, incurred for country club
memberships.
   COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
    
    Competition. Compensation should reflect the competitive
    marketplace, so the Company can attract, retain, and motivate
    talented executives.
    Accountability for Business Performance. Compensation
    should be tied in part to financial performance, so that
    executives are held accountable through their variable
    compensation for the performance of the business unit for which
    they are responsible and the organization as a whole. We
    consider various measures of business performance, including
    revenues, contribution margin, days sales outstanding, operating
    budgets and customer satisfaction. A portion of each
    executives variable compensation is tied to performance of
    the overall company. The remaining variable compensation is tied
    to the business unit for which the executive is responsible.
    Each executive has variable compensation targets specific to
    their business unit and the overall performance of the company.
    The metrics used differ for each executive. If these targets are
    not met, the compensation committee may nonetheless use its
    discretion to award bonuses to executives. We also consider the
    above referenced performance metrics in determining base
    salaries for executives, however we do not assign the
    performance measures relative weights. Instead, we make a
    subjective determination after considering all such measures
    collectively.
    Accountability for Individual Performance. Compensation
    should be tied in part to the individuals performance to
    encourage and reflect individual contributions to the
    Companys performance. In determining base salaries, we
    consider each officers leadership, level responsibility,
    prior experience, and our judgment as to individual performance
    over the previous year, as well as the executives
    potential for development and performance in the future. We do
    not apply formulas or assign these factors specific mathematical
    weights; instead, we exercise our judgment and discretion.
    Alignment with Stockholder Interests. Compensation should
    be tied in part to the Companys stock performance through
    stock options to align executives interests with those of
    the Companys stockholders. In determining the total amount
    to be granted annually to executives, the committee considers a
    number of factors, including the amount of unvested stock based
    equity compensation grants already held by executive officers,
    dilution, number of shares of common stock outstanding,
    responsibility level, future potential, and the performance of
    the company during the immediately preceding year.   7




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Base Salary.
 Long-Term Incentive Compensation.
 Other.
 CEO Compensation.
  8




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Internal Revenue Code Section 162(m).
 Compensation CommitteeM. Douglas Ivester (Chairman)Thomas P. JohnsonGregory J. Owens
 COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
  PERFORMANCE OF OUR COMMON STOCK
  Comparison of Cumulative Total Return Among
 S1, Interactive Week Internet Index and Nasdaq Composite Index
from December 31, 2001 to December 31, 2005
 
 Index
    
    12/31/01
    
    12/31/02
    
    12/31/03
    
    12/31/04
    
    12/31/05S1 Corporation
    
    
    100
    
    
    
    28
    
    
    
    50
    
    
    
    56
    
    
    
    27Interactive Week Internet Index
    
    
    100
    
    
    
    57
    
    
    
    98
    
    
    
    119
    
    
    
    121NASDAQ Composite Index
    
    
    100
    
    
    
    68
    
    
    
    102
    
    
    
    111
    
    
    
    113
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
     10




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Item 15. Exhibits and Financial Statement Schedules.
  ExhibitNo.
    
    Exhibit Description3.1
    
    Amended and Restated Certificate of Incorporation of S1 Corporation (S1) (filed as
Exhibit 1 to S1s Registration Statement on Form 8-A filed with the Securities and Exchange
Commission (the SEC) on September 30, 1998 and incorporated herein by reference).3.2
    
    Certificate of Amendment of Amended and Restated Certificate of Incorporation of S1 dated
June 3, 1999 (filed as Exhibit 4.2 to S1s Registration Statement on Form S-8 (File No.
333-82369) filed with the SEC on July 7, 1999 and incorporated herein by reference).3.3
    
    Certificate of Amendment of Amended and Restated Certificate of Incorporation of S1 dated
November 10, 1999 (filed as Exhibit 3.3 to S1s Annual Report on Form 10-K for the fiscal year
ended December 31, 1999 and incorporated herein by reference).3.4
    
    Certificate of Designation for S1s Series B Redeemable Convertible Preferred Stock (filed as
Exhibit 2 to S1s Registration Statement on Form 8-A filed with the SEC on September 30, 1998
and incorporated herein by reference).3.5
    
    Certificate of Designations for S1s Series E Convertible Preferred Stock (filed as Exhibit 3
to S1s Registration Statement on Form S-8 (File No. 333-72250) filed with the SEC on October
26, 2001 and incorporated herein by reference).3.6
    
    Amended and Restated Bylaws of S1, as amended (filed as Exhibit 3.6 to S1s Amendment No. 1
to Form 10-K/A filed with the SEC on March 30, 2006 and incorporated herein by reference).4.1
    
    Specimen certificate for S1s common stock (filed as Exhibit 4 to S1s Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 2000 and incorporated herein by reference).4.2
    
    Specimen certificate for S1s Series B Redeemable Convertible Preferred Stock (filed as
Exhibit 4.3 to S1s Annual Report on Form 10-K for the fiscal year ended December 31, 1998 and
incorporated herein by reference).4.3
    
    Specimen certificate for S1s Series E Convertible Preferred Stock (filed as Exhibit 4.2 to
S1s Registration Statement on Form S-3 (File No. 333-75178) filed with the SEC on December
14, 2001 and incorporated herein by reference).10.1
    
    Stock Purchase Agreement, dated as of June 29, 1998, by and among SFNB, S1 and State Farm
Mutual Automobile Insurance Company (filed as Exhibit 10.4 to Pre-Effective Amendment No. 2 to
the S1s Registration Statement on Form S-4 (File No. 333-56181) filed with the SEC on August
21, 1998 and incorporated herein by reference).10.2
    
    Stock Subscription Warrant, dated December 23, 1999, issued by S1 to America Online, Inc.
(filed as Exhibit 10.16 to S1s Annual Report on Form 10-K for the fiscal year ended December
31, 1999 and incorporated herein by reference).10.3
    
    Alliance Center Office Lease Agreement, entered into as of February 25, 2000, by and between
Solano Associates, as Landlord, and Security First Technologies, Inc., as Tenant (filed as
Exhibit 10.3 to S1s Quarterly Report on Form 10-Q for the quarterly period ended September
30, 2000 and incorporated herein by reference).10.4
    
    Security First Technologies Corporation Amended and Restated 1995 Stock Option Plan (filed as
Appendix B to
S1s definitive proxy statement for S1s 1999 annual meeting of shareholders and
incorporated herein by reference).*10.5
    
    Amendment to Security First Technologies Corporation Amended and Restated 1995 Stock Option
Plan (filed as Exhibit 10.3 to S1s Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2000 and incorporated herein by reference).*
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ExhibitNo.
    
    Exhibit Description10.6
    
    Security First Network Bank Amended and Restated Directors Stock Option Plan (filed as
Exhibit 10.2 to Pre-Effective Amendment No. 2 to S1s Registration Statement on Form S-4 (File
No. 333-56181) filed with the SEC on August 21, 1998 and incorporated herein by reference).*10.7
    
    Amendment to Security First Network Bank Amended and Restated Directors Stock Option Plan
(filed as Exhibit 10.1 to S1s Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2000 and incorporated herein by reference).*10.8
    
    Security First Technologies Corporation 1998 Directors Stock Option Plan (filed as Exhibit
10.3 to Pre-Effective Amendment No. 1 to S1s Registration Statement on Form S-4 (File No.
333-56181) filed with the SEC on July 30, 1998 and incorporated herein by reference).*10.9
    
    Amendment to Security First Technologies Corporation 1998 Directors Stock Option Plan (filed
as Exhibit 10.2 to S1s Quarterly Report on Form 10-Q for the quarterly period ended September
30, 2000 and incorporated herein by reference).*10.10
    
    Employment Agreement, entered into as of October 5, 2001, by and between S1 and Matthew Hale
(filed as Exhibit 10.36 to S1s Annual Report on Form 10-K for the fiscal year ended December
31, 2001 and incorporated herein by reference).*10.11
    
    Employment Agreement, entered into as of April 27, 2001, by and between S1 and Jaime
Ellertson (filed as Exhibit 10.1 to S1s Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2002 and incorporated herein by reference).*10.12
    
    Employment Agreement, entered into as of April 30, 2001, by and between S1 and James Mahan
(filed as Exhibit 10.2 to S1s Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2002 and incorporated herein by reference).*10.13
    
    S1 Corporation 2003 Stock Option Plan (filed as Attachment A to S1s Definitive Proxy
Statement on Schedule 14A filed with the SEC on April 18,2003 and incorporated herein by
reference).*10.14
    
    Stock Purchase Agreement By and Among S1 Corporation, Davidge Data Systems Corp. and GL
Consultants, Inc. Dated as of October 20, 2004 (filed as Exhibit 99 to S1s Current Report on
Form 8-K filed with the SEC on October 25, 2004 and incorporated herein by reference).10.15
    
    Share Purchase Agreement, dated November 6, 2004, among several persons listed in Schedule I
thereto and S1 Corporations (filed as Exhibit 2.1 to S1s Current Report on Form 8-K filed
with the SEC on November 16, 2004 and incorporated herein by reference).10.16
    
    Agreement and Plan of Merger By and Among S1 Corporation, Edify Corporation, Edify Holding
Company, Inc., Intervoice, Inc., and Arrowhead I, Inc., dated as of November 18, 2005 (filed
as Exhibit 2.1 to S1s Current Report on Form 8-K filed with the SEC on January 4, 2006 and
incorporated herein by reference).10.17
    
    Description of Arrangement for Directors Fees (incorporated by reference to Exhibit10.17 of
the Companys Form 10-K filed with the Securities and Exchange Commission on March 16, 2006).10.18
    
    Master Software Development and
Consulting Agreement between Security First Technologies, Inc. (S1)
and State Farm Mutual Automobile Insurance Company, dated March 31,
2000.21
    
    Subsidiaries of S1 (incorporated by reference to Exhibit 21 of the Companys Form 10-K filed
with the Securities and Exchange Commission on March 16, 2006).23.1
    
    Consent of Independent Registered Public Accounting Firm (incorporated by reference to
Exhibit 23.1 of the Companys Form 10-K filed with the Securities and Exchange Commission on
March 16, 2006).
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ExhibitNo.
    
    Exhibit Description31.1
    
    Certificate of Chief Executive Officer dated March 15,
2006 (incorporated by reference to
Exhibit 31.1 of the Companys Form 10-K filed with the Securities and Exchange Commission on
March 16, 2006).31.2
    
    Certificate of Chief Financial Officer dated March 15, 2006
(incorporated by reference to
Exhibit 31.2 of the Companys Form 10-K filed with the Securities and Exchange Commission on
March 16, 2006).31.3
    
    Certificate of Chief Executive
Officer dated March 30, 2006
(incorporated by reference to
Exhibit 31.3 of the Companys
Form 10-K/A No. 1 filed with the Securities and Exchange
Commission on March 30, 2006).31.4
    
    Certificate of Chief Financial
Officer dated March 30, 2006 (incorporated by reference to
Exhibit 31.4 of the Companys
Form 10-K/A No. 1 filed with the Securities and Exchange
Commission on March 30, 2006).31.5
    
    Certificate of Chief Executive
Officer dated May 1, 2006. (incorporated by reference to Exhibit
31.5 of the Companys Form 10-K/A No. 2 filed with the
Securities and Exchange Commission in May 1, 2006).31.6
    
    Certificate of Chief Financial
Officer dated May 1, 2006. (incorporated by reference to Exhibit
31.6 of the Companys Form 10-K/A No. 2 filed with the
Securities and Exchange Commission on May 1, 2006).31.7
    
    Certificate of Chief Executive
Officer dated July 26, 2006.31.8
    
    Certificate of Chief Financial
Officer dated July 26, 2006.32.1
    
    Certificate of Chief Executive Officer pursuant to §906 of the Sarbanes -Oxley Act of 2002
(incorporated by reference to Exhibit 32.1 of the Companys Form 10-K filed with the
Securities and Exchange Commission on March 16, 2006).32.2
    
    Certificate of Chief Financial Officer pursuant to §906 of the Sarbanes -Oxley Act of 2002
(incorporated by reference to Exhibit 32.2 of the Companys Form 10-K filed with the
Securities and Exchange Commission on March 16, 2006).
 
 *
    
    Management contract or compensatory plan. 13




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SIGNATURE
  S1 CORPORATIONBy:
    
    
    

/s/
James S. Mahan, IIIJames S. Mahan, IIIChief Executive Officer
 14