# EXHIBIT 99.5

# PRINCETON eCOM
CORPORATION AND SUBSIDIARIES

# CONSOLIDATED FINANCIAL
STATEMENTS

# AND

# REPORT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS

# DECEMBER 31, 2002 and
2001

---

# Report of
Independent Certified Public Accountants

To the Stockholders Princeton eCom
Corporation and Subsidiaries

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

We conducted our audit in accordance
with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, the consolidated
financial statements referred to above present fairly, in all material respects, the
consolidated financial position of Princeton eCom Corporation and Subsidiaries as of
December 31, 2002, and the consolidated results of their operations and their consolidated
cash flows for the year then ended in conformity with accounting principles generally
accepted in the United States of America.

/s/ BURTON, McCUMBER
& CORTEZ, L.L.P.

Brownsville, Texas
March 6, 2003

---

# Report of independent
public accountants

To Princeton eCom
Corporation:

We have audited the accompanying
consolidated balance sheets of Princeton eCom Corporation (a Delaware corporation) and
Subsidiaries, as of December 31, 2000 and 2001, and the related consolidated
statements of operations, stockholders equity (deficit) and cash flows for each of
the three years in the period ended December 31, 2001. These financial statements are
the responsibility of the Companys management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance
with auditing standards generally accepted in the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial
statements referred to above present fairly, in all material respects, the financial
position of Princeton eCom Corporation and Subsidiaries as of December 31, 2000 and
2001, and the results of their operations and their cash flows for each of the three years
in the period ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States.

/s/ ARTHUR ANDERSEN LLP

Philadelphia, Pennsylvania March 28, 2002

# THIS REPORT IS A COPY
OF A PREVIOUSLY ISSUED ARTHUR ANDERSEN LLP REPORT AND IT HAS NOT BEEN
REISSUED BY ARTHUR ANDERSEN LLP.

---

# PRINCETON eCOM
CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETSDECEMBER 31,

# ASSETS

|                                                                      | 2002 |             | 2001
|--------------------------------------------------------------------- | ---- | ----------- | ----
|CURRENT
      ASSETS:                                                 |      |             |     
|Consumer
      deposits                                               |     
|Cash                                                                  |      | $30,128,584 |     
|Receivables
      from billers                                        |      | 3,973,584   |     
|                                                                      |      |             |     
|Total
      consumer deposits                                         |      | 34,102,168  |     
|                                                                     
|Cash
      and cash equivalents                                       |      | 6,258,589   |     
|Accounts
      receivable, net of allowance of $186,468 and  $194,919 |      | 3,794,050   |     
|                                                                     
|Prepaid
      expenses and other                                      |      | 1,477,276   |     
|                                                                      |      |             |     
|Total
      current assets                                            |      | 45,632,083  |     
|                                                                     
|Property
      and equipment, net                                     |      | 13,502,414  |     
|Restricted
      cash                                                 |      | 2,078,176   |     
|Other assets                                                          |      | 405,350     |     
|                                                                      |      |             |     
|Total
      Assets                                                    |      | $61,618,023 |     
|                                                                      |      |             |     

The accompanying notes
are an integral part of these consolidated financial statements.

4

---

# PRINCETON eCOM
CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS  CONTINUED DECEMBER 31,

# LIABILITIES AND
STOCKHOLDERS DEFICIT

|                                                   |  | 2002           |   | 2001            |  
|-------------------------------------------------- |  | -------------- | - | --------------- | -
|CURRENT LIABILITIES:                               |  |                |   |                 |  
|Consumer deposits payable                          |  | $   34,102,168 |   | $     6,282,339 |  
|Service fees payable                               |  | 3,884,158      |   | 1,497,102       |  
|Current portion of long-term debt                  |  |               |   | 918,311         |  
|Accounts payable                                   |  | 1,949,948      |   | 3,834,537       |  
|Accrued expenses                                   |  | 2,732,329      |   | 10,084,221      |  
|Deferred revenue                                   |  | 316,532        |   | 348,507         |  
|                                                   |  |                |   |                
|Total current liabilities                          |  | 42,985,135     |   | 22,965,017      |  
|                                                  
|Deferred revenue                                   |  | 841,291        |   | 744,320         |  
|Other liabilities                                  |  | 314,804        |   | 475,569         |  
|                                                   |  |                |   |                
|Total liabilities                                  |  | 44,141,230     |   | 24,184,906      |  
|                                                  
|Series A-1 mandatorily redeemable convertible      | 
|preferred stock (liquidation value of $16,758,127) |  | 16,006,320     |   | 12,102,981      |  
|Series B-1 mandatorily redeemable convertible      |  |                |   |                 |  
|preferred stock (liquidation value of $4,051,164)  |  | 3,961,937      |   |                |  
|Series C-1 mandatorily redeemable convertible      | 
|preferred stock (liquidation value of $12,194,458) |  | 11,935,010     |   |                |  
|Warrants to purchase Series A-1 mandatorily        |  |                |   |                 |  
|redeemable convertible preferred stock             |  | 538,718        |   |                |  
|                                                  
|Commitments and contingencies (Note J)             |  |               |   |                |  
|                                                  
|STOCKHOLDERS' DEFICIT:                             |  |                |   |                 |  
|Preferred stock, $.01 par value, 77,500,000        |  |                |   |                 |  
|shares authorized                                  |  |               |   |                |  
|Common stock, $.01 par value, 185,000,000          | 
|shares authorized; 29,699,802 and 29,615,572       | 
|shares issued and outstanding                      |  | 296,998        |   | 296,156         |  
|Additional paid-in capital                         |  | 191,981,362    |   | 152,023,204     |  
|Accumulated deficit                                |  | (207,243,552   | ) | (153,238,442    | )
|Deferred compensation                              |  |               |   | (35,633         | )
|                                                   |  |                |   |                
|Total stockholders' deficit                        |  | (14,965,192    | ) | (954,715        | )
|                                                   |  |                |   |                
|                                                  
|Total Liabilities and Stockholders' Deficit        |  | $   61,618,023 |   | $   35,333,172  |  
|                                                   |  |                |   |                

The accompanying notes
are an integral part of these consolidated financial statements.

5

---

# PRINCETON eCOM
CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS For the years ended
December 31,

|                                                    |  | 2002              |   | 2001             |   | 2000             |  
|--------------------------------------------------- |  | ----------------- | - | ---------------- | - | ---------------- | -
|Revenues:                                           |  |                   |   |                  |   |                  |  
|Transaction fees                                    |  | $ 28,483,712      |   | $ 16,149,283     |   | $   9,494,496    |  
|Professional services and other                     |  | 2,171,383         |   | 3,396,882        |   | 1,265,916        |  
|Interest                                            |  | 801,347           |   | 1,986,358        |   | 2,301,672        |  
|                                                    |  |                   |   |                  |   |                 
|Total revenues                                      |  | 31,456,442        |   | 21,532,523       |   | 13,062,084       |  
|                                                    |  |                   |   |                  |   |                 
|Operating expenses:                                 | 
|Cost of services                                    |  |                   |   |                  |   |                  |  
|Cost of transaction fees                            |  | 14,538,006        |   | 12,904,631       |   | 8,527,720        |  
|Cost of professional services and other             |  | 2,840,515         |   | 4,359,993        |   | 1,947,497        |  
|Research and development costs                      |  | 6,240,814         |   | 8,981,954        |   | 3,485,268        |  
|Selling, general and administrative                 |  | 17,276,788        |   | 34,473,872       |   | 22,982,067       |  
|Financing related costs                             |  |                  |   | 400,000          |   | 1,316,815        |  
|Non-cash commissions related to warrants            |  |                  |   | 56,807           |   | 2,718,518        |  
|Restructuring and asset impairment charges          |  | 2,052,160         |   | 23,890,929       |   |                 |  
|Amortization of deferred compensation               |  | 4,175             |   | 652,409          |   | 2,201,701        |  
|                                                    |  |                   |   |                  |   |                 
|Total operating expenses                            |  | 42,952,458        |   | 85,720,595       |   | 43,179,586       |  
|                                                    |  |                   |   |                  |   |                 
|                                                   
|Operating loss                                      |  | (11,496,016       | ) | (64,188,072      | ) | (30,117,502      | )
|                                                   
|Interest income                                     |  | 96,953            |   | 444,736          |   | 528,369          |  
|Interest expense                                    |  | (247,220          | ) | (3,562,120       | ) | (110,097         | )
|Amortization of original issuance discount          |  | (538,718          | ) | (2,267,518       | ) | (323,462         | )
|                                                    |  |                   |   |                  |   |                 
|Net loss before income taxes                        |  | (12,185,001       | ) | (69,572,974      | ) | (30,022,692      | )
|                                                   
|Income tax benefit                                  |  | 291,518           |   |                 |   |                 |  
|                                                    |  |                   |   |                  |   |                 
|Net loss                                            |  | (11,893,483       | ) | (69,572,974      | ) | (30,022,692      | )
|                                                    |  |                   |   |                  |   |                 
|                                                   
|Accretion of preferred stock                        |  | (230,579          | ) | (167,743         | ) | (100,227         | )
|Preferred stock dividends                           |  | (1,905,214        | ) | (2,649,407       | ) | (1,020,000       | )
|Issuance of warrants treated as a dividend          |  |                  |   | (5,303,935       | ) |                 |  
|Beneficial conversion feature treated as a dividend |  | (39,975,834       | ) | (7,995,376       | ) | (12,937,192      | )
|                                                    |  |                   |   |                  |   |                 
|Net loss applicable to common stockholders          |  | $(54,005,110      | ) | $(85,689,435     | ) | $(44,080,111     | )
|                                                    |  |                   |   |                  |   |                 
|                                                   
|Basic and diluted net loss applicable to common     | 
|stockholders per share                              |  | $           (1.82 | ) | $         (24.52 | ) | $         (19.74 | )
|                                                    |  |                   |   |                  |   |                 
|Shares used in computing basic and diluted net loss |  |                   |   |                  |   |                  |  
|applicable to common stockholders per share         |  | 29,648,175        |   | 3,494,795        |   | 2,233,479        |  
|                                                    |  |                   |   |                  |   |                 

The accompanying notes
are an integral part of these consolidated financial statements.

6

---

# PRINCETON eCOM
CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT For
the years ended December 31, 2002, 2001 and 2000

|                                                                        | Common stock |            | Additional
      paid-in |           
|----------------------------------------------------------------------- | ------------ | ---------- | ------------------------ | ----------
|
|                                                                        |              |            |                          |           
|Balance,
      December 31, 1999                                        |              | 2,187,277  |                          | $   21,873
|Sale
      of common stock                                              |              | 28,871     |                          | 289       
|Exercise
      of stock options                                         |              | 62,613     |                          | 626       
|Compensation
      resulting from non-employee option grants            |              |           |                          |          
|Deferred
      compensation resulting from grant of options             |              |           |                          |          
|Amortization
      of deferred compensation, net of forfeitures         |              |           |                          |          
|Issuance
      of common stock warrant                                  |              |           |                          |          
|Non-cash
      commissions relating to warrants                         |              |           |                          |          
|Accretion
      of preferred stock redemption value                     |              |           |                          |          
|Cumulative
      preferred stock dividends                              |              |           |                          |          
|Beneficial
      conversion feature on preferred stock                  |              |           |                          |          
|Beneficial
      conversion feature treated as a dividend               |              |           |                          |          
|Repayment
      of subscription receivable                              |              |           |                          |          
|Net
      loss                                                          |              |           |                          |          
|                                                                        |              |            |                          |           
|Balance,
      December 31, 2000                                        |              | 2,278,761  |                          | 22,788    
|Exercise
      of stock options and warrants                            |              | 36,826     |                          | 368       
|Compensation
      expense resulting from grant of options              |              |           |                          |          
|Amortization
      of deferred compensation, net of forfeitures         |              |           |                          |          
|Issuance
      of common stock warrants to Series C holders             |              |           |                          |          
|Accretion
      of preferred stock to redemption value                  |              |           |                          |          
|Cumulative
      preferred stock dividends                              |              |           |                          |          
|Beneficial
      conversion feature treated as dividend                 |              |           |                          |          
|Paid
      in capital in connection with VFSC acquisition               |              |           |                          |          
|Non-cash
      interest related to warrants                             |              |           |                          |          
|Conversion
      of preferred stock and dividends into common stock     |              | 3,604,464  |                          | 36,045    
|Conversion
      of note payable and accrued interest into common stock |              | 24,525,000 |                          | 245,250   
|Surrender
      of common stock                                         |              | (829,479   | )                        | (8,295    
|Surrender
      of warrants to purchase Series C                        |              |           |                          |          
|Issuance
      of warrants in connection with contract settlement       |              |           |                          |          
|Net
      loss                                                          |              |           |                          |          
|                                                                        |              |            |                          |           
|Balance,
      December 31, 2001                                        |              | 29,615,572 |                          | 296,156   
|Exercise
      of stock options and warrants                            |              | 84,230     |                          | 842       
|Redemption
      of fractional common shares                            |              |           |                          |          
|Amortization
      of deferred compensation, net of forfeitures         |              |           |                          |          
|Accretion
      of preferred stock to redemption value                  |              |           |                          |          
|Cumulative
      preferred stock dividends                              |              |           |                          |          
|Beneficial
      conversion feature treated as dividend                 |              |           |                          |          
|Net
      loss                                                          |              |           |                          |          
|                                                                        |              |            |                          |           
|Balance,
      December 31, 2002                                        |              | 29,699,802 |                          | $ 296,998 
|                                                                        |              |            |                          |           

The accompanying notes
are an integral part of these consolidated financial statements.

7

---

# PRINCETON eCOM
CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT  CONTINUEDFor the years ended
December 31, 2002, 2001 and 2000

|Accumulated
      Deficit |   | Subscriptions
      Receivable |   | Deferred
      Compensation |   | Total        |  
|------------------------- | - | ------------------------------ | - | --------------------------- | - | ------------ | -
|                          |   |                                |   |                             |   |              |  
|$(23,468,896              | ) | $(94,703                       | ) | $(1,277,181                 | ) | $(9,021,225  | )
|                         |   |                               |   |                            |   | 975,000      |  
|                         |   |                               |   |                            |   | 34,928       |  
|                         |   |                               |   |                            |   | 132,959      |  
|                         |   |                               |   | (2,439,476                  | ) |             |  
|                         |   |                               |   | 2,201,701                   |   | 2,201,701    |  
|                         |   |                               |   |                            |   | 2,114,431    |  
|                         |   |                               |   |                            |   | 2,718,518    |  
|(100,227                  | ) |                               |   |                            |   | (100,227     | )
|(1,020,000                | ) |                               |   |                            |   | (1,020,000   | )
|                         |   |                               |   |                            |   | 11,146,223   |  
|(12,937,192               | ) |                               |   |                            |   | (12,937,192  | )
|                         |   | 94,703                         |   |                            |   | 94,703       |  
|(30,022,692               | ) |                               |   |                            |   | (30,022,692  | )
|                          |   |                                |   |                             |   |              |  
|(67,549,007               | ) |                               |   | (1,514,956                  | ) | (33,682,873  | )
|                         |   |                               |   |                            |   | 2,169        |  
|                         |   |                               |   |                            |   | 343,189      |  
|                         |   |                               |   | 1,479,323                   |   | 652,409      |  
|(5,303,935                | ) |                               |   |                            |   |             |  
|(167,743                  | ) |                               |   |                            |   | (167,743     | )
|(2,649,407                | ) |                               |   |                            |   | (2,649,407   | )
|(7,995,376                | ) |                               |   |                            |   |             |  
|                         |   |                               |   |                            |   | 13,014,925   |  
|                         |   |                               |   |                            |   | 56,807       |  
|                         |   |                               |   |                            |   | 64,058,237   |  
|                         |   |                               |   |                            |   | 24,525,000   |  
|                         |   |                               |   |                            |   |             |  
|                         |   |                               |   |                            |   | 2,267,518    |  
|                         |   |                               |   |                            |   | 198,028      |  
|(69,572,974               | ) |                               |   |                            |   | (69,572,974  | )
|                          |   |                                |   |                             |   |              |  
|(153,238,442              | ) |                               |   | (35,633                     | ) | (954,715     | )
|                         |   |                               |   |                            |   | 14,654       |  
|                         |   |                               |   |                            |   | (30          | )
|                         |   |                               |   | 35,633                      |   | 4,175        |  
|(230,579                  | ) |                               |   |                            |   | (230,579     | )
|(1,905,214                | ) |                               |   |                            |   | (1,905,214   | )
|(39,975,834               | ) |                               |   |                            |   |             |  
|(11,893,483               | ) |                               |   |                            |   | (11,893,483  | )
|                          |   |                                |   |                             |   |              |  
|$(207,243,552             | ) | $                             |   | $                          |   | $(14,965,192 | )
|                          |   |                                |   |                             |   |              |  

The accompanying notes
are an integral part of these consolidated financial statements.

8

---

# PRINCETON eCOM CORPORATION AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended
December 31,

|                                                                                  | 2002 |              | 2001 |              | 2000
|--------------------------------------------------------------------------------- | ---- | ------------ | ---- | ------------ | ----
|Operating
      activities:                                                       |      |              |      |              |     
|Net loss                                                                          |      | $(11,893,483 | )    | $(69,572,974 | )   
|Adjustments
      to reconcile net loss to net cash used in operating activities- |      |              |      |              |     
|Depreciation
      and amortization                                               |      | 5,614,274    |      | 7,512,453    |     
|Asset
      impairment charge                                                     |      |             |      | 16,106,889   |     
|Warrants
      issued in connection with restructuring                            |      |             |      | 198,028      |     
|Non-cash
      interest on bridge notes                                           |      | 36,969       |      | 3,525,000    |     
|Non-cash
      compensation expense                                               |      |             |      | 343,189      |     
|Amortization
      of lease guarantee                                             |      | 40,049       |      | 40,000       |     
|Amortization
      of original issuance discount                                  |      | 538,718      |      | 2,267,518    |     
|Amortization
      of deferred compensation, net                                  |      | 4,175        |      | 652,409      |     
|Provision
      for bad debts                                                     |      | (8,451       | )    | 84,294       |     
|Non-cash
      commissions related to warrants                                    |      |             |      | 56,807       |     
|Compensation
      expense related to note receivable forgiveness                 |      |             |      | 750,000      |     
|Loss
      on disposal of assets                                                  |      | 5,117        |      |             |     
|Changes
      in operating assets and liabilities-                                |      |              |      |              |     
|Consumer
      deposits                                                           |      | (27,819,829  | )    | 3,265,780    |     
|Accounts
      receivable                                                         |      | 1,301,327    |      | (1,439,456   | )   
|Prepaid
      expenses and other assets                                           |      | (604,399     | )    | 535,977      |     
|Consumer
      deposits payable                                                   |      | 27,819,829   |      | (3,265,780   | )   
|Service
      fees payable                                                        |      | 2,387,056    |      | (189,913     | )   
|Deferred
      revenue                                                            |      | 64,996       |      | 328,316      |     
|Accounts
      payable                                                            |      | (1,884,589   | )    | 346,744      |     
|Accrued
      expenses                                                            |      | (7,351,892   | )    | 7,734,776    |     
|Other
      liabilities                                                           |      | (160,765     | )    | 164,609      |     
|                                                                                  |      |              |      |              |     
|Net
      cash used in operating activities                                       |      | (11,910,898  | )    | (30,555,334  | )   
|                                                                                  |      |              |      |              |     
|Investing
      activities:                                                       |      |              |      |              |     
|Purchases
      of property and equipment                                         |      | (2,734,246   | )    | (19,542,087  | )   
|Proceeds
      from sale of property and equipment                                |      | 15,722       |      |             |     
|Business
      acquisition, net of cash paid                                      |      |             |      | 6,172,000    |     
|Restricted
      cash                                                             |      | 1,363,414    |      | (3,441,590   | )   
|                                                                                  |      |              |      |              |     
|Net
      cash used in investing activities                                       |      | (1,355,110   | )    | (16,811,677  | )   
|                                                                                  |      |              |      |              |     

The accompanying notes
are an integral part of these consolidated financial statements.

9

---

# PRINCETON eCOM
CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS  CONTINUEDFor the years ended
December 31,

|                                                           | 2002 |                   | 2001 |                   | 2000
|---------------------------------------------------------- | ---- | ----------------- | ---- | ----------------- | ----
|Financing
      activities:                                |      |                   |      |                   |     
|Net
      decrease in bank overdraft                       |      | $                |      | $                |     
|Proceeds
      from convertible note and warrant           |      | 2,690,000         |      | 25,600,000        |     
|Proceeds
      from sale of preferred stock, net           |      | 14,937,527        |      | 7,560,241         |     
|Proceeds
      (repayments) on line of credit              |      | (918,311          | )    | 918,311           |     
|Payments
      on long-term debt                           |      |                  |      | (15,793           | )   
|Proceeds
      from sale of common stock                   |      |                  |      |                  |     
|Proceeds
      from repayment of subscription receivable   |      |                  |      |                  |     
|Proceeds
      from exercise of stock options              |      | 14,624            |      | 2,169             |     
|                                                           |      |                   |      |                   |     
|Net cash
      provided by financing activities            |      | 16,723,840        |      | 34,064,928        |     
|                                                           |      |                   |      |                   |     
|Net
      increase (decrease) in cash and cash equivalents |      | 3,457,832         |      | (13,302,083       | )   
|Cash and
      cash equivalents, beginning of year         |      | 2,800,757         |      | 16,102,840        |     
|                                                           |      |                   |      |                   |     
|Cash and
      cash equivalents, end of year               |      | $   6,258,589     |      | $   2,800,757     |     
|                                                           |      |                   |      |                   |     

The accompanying notes
are an integral part of these consolidated financial statements.

10

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# PRINCETON eCOM
CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFor the years ended
December 31, 2002, 2001 and 2000

NOTE A  BACKGROUND

Princeton eCom Corporation (the
Company) was incorporated on January 25, 1984 in the state of Delaware as Princeton
TeleCom Corporation. In March 1999, the Company changed to its current name. The Company,
which operates in one business segment, is a leading provider of outsourced electronic
bill presentment and payment (EBPP) solutions. The Company markets its products to both
billers and financial institutions. The Companys clients are able to present their
bills and invoices through a broad distribution network and receive payments from
consumers and businesses using the Internet, telephone or handheld device. This results in
both cost savings for biller and financial institution clients as they convert from costly
paper-based systems as well as making bill payment more convenient and providing an array
of bill payment options. The biller market focuses on businesses that provide a large
volume of bills to their customers (typically monthly bills to consumers). This market
includes telecommunication companies, mortgage institutions, insurance companies,
utilities and other businesses with large numbers of consumers. The financial institution
market focuses on banks, credit unions and other financial institutions that offer online
banking products and electronic bill payment services to their customers. The Company
generates revenue from (i) transaction fees, including invoice presentment and
payment processing fees, (ii) professional services fees for implementation and
customized solutions and (iii) interest on funds held.

NOTE B  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES

|1. | Principles
of Consolidation
|-- | ---------------------------

The accompanying consolidated
financial statements include the accounts of Princeton eCom Corporation and its
subsidiaries. During 2002, the subsidiaries were dissolved. All material intercompany
balances and transactions for the years 2002, 2001 and 2000 have been eliminated.

|2. | Use
of estimates
|-- | ----------------

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

|3. | Revenue
recognition
|-- | -------------------

Transaction fees are amounts
  charged to billers and financial institutions based on contractual rates. Transaction
  fees are recognized as the services are performed based upon actual transactions.
  Professional service fees and other consist primarily of consulting services
  provided to customers on a time and materials basis. Revenues from consulting
  services are recognized as the services are performed.

11

---

NOTE B  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES  continued

|3. | Revenue
recognition  continued
|-- | -------------------------------

Included in professional service fees
and other category are fees earned for implementation services. A certain portion of these
implementation fees is deferred and recognized as revenue over the term of the ongoing
transaction service period. Interest revenue reflects amounts earned on the overnight
investment of funds received from consumers pending payment processing and is recorded as
revenue as earned.

|4. | Cash
and cash equivalents
|-- | -------------------------

Cash and cash equivalents include
highly liquid investments with original maturities of three months or less and funds
received from consumers pending payment processing. The Company maintains cash and cash
equivalents with various major financial institutions. At times such amounts may exceed
the FDIC limits. The Company limits the amount of credit exposure with any one financial
institution and management believes that no significant concentration of credit risk
exists with respect to cash investments.

|5. | Property
and equipment
|-- | ----------------------

Property and equipment are
  recorded at cost. Property and equipment also includes fees paid to third parties
  for software licenses and consulting services related to the development of
  internal-use software applications in accordance with Statement of Position
  (SOP) 98-1, Accounting for the Costs of Computer Software Developed or
  Obtained for Internal Use. Depreciation and amortization are provided
  using the straight-line method over the estimated useful lives. Expenditures
  for maintenance, repairs and betterments that do not prolong the useful life
  of an asset have been charged to operations as incurred. Additions and betterments
  that substantially extend the useful life of the asset are capitalized. Upon
  sale or other disposition of assets, the cost and related accumulated depreciation
  and amortization are removed from the respective accounts, and the resulting
  gain or loss, if any, is included in operating results.

|6. | Long-lived
assets
|-- | -----------------

Prior to 2002, the Company followed
Statement of Financial Accounting Standards (SFAS) No. 121, Accounting for
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of. SFAS
No. 121 required that long-lived assets and certain identifiable intangibles held and used
by the Company be reviewed for possible impairment whenever events or changes in
circumstances indicate the carrying amount of an asset may not be recoverable. SFAS No.
121 also requires that long-lived assets held for sale or disposal be reported at the
lower of the carrying amount or fair value less cost to sell. If changes in circumstances
indicate that the carrying amount of asset may not be recoverable, future undiscounted
cash flows expected to result from the use of the asset and its disposition must be
estimated to determine if the carrying value is impaired.

In October 2001 the FASB issued SFAS
No. 144, Accounting for the Impairment for Disposal of Long-Lived Assets. SFAS
No. 144 supercedes SFAS No. 121 and applies to all long-lived assets (including
discontinued operations) and consequently amends Accounting Principles Board (APB)
Opinion No. 30, Reporting Results of Operations-Reporting Effects of Disposal of a
Segment of a Business. SFAS No. 144 is effective for financial statements issued for
fiscal years beginning after December 12, 2001, and as required, was adopted by the
Company on January 1, 2002.

12

---

NOTE B  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES  continued

|7. | Restricted
Cash
|-- | ---------------

Restricted cash relates to
outstanding letters of credit required by certain operating lease agreements.

|8. | Other
assets
|-- | ------------

Other assets primarily consist of
prepaid lease guarantee and deposits. In December 1999, the Company entered into a lease
for its primary operating facility. In order to induce an existing stockholder to
guarantee the lease, the Companys then Chief Executive Officer sold the investor
28,871 shares of Common stock from his personal account at $27.69 per share, which was
below the then estimated fair market value of $41.56 per share. The in-the-money value of
the Common stock sold of approximately $400,000 has been recorded as a deferred asset with
a corresponding credit to additional paid-in capital. The deferred asset is being
amortized to rent expense over the ten-year lease term. For each of the three years in the
period ended December 31, 2002, the Company recognized approximately $40,000 of rent
expense related to this deferred asset.

|9. | Consumer
deposits payable
|-- | -------------------------

Consumer deposits represent assets
held on behalf of consumers for the satisfaction of payment processing and includes both
cash and receivables from billers. Receivables from billers are created when payment
processing has been completed and funds are subsequently drawn from consumer bank
accounts. Management believes that receivables from billers are fully realizable assets
because contractual agreements permit reversals from biller accounts or stipulate that the
biller is obligated to reimburse the Company for such payments.

|10. | Deferred
rent
|--- | -------------

Rent expense on leases is recorded on
a straight-line basis over the lease period. The excess of rent expense over the actual
cash paid is recorded as deferred rent.

|11. | Development
costs
|--- | -----------------

Research and development costs are
charged to expense as incurred.

|12. | Advertising
and marketing expense
|--- | ---------------------------------

The Company charges to expense
advertising and marketing costs as incurred. Advertising and marketing expense totaled
$421,413, $3,663,696 and $1,266,903 for 2002, 2001 and 2000, respectively.

13

---

NOTE B  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES  continued

|13. | Income
taxes
|--- | ------------

Income taxes are accounted for using
the liability method in accordance with SFAS No. 109, Accounting for Income
Taxes. Accordingly, deferred income tax assets and liabilities are determined based
on differences between the financial statement carrying amounts of assets and liabilities
and their respective income tax basis, measured using enacted tax rates.

|14. | Restatement
of certificate of incorporation and stock split
|--- | -----------------------------------------------------------

As part of a recapitalization of the
Company in December 2001, the Company declared a one-for-5.1955 reverse stock split of its
Common stock. In addition, the holders of the Series A, B and C Preferred stock agreed to
convert their shares as follows: one share of Series A to 0.00187861 shares of Common, one
share of Series B to 0.001542 shares of Common and one share of Series C to 0.498 shares
of Common. In June 2002, the Companys Certificate of Incorporation was amended to
authorize 77,500,000 shares of Preferred stock and 185,000,000 shares of Common stock. The
increase in authorized capital stock and the reverse stock split of the Common stock have
been retroactively reflected in the consolidated financial statements.

|15. | Stock
compensation
|--- | ------------------

In December 2002, the Financial
Accounting Standards Board issued SFAS No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure, which provides alternative methods of
transition for a voluntary change to the fair value based method of accounting for
stock-based employee compensation and amends the disclosure requirements of SFAS No. 123,
Accounting for Stock-Based Compensation, to require prominent disclosures in
both annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported results.
The transition guidance and annual disclosure requirements are effective for fiscal years
ending after December 15, 2002. The Company adopted the disclosure provisions for the
accompanying consolidated financial statements. As the Company will continue to apply APB
Opinion No. 25, the accounting for stock-based employee compensation will not change as a
result of SFAS No. 148.

Pro forma information provided below
has been determined as if the Company had accounted for its employee stock options in
accordance with SFAS No. 123. The determination of the fair value of the options
noted above was estimated at the date of grant using a Black-Scholes options pricing model
with the following weighted-average assumptions for 2002, 2001 and 2000: risk-free
interest rate of 3.0%, 6.1% and 5.6%, respectively; dividend yield of 0%; volatility
factor of the expected market price of the Companys Common stock of 70%; and an
expected life of the options of 4 years.

The weighted average fair value of
the options granted is as follows:

|                                | Year ended December 31
|------------------------------- | ----------------------
|
|Granted at fair market value    |                       
|Granted below fair market value |                       

14

---

---

NOTE B  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES  continued

|15. | Stock
compensation  continued
|--- | ------------------------------

For purposes of pro forma
disclosures, the estimated fair value of the options is amortized to expense over the
option vesting periods. The Companys pro forma information is as follows:

|                                                        | Year ended December 31
|------------------------------------------------------- | ----------------------
|
|Net loss applicable to common stockholders, as reported |                       
|Pro forma net loss applicable to common stockholders    |                       
|Pro forma net loss per share                            |                       

|16. | Net
loss per share
|--- | ------------------

Basic EPS is computed by dividing net
loss by the weighted average number of shares of Common stock outstanding for the period.
Diluted EPS includes the dilutive effect, if any, from the potential exercise or
conversion of securities such as stock options, warrants and convertible preferred stock
which would result in the issuance of additional shares of common stock. For 2002, 2001,
and 2000 the impact of stock options, warrants and mandatorily redeemable convertible
preferred stock was not considered as the effect on net loss per share would be
anti-dilutive.

|17. | Fair
value of financial instruments
|--- | -----------------------------------

The Companys financial
instruments consist of consumer deposits, cash and cash equivalents, accounts receivable,
prepaid expenses and other assets, consumer deposits payable, accounts payable, accrued
expenses and deferred revenue. Management believes the carrying values of these assets and
liabilities are representative of their fair values due to the relatively short-term
nature of those instruments.

|18. | Comprehensive
loss
|--- | ------------------

The Company follows SFAS No. 130,
Reporting Comprehensive Income. This statement requires the classification of
items of other comprehensive income by their nature and disclosure of the accumulated
balance of other comprehensive income, separately from retained earnings and additional
paid-in capital, in the equity section of the balance sheet. Net loss was the only
comprehensive loss item for 2002, 2001 and 2000.

|19. | Supplemental
cash flow information
|--- | ----------------------------------

For 2002, 2001 and 2000, the Company
paid interest of $210,251, $116,289 and $5,929, respectively.

15

---

NOTE B  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES  continued

|20. | Reclassification
|--- | ----------------

Certain items in the prior year
financial statements were reclassified to conform to the 2002 financial statement
presentation.

NOTE C  BUSINESS
ACQUISITION

On May 15, 2001, the Company
acquired all of the outstanding shares of Venture Finance Software Corporation (VFSC)
formerly known as WebQuicken, Inc., a wholly owned subsidiary of Intuit, Inc., for an
aggregate purchase price of $13,542,925, including transaction costs of $528,000. VFSC
operated in the Internet commerce industry developing and deploying server-based personal
finance products including WebQuicken. The Company had three payment options; (1) issue
Common stock, (2) cash payment or (3) combination of Common stock and cash. Also, the
consideration was not to be exchanged until the earlier of 20 days after an Initial Public
Offering by the Company or February 1, 2002. The purchase price was determined based
on the Companys decision to issue only Common stock. Accordingly, the Company
measured the purchase price as of May 15, 2001, based on the fair value of 2,277,307
shares of Common stock to be issued in the
future. The Company determined that the fair value of its Common stock was approximately
$5.72 per share on May 15, 2001. The acquisition was recorded using the purchase
method of accounting. The accompanying statements of operations include the operating
results for the acquisition from May 15, 2001 through December 31, 2001. A
summary of the allocation of the purchase price to the net assets acquired is as follows:

|                                 | 
|-------------------------------- | 
|Purchase
      price             | 
|                                 | 
|Purchase
      price allocation: | 
|Cash                             | 
|Property
      and equipment     | 
|Acquired
      technology        | 
|                                 | 
|                                 | 
|                                 | 

The allocation of the purchase price
to identifiable acquired technology has been determined by management based on an analysis
of factors such as historical operating results, discounts on cash flow projections and
specific evaluations of products, customers and other information. The acquired technology
was being amortized over five years based on its estimated useful life. During 2001, the
Company recorded $460,944 of amortization expense on acquired technology, which is
included in selling, general, and administrative expense in the accompanying consolidated
statements of operations.

16

---

NOTE C  BUSINESS
ACQUISITION  continued

The following unaudited pro forma
operating results have been presented assuming the acquisition occurred on January 1,
2000. The pro forma results have been prepared for comparative purposes only and do not
purport to be indicative of the results of operations which actually would have resulted
had the acquisitions been made on January 1, 2000 or of results which may occur in
the future.

|                     | Year ended December 31
|-------------------- | ----------------------
|
|Revenues             |                       
|Loss from operations |                       
|Net loss per share   |                       

As of September 30, 2001, management
determined the long-lived assets related to the VFSC acquisition were impaired and
decided to exit the business entirely in December 2001 (see Note D).

NOTE D - ASSET IMPAIRMENT AND
RESTRUCTURING CHARGES

The Company recorded restructuring
and asset impairment charges as follows:

|                                    | Year ended December 31
|----------------------------------- | ----------------------
|
|VFSC acquired technology impairment |                       
|VFSC related fixed asset impairment |                       
|                                    |                       
|Subtotal VFSC asset impairment      |                       
|                                   
|Other fixed asset impairment        |                       
|                                   
|Restructuring charge                |                       
|                                    |                       
|                                    |                       
|                                    |                       

# VFSC asset impairments

Subsequent to the VFSC acquisition
date and through September 30, 2001, the Company made significant investments in software,
hardware and property and equipment to build-out the VFSC business. In accordance with
SFAS No. 121, the Company evaluated whether later events and circumstances occurred that
indicated that the remaining useful life of its long-lived assets warranted revision or
that the remaining balance was not recoverable. Management determined that as of September
30, 2001, its long-lived assets related to the VFSC acquisition had been impaired. The
impairment was measured by the Company due to the following factors:

|(a) | The Company had
accumulated costs significantly in excess of the amount originally expected.
|--- | --------------------------------------------------------------------------------------------

|(b) | A significant
current period operating loss and cash flow loss combined with a projection that
demonstrated continuing losses associated with assets acquired.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------

The expected undiscounted
  cash flows directly related to the VFSC assets were negative. As of September
  30, 2001, the Company recorded an impairment charge of

17

---

NOTE D  ASSET IMPAIRMENT AND
RESTRUCTURING CHARGES  continued

$10,673,638 which reduced acquired
technology and VFSC related fixed assets to $0 as of September 30, 2001. The impairment
charge was determined based upon the estimated fair value of the business using a
discounted cash flow analysis compared to the tangible net book value of the Company.

In December 2001, the Company decided
to exit the VFSC business. The Company terminated 28 employees and 6 subcontractors in
December 2001 (see restructuring charges below) and on February 28, 2002, the Company
entered into a Modification, Release and Termination Agreement, an Asset Purchase
Agreement and a Software License Agreement (together the Termination Agreements) with
Intuit, Inc. As a result of the Termination Agreements, the Company and Intuit agreed that
no shares of Common stock would be issued to Intuit in the future and that the Company
would continue to maintain ownership of certain assets acquired from Intuit in May 2001.
Intuit agreed to repurchase hardware and other equipment for $35,612. Additionally, the
Company granted to Intuit, Inc. a license for presentment of electronic bills desktop
software and retained ownership of the licensed software purchased in May 2001. The
license fee paid to the Company was $33,000. Additionally, the Company agreed to pay
$328,000 to Intuit, Inc. for consulting services performed during 2001, which was accrued
at December 31, 2001.

# Other fixed asset
impairment

During 2001, the Company recorded
$5,433,251 in impairment charges to fixed assets in addition to the aforementioned VFSC
charges, which included $3,137,610 for property and equipment and $2,295,641 for two
software license agreements.

In accordance with SFAS No. 121,
based upon a review of the Companys long-lived assets in December 2001, the Company
recorded a non-cash impairment charge of $3,137,610 related to the write-down of a portion
of the asset value of the Companys property and equipment. The impairment was
recognized as the future undiscounted cash flows for the Company were estimated to be
insufficient to recover the related carrying values of the property and equipment. As
such, the carrying values of these assets were written down to the Companys
estimates of their fair value. Fair value was based on the present value of estimated
expected future cash flows using a discount rate of 30%. Management believes this
provision was adequate to cover any future losses incurred relating to these assets.
However, actual losses could vary significantly from these estimates.

The Company capitalized a $1,000,000
nonrefundable software license fee in 1999. During 2000 and through the third quarter of
2001, the Company utilized the software to generate revenues from one significant
customer. During the third quarter of 2001, the significant customer informed the Company
that it was exiting its strategy to resell this product to its business customers. As a
result of the lost customer and in accordance with SFAS No. 121, the Company determined
that the software license fee had been impaired and recorded an impairment charge in the
amount of $692,308 (carrying value including $307,692 of accumulated amortization) which
reduced the asset to $0.

During 2001, the Company entered into
a software license agreement that required upfront payments of $1,950,000. The Company
utilized the software to provide a solution to several large customers. Based upon
significant changes in market conditions during the third quarter of 2001, the Company
decided to stop providing the solution to its customers. In accordance with SFAS No. 121,
the Company recorded an impairment charge in the amount of
$1,603,333 (carrying value including $346,667 of accumulated amortization), which reduced
the asset to $0.

18

---

NOTE D  ASSET
IMPAIRMENT AND RESTRUCTURING CHARGES  continued

# Restructuring charge

The Company implemented a
  strategic restructuring plan in the fourth quarter of 2001 (including exiting
  the VFSC business) and the first quarter of 2002 and recorded restructuring
  charges of $2,052,160 and $7,784,040 in 2002 and 2001, respectively. The focus
  of the Companys restructuring plan was to streamline its operations by
  reducing operating expenses primarily through workforce reductions and renegotiating
  significant contracts and leases. The Company completed the restructuring program
  in 2002.

In accordance with Emerging Issues
Task Force No. 94-3 Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity, the components of the restructuring charge are
as follows:

|                     | Year ended December 31
|-------------------- | ----------------------
|
|Employee severance   |                       
|Contract settlements |                       
|Facility closings    |                       
|                     |                       
|                     |                       
|                     |                       

In 2001, included in the employee
severance charge is the non-cash charge in the amount of $750,000, which reflects the
forgiveness of a note receivable due from a former executive.

Contract settlements include
settlements of purchase commitments and contractual agreements with vendors and property
owners. In 2001, approximately 88% of the contract settlements relate to buyouts of real
estate lease agreements.

In 2001, facility closings reflect
the costs associated with the consolidation of offices as a result of employee separations
and product rationalization. In connection with the cancellation of an office lease, the
Company agreed to issue warrants to the landlord to purchase 400,000 shares of the
Companys Common stock at $0.36 per share and recorded a restructuring charge of
$198,028 in the accompanying consolidated statement of operations.

19

---

NOTE E  PROPERTY
AND EQUIPMENT

|                                                     |  | December 31
|---------------------------------------------------- |  | -----------
|
|Computer and telephone equipment                     |  | 3-5 years  
|Purchased software and capitalized development costs |  | 3 years    
|Furniture and fixtures                               |  | 5 years    
|Leasehold improvements                               |  | Lease term 
|                                                     |  |            
|                                                     |  |            
|                                                    
|Less- Accumulated depreciation and amortization      |  |            
|                                                     |  |            
|                                                     |  |            
|                                                     |  |            

Depreciation and amortization
expense for 2002, 2001 and 2000, was $5,614,274, $6,513,765 and $2,274,220, respectively.

NOTE F  CURRENT
DEBT OBLIGATIONS

In 2001, the Company entered into an
accounts receivable funding agreement (funding agreement) with a financial institution.
The funding agreement allows the Company to borrow the lesser of $5,000,000 or 80% of the
eligible accounts receivable, as defined. The Company was subject to an annual interest
rate of 9.5% and 12.0% at December 31, 2002 and 2001, respectively. The current debt
obligation was $0 and $918,311 as of December 31, 2002 and 2001, respectively.

In connection with the funding
agreement, the financial institution was issued fully vested warrants to purchase 125,000
shares of the Companys Common stock at an exercise price of $1.00 per share. In
2001, the Company recorded non-cash commissions totaling $56,807 in the accompanying
consolidated statement of operations relating to the grant of the warrants.

NOTE G  BRIDGE
NOTES, WARRANTS, AND MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK

# Accounting for bridge
notes and warrants

In March and April 2002, the Company
issued bridge notes in the aggregate of $2,690,000. The bridge notes bore interest at 12%
per annum and have a maturity date of one year from the date of issuance. The note holders
were also issued warrants to purchase 807,000 shares of Series A-1 at an exercise price of
$1.00 per share.

The Company allocated the proceeds
from the bridge note to the note and the warrant based on their relative fair values. The
fair value of the note was determined based on a discounted cash flow analysis using a
discount rate of 30%. The fair value of the warrant was based on the Black-Scholes
option-pricing model. As a result, the Company allocated $2,151,282 to the notes and
$538,718 to the warrants.

20

---

NOTE G - BRIDGE NOTES, WARRANTS, AND
MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK  continued

The Company recognized interest
expense on the note of $572,392 in 2002, of which $33,674 was accrued coupon interest and
$538,718 was amortization of the debt discount. In May 2002, the principal amount of the
note and coupon interest were converted into Series B-1.

In November 2001, the Company issued
a $3,100,000 bridge note to two investors and the Companys CEO. The bridge note was
convertible into a subsequent series of mandatorily redeemable convertible preferred stock
at the offering price of a subsequent closing of mandatorily redeemable convertible
preferred stock. The bridge note bore interest at 15% and the principal was due on
November 13, 2002. The bridge note also bore a prepayment penalty of 50%. In December
2001, in connection with the close of Series A-1, the principal amount of the notes held
by two investors and prepayment penalty were converted into Common stock. The note held by
the Companys CEO was repaid during 2002.

In April 2001, the Company issued a
$22,500,000 bridge note to several investors. The bridge note was convertible into a
subsequent series of mandatorily redeemable convertible preferred stock at the offering
price of a subsequent closing of mandatorily redeemable convertible preferred stock. The
bridge note bore interest at 12% prior to the due date of September 15, 2001 and 18%
thereafter. In connection with the bridge note, the note holders were issued warrants to
purchase 3,251,445 shares of Series C at an exercise price of $3.46 per share.

The Company allocated the proceeds
from the bridge note to the note and the warrant based on their relative fair values. The
fair value of the note was determined based on a discounted cash flow analysis using a
discount rate of 30%. The fair value of the warrant was based on the Black-Scholes
option-pricing model. As a result, the Company allocated $20,232,483 to the note and
$2,267,518 to the warrant.

The Company recognized interest
expense on the note of $4,292,518 in 2001, of which $2,025,000 was accrued coupon interest
and $2,267,518 was amortization of the debt discount. In December 2001, in connection with
the close of Series A-1, the principal amount of the note and coupon interest were
converted into Common stock and the warrants were cancelled.

In connection with the
April 2001 bridge note, the Company agreed to issue warrants to purchase an
additional 5,202,312 shares of Series C at an exercise price of $3.46 per share.
These additional shares were issuable only in the event the Company failed to consummate a
subsequent series of mandatorily redeemable convertible preferred stock by
September 15, 2001. The subsequent series of mandatorily redeemable convertible
preferred stock occurred in December 2001. Accordingly, the Company issued warrants
to purchase 5,202,312 shares of Series C. Management determined that the value of the
warrants was zero and in connection with the recapitalization in December 2001, all
of the warrants were cancelled.

In June 2000, the Company issued
a $5,000,000 bridge note. The bridge note was converted into 1,111,111 shares of Series C
in August 2000. The bridge note bore interest at 10% and the principal was due on
July 1, 2001. In connection with the bridge note, the note holder was issued a
warrant to purchase 96,237 shares of the Companys Common stock at an exercise price
of $12.99 per share.

21

---

NOTE G - BRIDGE NOTES, WARRANTS, AND
MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK  continued

The Company allocated the proceeds
from the bridge note to the note and the warrant based on their relative fair values. The
fair value of the note was determined based on a discounted cash flow analysis using a
discount rate of 30%. The fair value of the warrant was determined based on the
Black-Scholes option-pricing model. As a result, the Company allocated $2,885,569 to the
note and $2,114,431 to the warrant.

The Company recognized interest
expense on the note of $427,630 in 2000, of which $104,168 was accrued coupon interest and
$323,462 was amortization of the debt discount. In December 2001, in connection with the
close of Series A-1, warrants to purchase 91,234 shares of Common stock were cancelled.

# Mandatorily redeemable
convertible preferred stock

As of December 31, 2002, the
Company has authorized 77,500,000 shares of Preferred stock with a par value of $.01 per
share, of which 16,500,000 shares have been designated as Series A-1 mandatorily
redeemable convertible preferred stock (Series A-1), 14,000,000 shares have been
designated as Series B-1 mandatorily redeemable convertible preferred stock
(Series B-1) and 47,000,000 shares have been designated as Series C-1 mandatorily
redeemable convertible preferred stock (Series C-1), collectively (Series A-1, B-1
and C-1).

The holders of Series A-1, B-1 and
C-1 are entitled to liquidation preferences equal to the original purchase price, plus all
accrued but unpaid dividends. The holders of the Series A-1, B-1 and C-1 are entitled to
receive cumulative dividends at an annual rate of 8%. The Series A-1, B-1 and C-1 are
redeemable at the option of the holders and upon the receipt of notice of the election of
75% of said holders of each Series, in December 2006.

The Series A-1, B-1 and C-1 are
convertible at any time into common stock at the holders option at a conversion rate
of one-to-three and one third, one-to-one and one half, and one-to-one, respectively, at
December 31, 2002. All outstanding shares of the Series A-1, B-1 and C-1 are
automatically convertible into common stock upon the closing of a qualified underwritten
public offering, as defined. The holders of Series A-1, B-1 and C-1 are entitled to
certain voting, anti-dilution and registration rights, as defined.

The Company would have issued
103,519,321 shares of Common stock had all of Series A-1, B-1 and C-1 been converted at
December 31, 2002.

In June 2002, the Company sold
39,011,536 shares of Series C-1 at $0.30 per share for proceeds of $11,416,258, net of
offering costs of $287,203.

In May 2002, the Company sold
8,560,745 shares of Series B-1 at $0.45 per share for proceeds of $3,748,236, net of
offering costs of $104,098. The proceeds included the conversion of the March and April
2002 bridge notes in the amount $2,690,000 and accrued coupon interest of $33,674.

In January and February 2002, the
Company sold, in the aggregate, 2,500,000 shares of Series A-1 at $1.00 per share for
proceeds of $2,500,000.

22

---

NOTE G - BRIDGE NOTES, WARRANTS, AND
MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK  continued

In December 2001, the Company sold
8,500,000 shares of Series A-1 at $1.00 per share for proceeds of $7,560,241, net of
offering costs of $939,759, and two investors onverted $3,000,000 of the November 2001
bridge note plus prepayment penalty into 4,500,000 shares of Series A-1.

The offering costs for each series of
preferred stock will be accreted using the effective interest method from the date the
shares were issued through the redemption date. For 2002, the Company recorded a total of
$230,579 of such accretion for the Series A-1, B-1 and C-1.

As of December 31, 2000, the Company
had authorized 15,000,000 shares of Preferred stock with a par value of $.01 per share.
The authorized shares were designated as 3,753,846 shares of Series A mandatorily
redeemable convertible preferred stock (Series A), 487,805 shares of Series B
mandatorily redeemable convertible preferred stock (Series B) and 7,555,556 shares of
Series C mandatorily redeemable convertible preferred stock (Series C),
collectively (Series A, B and C).

The Series A, B and C were
convertible at any time into common stock at the holders option at a conversion
rate, as defined. All outstanding shares of the Series A, B and C were
automatically convertible into common stock upon the closing of a qualified underwritten
public offering, as defined. The holders of Series A, B and C were entitled to
certain voting, anti-dilution and registration rights, as defined.

The Series A, B and C were
redeemable, upon the receipt of notice of the election of two-thirds of the Series C
holders to redeem the Series C, at the option of the holders in March 2005. The
holders of Series A, B and C were entitled to liquidation preferences equal to the
original purchase prices, plus all accrued but unpaid dividends. The holders of the
Series C were entitled to receive cumulative dividends at an annual rate of 8%. The
Company has recorded cumulative dividends on Series C of $2,606,667 for 2001 and
$1,020,000 for 2000.

In August 2000, the
  Company sold 6,111,112 shares of Series C at $4.50 per share for proceeds of
  $27,174,359, net of offering costs of $325,641, and an investor converted the
  June 2000 bridge note into 1,111,111 shares of Series C. The offering costs
  were being accreted using the effective interest method through the March 2005
  redemption date of the Series C. The Company recorded $68,129 and $26,643 of
  such accretion from January 1, 2001 through December 14, 2001 and
  for the year ended December 31, 2000, respectively. In connection with the conversion
  of the bridge note, the Company recorded a beneficial conversion feature as
  a preferred stock dividend for the difference between the carrying amount of
  the bridge note and the fair value of the common shares to be issued upon conversion
  in the amount of $1,790,969. Also in August 2000, the Company sold 333,333
  shares of Series C at $4.50 per share to the Companys CEO for cash of
  $750,000 and a full recourse note of $750,000. The note accrued interest at
  6.18%. In December 2001, the Series C shares were surrendered to the Company
  and the note was forgiven. In December 2001, the remaining Series C
  converted into 3,596,660 shares of the Companys Common stock.

23

---

NOTE G - BRIDGE NOTES, WARRANTS, AND
MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK  continued

In March 2000, the Company sold
3,753,846 shares of Series A for $6.50 per share and 487,805 shares of Series B for $5.33
per share for aggregate proceeds of $26,489,241, net of offering costs of $510,759. The
offering costs were being accreted using the effective interest method through the
March 2005 redemption date of the Series A and Series B. The Company recorded $99,614
and $73,584 of such accretion from January 1, 2001 through December 14, 2001 and
for the year ended December 31, 2000, respectively. In December 2001, the
Series A and Series B converted into 7,804 shares of the Companys Common
stock.

# Conversion price
adjustments

In connection with the issuance of
the Series C-1 in June 2002, the conversion price of the Series A-1, Series B-1 and
the warrants to purchase Series A-1 was adjusted to $0.30 per share from $0.45. This
conversion price adjustment created a beneficial conversion feature for financial
reporting purposes. Upon the issuance of the Series C-1, the Company recorded a preferred
stock dividend to the Series A-1, Series B-1 and warrants to purchase Series A-1 of
$17,222,222, $1,926,168 and $896,666, respectively, in the accompanying consolidated
statements of operations.

In connection with the issuance of
the Series B-1 in May 2002, the conversion price of the Series A-1 and the warrants
to purchase Series A-1 was adjusted to $0.45 per share from $1.00. This conversion price
adjustment created a beneficial conversion feature for financial reporting purposes. Upon
the issuance of the Series B-1, the Company recorded a preferred stock dividend to the
Series A-1 and warrants to purchase Series A-1 of $18,944,444 and $986,334,
respectively, in the accompanying consolidated statements of operations.

In connection with the issuance of
the April 2001 bridge note, the conversion price of Series A and Series B
was adjusted to $3.46 per share from $4.50. This conversion price adjustment created a
beneficial conversion feature for financial reporting purposes. Upon the issuance of the
bridge note, the Company recorded a preferred stock dividend to the Series A and
Series B of $7,213,873 and $781,503, respectively, in the accompanying consolidated
statements of operations.

In connection with the sale of Series
C in August 2000, the conversion price of Series A and Series B was adjusted to $4.50 per
share from $6.50 and $5.33, respectively. This conversion price adjustment created a
beneficial conversion feature for financial reporting purposes. Upon the issuance of the
Series C, the Company recorded a preferred stock dividend to the Series A and Series B of
$10,666,667 and $479,556, respectively, in the accompanying consolidated statements of
operations.

NOTE H  COMMON
STOCK AND COMMON STOCK WARRANTS

# Common stock

In connection with the
recapitalization of the Company in December 2001, certain investors surrendered 829,479
shares of Common stock to the Company.

In March 2000, the Company sold
28,871 shares of Common stock to a director of the Company at $33.77 per share.

24

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NOTE H  COMMON
STOCK AND COMMON STOCK WARRANTS  continued

# Common stock warrants

In April 2001, the Company granted
warrants to the Series C investors to purchase 437,115 shares of Common stock at
$0.05 per share. The warrants vested immediately. The Company recorded a deemed preferred
dividend in the amount of $2,486,378. In July 2001, warrants to purchase 25,712 were
exercised. In December 2001, in connection with the close of Series A-1, warrants to
purchase 321,408 shares were cancelled.

In August 2000, the Company
agreed to grant warrants to certain Series C investors to purchase 178,013 shares of
Common stock at $0.05 per share in exchange for certain future performance obligations. In
2000, one of the Series C investors satisfied a portion of the obligation and the Company
recorded a non-cash commission charge of $2,718,518 related to the granting of 116,429
fully vested warrants. In December 2001, in connection with the close of Series A-1,
warrants to purchase 170,314 shares were cancelled.

NOTE I  STOCK
OPTIONS

Effective December 13, 2001, the
Company adopted the 2001 Stock Plan (the Plan). The Plan provides for the granting of
incentive and nonqualified stock options to employees and consultants of the Company. The
Compensation Committee of the Board of Directors administers the Plan and awards grants
and determines the terms of such grants at its discretion. The Company has reserved
approximately 24,000,000 shares of Common stock for issuance pursuant to the Plan.

Information with respect to the
Companys common stock options is as follows:

|                                      | Shares |            | Exercise
      price |             | Weighted
      average
      exercise
      price
|------------------------------------- | ------ | ---------- | -------------------- | ----------- | -------------------------------------------------
|                                      |        |            |                      |             |                                                  
|Balance,
      December 31, 1999      |        | 661,156    |                      | $0.16-20.71 |                                                  
|Granted
      at fair market value    |        | 646,761    |                      | 23.38-33.77 |                                                  
|Granted
      below fair market value |        | 398,838    |                      | 0.16-20.78  |                                                  
|Exercised                             |        | (62,613    | )                    | 0.16-41.57  |                                                  
|Canceled                              |        | (81,684    | )                    | 0.16-41.57  |                                                  
|                                      |        |            |                      |             |                                                  
|Balance,
      December 31, 2000      |        | 1,562,458  |                      | 0.16-41.57  |                                                  
|Granted
      at fair market value    |        | 454,372    |                      | 7.79-41.57  |                                                  
|Exercised                             |        | (2,452     | )                    | 0.16        |                                                  
|Canceled                              |        | (557,750   | )                    | 0.16-41.57  |                                                  
|                                      |        |            |                      |             |                                                  
|Balance,
      December 31, 2001      |        | 1,456,628  |                      | 0.16-41.57  |                                                  
|Granted
      at fair market value    |        | 22,972,024 |                      | 0.24-1.00   |                                                  
|Exercised                             |        | (84,230    | )                    | 0.16-0.24   |                                                  
|Canceled                              |        | (1,557,330 | )                    | 0.16-41.57  |                                                  
|                                      |        |            |                      |             |                                                  
|Balance,
      December 31, 2002      |        | 22,787,092 |                      | $0.16-41.57 |                                                  
|                                      |        |            |                      |             |                                                  

25

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NOTE I  STOCK
OPTIONS  continued

All options have terms ranging from 2
to 10 years and generally vest over 3 to 4 years. The total number of shares available for
future grants under the Plan was 1,105,291 as of December 31, 2002.

The following table summarizes
information relating to the Plan as of December 31, 2002 based upon each exercise
price:

|Outstanding stock options | Exercisable stock options
|------------------------- | -------------------------
|
|$                0.16     |                          
|0.24                      |                          
|0.80                      |                          
|1.00                      |                          
|7.79                      |                          
|17.98                     |                          
|20.78                     |                          
|23.38                     |                          
|27.69                     |                          
|33.77                     |                          
|41.57                     |                          
|                          |                          
|                          |                          
|                          |                          

In connection with certain options
granted to employees during 2000, the Company recorded $2,439,476 of deferred
compensation. These amounts represent the difference between the fair market value of the
Companys Common stock on the date of grant and the exercise price of options to
purchase 398,838 shares of the Companys Common stock. Deferred compensation is
amortized over the vesting periods of the options, which range from immediate vesting to
periods of up to four years. For 2002, 2001 and 2000, $4,175, $652,409 and $2,201,701 of
deferred compensation, net of forfeitures, was charged to expense, respectively.

26

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NOTE J  COMMITMENTS
AND CONTINGENCIES

# Lease commitments

The Company leases facilities and
equipment under noncancellable operating leases with expiration dates through December
2009. Rent expense for 2002, 2001 and 2000, was $2,716,854, $2,114,340 and $1,431,570,
respectively. Future minimum lease payments as of December 31, 2002, are as follows:

| |                             
| | ----------------------------
| | 2003                        
| | 2004                        
| | 2005                        
| | 2006                        
| | 2007                        
| | Thereafter                  
| |                             
| | Total minimum lease payments
| |                             

# Litigation

The Company is involved, from time to
time, in various legal matters and claims which are being defended and handled in the
ordinary course of business. None of these matters are expected, in the opinion of
management, to have a material adverse effect on the financial position or results of
operations of the Company.

# Employment agreements

The Company has employment agreements
with certain officers of the Company. The agreements provide for, among other things,
salaries, bonuses, stock options, and severance payments.

# Government regulation

Management believes, based upon
consultation with legal counsel, that the Company is not required to be licensed by the
Office of the Comptroller of the Currency, the Federal Reserve Board or other federal or
state agencies that regulate or monitor banks or other providers of electronic commerce.
However, the Company may be periodically examined by banking authorities since the Company
is a supplier of services to financial institutions. Laws regulating internet commerce may
be enacted to address issues such as, trust accounting, user privacy, pricing, content,
taxation and the characteristics and quality of online products and services, among other
things. If enacted, these laws could have a material adverse effect on the Companys
business.

27

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NOTE K  INCOME TAXES

The reconciliation of the statutory
federal income tax rate to the Companys effective income tax rate is as follows:

|                                               | Year ended December 31
|---------------------------------------------- | ----------------------
|
|Statutory federal income tax rate              |                       
|State income taxes, net of federal tax benefit |                       
|Nondeductible expenses                         |                       
|Sale of New Jersey NOL                         |                       
|Valuation allowance                            |                       
|                                               |                       
|                                               |                       
|                                               |                       

In December 2002, the Company
participated in the New Jersey Emerging Technology and Biotechnology Financial Assistance
Program (the Program). Under the Program, the Company received net proceeds of $291,518
and transferred the rights to approximately $3.7 million of its unused New Jersey NOL
carry-forwards to a third party. This transaction has been recorded as an income tax
benefit in the accompanying consolidated statements of operations.

Deferred taxes are determined based
upon the estimated future tax effects of differences between the financial statements and
income tax basis of assets and liabilities given the provisions of the enacted tax laws.
The tax effect of temporary differences that give rise to deferred taxes are as follows:

|                                               | December 31
|---------------------------------------------- | -----------
|
|Deferred tax assets:                           |            
|Net
      operating loss carry-forwards        |            
|Deferred compensation                          |            
|Development costs                              |            
|Accruals and reserves not currently deductible |            
|Property and equipment                         |            
|                                               |            
|                                               |            
|                                              
|Less- Valuation allowance                      |            
|                                               |            
|Net deferred tax asset                         |            
|                                               |            

As of December 31, 2002, the Company
had net operating loss carry-forwards totaling approximately $74,000,000 for federal tax
purposes. The availability of the net operating loss carry-forwards and future tax
deductions to reduce taxable income is subject to various limitations under Section 382 of
the Internal Revenue Code of 1986, as amended (Code), in the event of a further ownership
change. This section states that after reorganization or other changes in corporate
ownership (50% cumulative change in ownership over a three year period), the use of
certain carry-forwards may be limited or prohibited. Due to the uncertainty surrounding
the realization of the net deferred tax asset, management has provided a full allowance.

28

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NOTE K  INCOME
TAXES  continued

As of December 31, 2002, the Company
has net operating loss carry-forwards of approximately $107,000,000 for state tax
purposes.

NOTE L  EMPLOYEE
BENEFIT PLAN

The Company has a Section 401(k)
retirement savings plan (the 401(k) Plan). The 401(k) Plan allows employees to contribute
from 2% to 15% of their annual compensation subject to statutory limitations. Company
contributions to the 401(k) Plan are discretionary. In past years, the Company, at its
discretion, has made matching contributions of 50% to 100% of the first 6% of employee
contributions. For 2002, 2001 and 2000, the Company made matching contributions of
$288,451, $440,435 and $235,162, respectively, to the 401(k) Plan.

NOTE M 
CONCENTRATION OF CREDIT RISK

For 2002, 2001 and 2000, the Company
had three, one and one customer(s) which accounted for 51%, 22% and 21% of total revenues,
respectively. At December 31, 2002 and 2001, the Company had aggregate accounts
receivable from these customers of $1,421,367 and $887,448, respectively. The loss of one
or more of these customers could have a materially adverse effect on the Companys
business.

NOTE N  RELATED
PARTY TRANSACTONS

The Company provides services to a
customer who is also a stockholder. The Company recognized revenue totaling $323,728,
$2,537,765 and $1,305,948 for 2002, 2001 and 2000, respectively, related to this
arrangement. The Company had an accounts receivable balance of $40,865 and $1,169,825 due
from this customer at December 31, 2002 and 2001, respectively.

The Company receives banking services
from a vendor who is also a stockholder. The Company paid $1,430,765 and $571,808 in fees
to this vendor in 2002 and 2001, respectively, and received interest income of $424,702
and $193,393 in 2002 and 2001, respectively.

In connection with the Series A and
Series B financing in 2000, the Company paid $975,000 to a director and stockholder of the
Company. This amount was charged to financing costs on the accompanying consolidated
statements of operations.

29

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