<PAGE>


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


                                    FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Period Ended April 30, 2001.

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

Commission file number    0-24201
                      ----------------

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



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

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



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


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

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

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



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

Common Stock, $.01 par value --- 21,858,629 shares as of May 31, 2001.


<PAGE>


                              CARREKER CORPORATION

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                                  PAGE
                                                                                                                  ----
<S>                   <C>                                                                                         <C>
PART 1:               FINANCIAL INFORMATION

        ITEM 1.       FINANCIAL STATEMENTS (UNAUDITED)

                      CONDENSED CONSOLIDATED BALANCE SHEETS AT APRIL 30, 2001 AND JANUARY 31, 2001                  3

                      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED                    4
                      APRIL 30, 2001 AND 2000

                      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED                    5
                      APRIL 30, 2001 AND 2000

                      NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS                                6


        ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS        10

        ITEM 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                   18



PART II:              OTHER INFORMATION

        ITEM 1.       LEGAL PROCEEDINGS                                                                            19

        ITEM 2.       CHANGES IN SECURITIES AND USE OF PROCEEDS                                                    19

        ITEM 3.       DEFAULTS UPON SENIOR SECURITIES                                                              19

        ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                          19

        ITEM 5.       OTHER INFORMATION                                                                            19

        ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K                                                             19


SIGNATURES                                                                                                         20
</TABLE>

                                      2


<PAGE>


PART I  FINANCIAL INFORMATION

      ITEM 1.  FINANCIAL STATEMENTS

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

<TABLE>
<CAPTION>
                                                             ASSETS

                                                                                          APRIL 30,            JANUARY 31,
                                                                                            2001                  2001
                                                                                     -----------------    -------------------
<S>                                                                                  <C>                  <C>
CURRENT ASSETS

    Cash and cash equivalents.............................................           $         55,052     $           63,098
    Short-term investments................................................                     13,581                 15,407
    Accounts receivable, net..............................................                     47,712                 44,746
    Federal income tax receivable.........................................                      6,116                  5,372
    Prepaid software royalties............................................                      6,606                    635
    Prepaid expenses and other current assets.............................                      3,554                  1,919
    Deferred income taxes.................................................                        868                    678
                                                                                     -----------------    -------------------

Total current assets......................................................                    133,489                131,855

Property and equipment, net of accumulated depreciation ..................                      6,196                  5,888
Software costs capitalized, net of accumulated amortization...............                     10,796                 10,222
Deferred income taxes.....................................................                         46                     29
Other assets..............................................................                        613                     80
                                                                                     -----------------    -------------------

Total assets..............................................................           $        151,140     $          148,074
                                                                                     =================    ===================


                                              LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

    Accounts payable......................................................           $          2,319     $            3,521
    Accrued compensation and benefits.....................................                      4,420                  1,925
    Other accrued expenses ...............................................                      2,747                  3,902
    Note payable .........................................................                        593                    880
    Income taxes payable .................................................                        800                    862
    Deferred revenue......................................................                      8,748                  9,010
                                                                                     -----------------    -------------------

Total current liabilities.................................................                     19,627                 20,100
Deferred income taxes.....................................................                      3,473                  2,916
                                                                                     -----------------    -------------------

Total liabilities.........................................................                     23,100                 23,016
                                                                                     -----------------    -------------------

STOCKHOLDERS' EQUITY Preferred stock, $.01 par value:

        2,000 shares authorized; no shares issued or outstanding..........                         --                     --
    Common stock, $.01 par value:
        100,000 shares authorized; 21,837 and 21,720 shares issued,                               218                    217
        respectively......................................................
    Additional paid-in capital............................................                     92,590                 90,873
    Deferred compensation.................................................                        (48)                    --
    Retained earnings.....................................................                     35,752                 34,440
    Less treasury stock, at cost:  1 common shares as of April 30, 2001 and
    January 31, 2001 .....................................................                       (472)                  (472)

                                                                                     -----------------    -------------------
Total stockholders' equity................................................                    128,040                125,058
                                                                                     -----------------    -------------------

Total liabilities and stockholders' equity................................           $        151,140     $          148,074
                                                                                     =================    ===================
</TABLE>


                             See accompanying notes.

                                      3


<PAGE>



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

<TABLE>
<CAPTION>
                                                                                        THREE MONTHS ENDED
                                                                                             APRIL 30,
                                                                                   -----------------------------
                                                                                        2001          2000
                                                                                   -------------- --------------
<S>                                                                                <C>            <C>
REVENUES:
  Consulting fees.........................................................           $    14,845   $    13,110
  Software license fees....................................................                5,235         4,173
  Software maintenance fees ...............................................                3,197         2,282
  Software implementation fees ............................................                2,127         2,495
                                                                                   -------------- -------------
    Total revenues  .......................................................               25,404        22,060

COST OF REVENUES:

  Consulting fees .........................................................               10,015         8,573
  Software license fees ...................................................                1,165         1,143
  Software maintenance fees ...............................................                1,300           535
  Software implementation fees ............................................                1,724         1,217
                                                                                   -------------- -------------
    Total cost of revenues ................................................               14,204        11,468
                                                                                   -------------- -------------
GROSS PROFIT ..............................................................               11,200        10,592
                                                                                   -------------- -------------

OPERATING COSTS AND EXPENSES:

  Selling, general and administrative .....................................                8,937         7,598
  Research and development ................................................                  867           984
                                                                                   -------------- -------------
    Total operating costs and expenses ....................................                9,804         8,582
                                                                                   -------------- -------------
Income from operations ....................................................                1,396         2,010

OTHER INCOME (EXPENSE):

  Interest income, net ....................................................                  770           388
  Other income (expense) ..................................................
                                                                                             (84)          (16)
                                                                                   -----------------------------
    Total other income ....................................................                  686           372

Income before provision for income taxes...................................                2,082         2,382
Provision for income taxes ................................................                  770           905
                                                                                   -------------- -------------

Net income ................................................................          $     1,312   $     1,477
                                                                                   ============== =============
Basic earnings per share...................................................          $      0.06   $      0.08
                                                                                   ============== =============
Diluted earnings per share.................................................          $      0.06   $      0.08
                                                                                   ============== =============
Shares used in computing basic earnings per share..........................               21,764        18,499
                                                                                   ============== =============
Shares used in computing diluted earnings per share........................               22,732        19,467
                                                                                   ============== =============
</TABLE>


                             See accompanying notes.

                                      4


<PAGE>


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

<TABLE>
<CAPTION>
                                                                                     THREE MONTHS ENDED
                                                                                          APRIL 30,
                                                                                 ----------------------------
                                                                                     2001           2000
                                                                                 -------------  -------------
<S>                                                                              <C>            <C>
OPERATING ACTIVITIES:

  Net income..............................................................           $  1,312       $  1,477
  Adjustments to reconcile net income to net cash used in operating activities:
    Depreciation and amortization of property and equipment...............                668            562
    Amortization of software costs capitalized ...........................              1,068            760
    Compensation earned under employee/director stock option plan.........                 18             66
    Tax benefit from exercises of stock options...........................                954             --
   Deferred income taxes..................................................                350             --
    Provision for doubtful accounts.......................................                187            329
    Changes in operating assets and liabilities
      Accounts receivable.................................................             (3,153)        (4,178)
      Prepaid expenses and other assets...................................             (2,168)          (384)
      Prepayment of software royalty......................................             (5,971)            --
      Accounts payable and accrued expenses ..............................                138         (1,978)
      Income taxes payable/receivable.....................................               (806)            --
      Deferred revenue....................................................               (262)         1,004
                                                                                 -------------- --------------
Net cash used in operating activities.....................................             (7,665)        (2,342)

INVESTING ACTIVITIES:
  Purchases of short-term investments.....................................             (1,348)            --
  Sales and maturities of short-term investments..........................              3,174             --
  Acquisition of AIS, net of cash acquired................................                 --         (2,300)
  Purchases of property and equipment.....................................               (976)          (649)
  Computer software costs capitalized.....................................             (1,642)          (235)
                                                                                 -------------- --------------
Net cash used in investing activities.....................................               (792)        (3,184)

FINANCING ACTIVITIES:

  Proceeds from exercises of stock options................................                698            273
  Payments on notes payable...............................................               (287)            --
                                                                                 -------------- --------------
Net cash provided by financing activities.................................                411            273
                                                                                 -------------- --------------
Net decrease in cash and cash equivalents.................................             (8,046)        (5,253)
Cash and cash equivalents at beginning of period..........................             63,098         25,973
                                                                                 --------------  --------------
Cash and cash equivalents at end of period................................           $ 55,052      $  20,720
                                                                                 ==============  ==============

Supplemental disclosures of cash flow information:

  Cash paid for interest..................................................           $     56      $       9
                                                                                 ==============  ==============
  Cash paid for income taxes, net.........................................           $    226      $   2,502
                                                                                 ==============  ==============
</TABLE>

                             See accompanying notes.


                                       5


<PAGE>


                              CARREKER CORPORATION
         NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
               FOR THE THREE MONTHS ENDED APRIL 30, 2001 AND 2000

                                     PART I

1        GENERAL

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

2.       BASIS OF PRESENTATION

    The accompanying condensed consolidated unaudited financial statements
and notes thereto have been prepared in accordance with the rules and
regulations of the Securities and Exchange Commission for Form 10-Q and
include all of the information and disclosures required by generally accepted
accounting principles for interim financial reporting. The results of
operations for the three months ended April 30, 2001 and 2000 are not
necessarily indicative of the results for the full year.

    These financial statements should be read in conjunction with the
financial statements, accounting policies and financial notes thereto
included in the Company's Annual Report on Form 10-K for the fiscal year
ended January 31, 2001 filed with the Securities and Exchange Commission. In
the opinion of management, the accompanying condensed consolidated unaudited
financial statements reflect all adjustments (consisting only of normal
recurring adjustments) which are necessary for a fair representation of
financial results for the interim periods presented.

    Certain prior year amounts have been reclassified to conform to the
current year presentation.

3.       CASH AND CASH EQUIVALENTS

    The Company considers all highly liquid investments with maturities of
three months or less when purchased to be cash equivalents. At April 30,
2001, cash equivalents consisted principally of highly liquid debt securities
of corporations and municipalities, maintained with nationally recognized
financial institutions.

4.       SHORT-TERM INVESTMENTS

    The Company considers investments with maturities of greater than three
months, when purchased, to be short-term investments based on the freely
tradable nature of the investments, and management's expectation that they
will not be held for greater than one year. Short-term investments consist
primarily of tax-exempt municipal bonds. Management determines the
appropriate classification of debt securities at the time of purchase and
reevaluates such designation as of each balance sheet date. All debt
securities have been determined by management to be available for sale.
Available for sale securities are stated at amortized cost, which
approximates fair value. Fair value of debt securities is determined based
upon current market value price quotes by security. As of April 30, 2001,
substantially all short-term investments mature in less than one year.

5.       ACCOUNTS RECEIVABLE

    Accounts Receivable include unbilled amounts that represent receivables
for work performed, or for software delivered for which billings upon mutual
agreement have not been presented to the customers. These receivables are
generally billed and collected within one year of the completion of the
service, or the delivery of the software. Accounts receivable include
$20,213,000 and $24,055,000 of unbilled receivables at April 30, 2001 and
January 31, 2001, respectively.

6.       EARNINGS PER SHARE

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

                                      6


<PAGE>


    The following table sets forth the computation of basic and diluted
earnings per share for the three months ended April 30, 2001 and 2000 (in
thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                                 THREE MONTHS ENDED
                                                                      APRIL 30,
                                                               ------------------------
                                                                  2001         2000
                                                               -----------  -----------
<S>                                                            <C>          <C>
Basic earnings per share:
   Net income.................................................    $ 1,312    $   1,477
                                                               ===========  ===========
   Weighted average shares outstanding........................     21,764       18,499
                                                               ===========  ===========
   Basic earnings per share...................................    $  0.06    $    0.08
                                                               ===========  ===========

Diluted earnings per share:
   Net income.................................................    $ 1,312    $   1,477
                                                               ===========  ===========

   Weighted average shares outstanding........................     21,764       18,499
   Assumed conversion of employee stock options...............        968          968
                                                               -----------  -----------

   Shares used in diluted earnings per share calculation......     22,732       19,467
                                                               ===========  ===========

   Diluted earnings per share.................................    $  0.06    $    0.08
                                                               ===========  ===========
</TABLE>


                                       7


<PAGE>
7.       BUSINESS SEGMENTS

    The tables below show revenues and income (loss) from operations for the
periods indicated for our four reportable business segments: Revenue
Enhancement, PaymentSolutions, Enterprise Solutions and CashSolutions. Our
customer projects are sold on a solution basis, so it is necessary to break
them down by segment and allocate accordingly. Included in "Corporate
Unallocated" are costs related to selling and marketing, unallocated
corporate overhead expense and general software management. Business segment
results include costs for research and development as well as product royalty
expense (in thousands):

<TABLE>
<CAPTION>
                                                                       THREE MONTHS ENDED APRIL 30, 2001
                                          -----------------------------------------------------------------------------------------
                                             Revenue                         Enterprise                     Corporate
                                           Enhancement     PaymentSolutions   Solutions    CashSolutions   Unallocated    Total
                                          ---------------  ---------------  -------------- --------------  -----------  -----------
<S>                                       <C>              <C>              <C>            <C>             <C>          <C>
Revenues:
    Consulting fees.....................       $   7,848        $     333       $   6,411      $     253      $     --   $ 14,845
    Software license fees...............              --            4,396              --            839            --      5,235
    Software maintenance fees...........              --            2,337              --            860            --      3,197
    Software implementation fees........              --            1,528              --            599            --      2,127
                                          ---------------  ---------------  -------------- --------------  ------------------------
       Total revenues...................       $   7,848        $   8,594       $   6,411      $   2,551      $     --   $ 25,404
                                          ===============  ===============  ============== ==============  ========================

Income (loss) from operations.......           $   4,512        $     854       $     932      $     455      $ (5,357)  $  1,396
                                          ===============  ===============  ============== ==============  ============= ==========
</TABLE>

<TABLE>
<CAPTION>
                                                                       THREE MONTHS ENDED APRIL 30, 2000
                                          -----------------------------------------------------------------------------------------
                                             Revenue                         Enterprise                     Corporate
                                           Enhancement     PaymentSolutions   Solutions    CashSolutions   Unallocated    Total
                                          ---------------  ---------------  -------------- --------------  -----------  -----------
<S>                                       <C>              <C>              <C>            <C>             <C>          <C>
Revenues:
    Consulting fees.....................       $   5,721       $    1,271        $  6,075      $      43      $      --   $ 13,110
    Software license fees...............              --            3,011              --          1,162             --      4,173
    Software maintenance fees...........              --            1,740              --            542             --      2,282
    Software implementation fees........              --            1,540             127            828             --      2,495
                                          ---------------  ---------------  -------------- --------------  ------------------------
       Total revenues...................       $   5,721       $    7,562        $  6,202      $   2,575      $      --   $ 22,060
                                          ===============  ===============  ============== ==============  ========================

Income (loss) from operations.......           $   3,316       $      206        $  2,270      $     284      $ (4,066)   $  2,010
                                          ===============  ===============  ============== ==============  ============= ==========
</TABLE>

    Revenues derived from a single major customer accounted for approximately
23.8% and 20.8% of total revenue for the three months ended April 30, 2001
and 2000, respectively. Revenue derived from our five largest customers
accounted for approximately 50.1% and 51.5% of total revenue for the three
months ended April 30, 2001 and 2000, respectively.

    The Company markets its solutions in several foreign countries. Revenue
for the quarters ended April 30, 2001 and 2000 are attributed to countries
based on locations of the customers (in thousands):

<TABLE>
<CAPTION>
                                            APRIL 30,                          APRIL 30,
                                              2001                                2000
                                    --------------------------        -----------------------------
<S>                                 <C>                 <C>           <C>                 <C>
United States.......................    $  17,206         67.7%           $  20,351        92.2%
United Kingdom......................        6,642         26.2                  196          .9
Australia...........................        1,047          4.1                1,099         5.0
Canada..............................          509          2.0                  414         1.9
                                    --------------    -----------     --------------    -----------
    Total Revenue...................    $  25,404        100.0%           $  22,060       100.0%
                                    ==============    ===========     ==============    ===========
</TABLE>
                                       8
<PAGE>

8.       STRATEGIC ALLIANCE

    Effective March 31, 2001, the Company entered into an alliance with
Exchange Applications, Inc. ("Xchange"). As part of this alliance the Company
will be the exclusive provider of Xchange EnAct to the banking industry. In
addition, the Company and Xchange have entered into a reseller agreement for
Xchange7. Xchange EnAct is one of five components included in Xchange 7 and
is customer relationship management software and methodology. As part of the
reseller agreement the Company paid $6.0 million in April 2001 and will pay
up to an additional $6.4 million through December 15, 2001 to Xchange as a
guaranteed royalty. Accordingly, the Company will record the payments during
fiscal 2001 as "Prepaid expenses and other current assets" and record the
related amortization as a "Cost of revenue". The agreement is renewable
annually at the discretion of the Company subject to the payment of
additional royalties.

    In addition, twelve employees from Xchange were hired by Carreker with
one employee receiving a loan of $500,000. The loan is pursuant to a Limited
Recourse Promissory Note. Pursuant to the terms of the Note, interest shall
accrue annually at a rate of five percent (5%) and all principal and accrued
interest is due in full on March 30, 2004.

9.       BUSINESS COMBINATIONS

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

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

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

10.      SUBSEQUENT EVENT

    On May 22, 2001, Carreker Corporation (the "Company") executed a
definitive agreement (the "Agreement") to acquire Check Solutions Company, a
New York general partnership ("Check Solutions"), pursuant to a partnership
interest purchase transaction to which the partners of Check Solutions, which
partners are wholly-owned subsidiaries of International Business Machines
Corporation and First Tennessee Bank, the principal banking subsidiary of
First Tennessee National Corporation (the "Acquisition"), are parties. Check
Solutions is a check and image processing software development and
installation business that services the payment-processing sector of the
financial industry.

    On June 6, 2001, the Company completed the acquisition of Check
Solutions. Under the terms of the Agreement, the Company will pay $109.5
million in cash and assume approximately $1.5 million in net liabilities of
Check Solutions. The acquisition will be accounted for as a purchase. The
Company plans to fund the acquisition through the use of $55 million of its
own cash and borrow $54.5 million under the credit agreement described below.

    On June 6, 2001, the company entered into a three-year revolving credit
agreement with a group of banks in an amount not to exceed $60.0 million.
Borrowings under the credit agreement bear interest equal to either the
greater of prime or federal funds rate plus 0.50% plus a margin ranging from
0.00% to 0.75% depending on the company's ratio of funded debt to EBITDA; or
LIBOR plus a margin equal to 1.50% to 2.25% depending on the company's ratio
of funded debt to EBITDA. Interest payments are due quarterly. The Company is
required to pay a commitment fee equal to 0.25% to 0.50% depending on the
company's ratio of funded debt to EBITDA on the unused amount of the
revolving credit agreement. The revolving credit agreement contains customary
affirmative and negative covenants including financial covenants requiring
the maintenance of specified interest coverage, ratio of EBITDA to funded
debt, and ratio of accounts receivable, cash and short-term investments to
funded debt.

                                      9


<PAGE>



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

    All statements other than statements of historical fact contained in this
report, including statements in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations" concerning our financial
position and liquidity, results of operations, prospects for future growth,
and other matters are forward-looking statements. Although we believe that
the expectations reflected in such forward-looking statements are reasonable,
no assurance can be given that such expectations will prove correct. Factors
that could cause our results to differ materially from the results discussed
in, or contemplated by, such forward-looking statements include the risks
described under "Risk Factors" in the company's Form 10-K for the fiscal year
ended January 31, 2001, on file with the Commission. Such risks include,
without limitation, risks associated with our acquisition of Check Solutions,
dependence on the banking industry, customer concentration, fluctuations in
our operating results, use of fixed-price or value-priced arrangements, lack
of long term agreements, ability to gain market acceptance, ability to manage
growth, dependence on key personnel, product liability, rapid technological
change and dependence on new products, dependence on third-party providers
and the Internet, our ability to increase usage software license fees over
lump sum software license fees, ability to attract and retain qualified
personnel, competition, potential strategic alliances and acquisitions,
proprietary rights, claims and legal proceedings, international operations,
use of independent contractors, changing government and tax regulations, and
anti-takeover provisions in our charter. All forward-looking statements in
this report are expressly qualified in their entirety by the cautionary
statements in this paragraph, in "Risk Factors" (as set forth in the
aforementioned Form 10-K) and elsewhere in this report.

OVERVIEW

    We are a leading provider of integrated consulting and software solutions
that enable banks to identify and implement e-finance solutions, increase
their revenues, reduce their costs and enhance their delivery of customer
services. We were founded in 1978 to provide consulting services to banks,
and we subsequently integrated software products into our banking solutions.
With our acquisition of Antinori Software, Inc. in 1997, we were able to
significantly enhance our portfolio of software products. Additionally, we
acquired Genisys Operations, Inc. in January 1999, Automated Integrated
Solutions, Inc. in February 2000 and X-Port Software, Inc. in May 2000, each
of which provided incremental added value to our product offerings. We
accounted for the acquisitions of Antinori and Genisys as a pooling of
interests. The acquisitions of Automated Integrated Solutions and X-Port
Software were accounted for as purchases.

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

    We seek to establish long-term relationships with our customers that will
lead to on-going projects utilizing our solutions. We are typically retained
to perform one or more discrete projects for a customer, and we use these
opportunities to extend our solutions into additional areas of the customer's
operations. To this end, a significant portion of our current revenues is
derived from customers who were customers in prior years, and we are
therefore dependent to a significant degree on our ability to maintain our
existing relationships with these customers.

    CONSULTING FEES. We employ three primary pricing methods in connection
with our delivery of consulting services. First, we may price our delivery of
consulting services on the basis of time and materials, in which case the
customer is charged agreed upon daily rates for services performed and
out-of-pocket expenses. In this case, we are generally paid fees and related
amounts on a monthly basis, and we recognize revenues as the services are
performed. Second, we may deliver consulting services on a fixed-price basis.
In this case, we are paid on a monthly basis or pursuant to an agreed upon
payment schedule, and we recognize revenues paid on a
percentage-of-completion basis. We recognize any anticipated losses on a
fixed-price contract when estimable. Third, we may deliver consulting
services pursuant to a value-pricing contract with the customer. In this
case, we are paid, on an agreed upon basis with the customer, either a
specified percentage of (1) the projected increased revenues and/or decreased
costs that are expected to be derived by the customer generally over a period
of up to twelve months following implementation of our solution or (2) the
actual increased revenues and/or decreased costs experienced by the customer
generally over a period of up to twelve months following implementation of
our solution, subject in either case to a maximum, if any is agreed to, on
the total amount of payments to be made to us. These contracts typically
provide for us to receive a percentage of the projected or actual increased
revenues and/or decreased costs, with payments to be made to us pursuant to
an agreed upon schedule ranging from one to twelve months in length. We
recognize revenues generated from consulting services in connection with
value-priced contracts based upon projected results only upon completion of
all services and agreement upon the actual fee to be paid (even though
billings for these services may be delayed by mutual agreement for periods
not to exceed twelve months). When fees are to be paid based on a percentage
of actual revenues and/or savings, we

                                      10


<PAGE>


recognize revenues only upon completion of all services and as the amounts of
actual revenues or savings are confirmed by the customer.

    We typically must first commit time and resources to develop projections
associated with value-pricing contracts before a bank will commit to purchase
our solutions, and we therefore assume the risk of making these commitments
with no assurance that the bank will purchase the solutions. We expect that
value-pricing contracts will account for an increasing percentage of our
revenues in the future. In addition, as a consequence of the shift toward the
use of more value-pricing contracts and due to the revenue recognition policy
associated with those contracts, our results of operations will likely
fluctuate significantly from period to period.

    Regardless of the pricing method employed by us in a given contract, we
are typically reimbursed on a monthly basis for out-of-pocket expenses
incurred on behalf of our customers, which expenses are netted against
reimbursements for consolidated financial statement reporting purposes.

    SOFTWARE LICENSE FEES. In the event that a software license is sold
either together with consulting services or on a stand-alone basis, we are
usually paid software license fees in one or more installments, as provided
in the customer's contract but not to exceed twelve months. We recognize
software license revenues in accordance with the American Institute of
Certified Public Accountants' Statement of Position 97-2, "Software Revenue
Recognition." Under SOP 97-2, we recognize software license revenues upon
execution of a contract and delivery of software, provided that the license
fee is fixed and determinable, no significant production, modification or
customization of the software is required, and collection is considered
probable by management.

    Although substantially all of our current software licenses provide for a
fixed price license fee, some of our payment electronification licenses
instead provide for usage fees, in which case fees are recognized and due on
a monthly basis. Software licenses that include a usage license fee have a
fixed term. We expect to increase this practice of charging license fees on a
usage basis in the future as part of our strategy to increase recurring
revenues and smooth our period-to-period revenues.

    SOFTWARE MAINTENANCE FEES. In connection with our sale of a software
license, a customer may elect to purchase software maintenance services. Most
of the customers that purchase software licenses from us also purchase
software maintenance services, which typically are renewed annually. We
charge an annual maintenance fee, which is typically a percentage of the
initial software license fee. The annual maintenance fee generally is paid to
us at the beginning of the maintenance period, and we recognize these
revenues ratably over the term of the related contract.

    SOFTWARE IMPLEMENTATION FEES. In connection with our sale of a software
license, a customer may elect to purchase software implementation services,
including software enhancements, patches and other software support services.
Most of the customers that purchase software licenses from us also purchase
software implementation services. We price our implementation services on a
time-and-materials or on a fixed-price basis, and we recognize the related
revenues as services are performed.

    Revenues for agreements that include one or more elements to be delivered
at a future date are recognized based on the relative fair value of those
elements determined using vendor-specific objective evidence. If fair values
have not been established for certain undelivered elements, revenue is
deferred until those elements have been delivered or their fair values have
been determined.

    In accordance with generally accepted accounting principles, we
capitalize software development costs incurred in developing a product once
technological feasibility of the product has been determined. These
capitalized software development costs also include amounts paid for software
that is purchased and that has reached technological feasibility. We amortize
capitalized software development costs on the basis of each product's
projected revenues or on a straight-line basis over the remaining economic
life of the product, which is generally three to four years. At April 30,
2001, our capitalized software development costs, net of accumulated
amortization, were $10.8 million.

                                      11


<PAGE>


    PRODUCTS AND SERVICES: We offer a wide range of innovative solutions that
enable banks to identify and implement e-finance solutions, increase their
revenues, reduce their costs and enhance their delivery of customer services.
By combining our consulting services with our proprietary technology
applications, we help banks improve their current operations and provide
access to the benefits of the Internet economy. Our offerings, uniquely
tailored to the needs of the banking industry, fall into four complementary
groups. These groups, Revenue Enhancement, PaymentSolutions, Enterprise
Solutions and CashSolutions, we believe offer products and services that,
when combined, deliver optimal benefits.

    REVENUE  ENHANCEMENT. Revenue Enhancement consulting services enable
banks to improve workflows, internal operational processes and customer
pricing structures.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
         SOLUTION                              DESCRIPTION                                        PRODUCTS OFFERED
-----------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>                                                     <C>
Revenue Enhancement        Provides consulting services that assess the            Revenue Enhancement Consulting
                           existing policies and procedures of banks to
                           increase their revenue streams and reduce interest
                           and operating expenses. These assessments generally
                           focus on a variety of a bank's operations,
                           including deposits, treasury management, commercial
                           lending, credit cards, automobile finance, mortgage
                           and other consumer lending operations. Revenue
                           Enhancement engagements typically take four to
                           seven months to complete and we believe are
                           relatively non-intrusive to the client.

EnAct                      EnAct  is one of the  five  components  included  in    EnAct
                           Xchange 7 and is a customer relationship  management
                           software   and   methodology.   Xchange   7  enables
                           companies to focus their  resources on customers who
                           represent  the  highest  potential  value,  and then
                           drive  customer  interactions   consistently  across
                           every customer  channel,  to increase  profitability
                           of its customer base.

-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
         SOLUTION                              DESCRIPTION                                        PRODUCTS OFFERED
-----------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>                                                     <C>
FraudLink                  Provides a comprehensive, automated approach to         FraudLink On-us, FraudLink Deposit, FraudLink
                           solving the growing problem of fraudulent financial     Kite, FraudLink PositivePay, FraudLink eTracker,
                           transactions, including bad checks drawn on banks       FraudLink PC, FraudLink Hold
                           for payment, fraudulent items deposited with banks
                           for credit and check kiting.

eXceptions                 Reduces the number of exceptions that banks             CheckFlow 1st Edition, Innovasion, Research and
                           experience, while using technology to transform         Adjustments
                           traditionally labor-intensive bank operations into
                           efficient elements of the total e-payment
                           transaction chain. It features a unique combination
                           of an automated check research, photo referral and
                           adjustment solutions, together with a flexible
                           workflow engine.

                                      12


<PAGE>


eRM                        Provides tools for customer relationship management     eRM Exceptions Management, eRM Risk
                           in an e-finance environment through a web-enabled       Management, eRM Treasury Services, eRM Image
                           decision support system that incorporates exception     Requestor
                           management, risk management, treasury services and
                           document image archival and retrieval.

eTrac                      Offers an automated track and trace system designed     Receive Sentry, Records
                           to monitor items from the time they enter a bank's
                           processing stream to final disposition, which
                           enables a bank to improve labor productivity by
                           channeling resources to the place they are most
                           needed.

eInform                    Focuses on performance-measurement by using the         eiLumen, eiPerform, eiStats, Super Query,
                           historical data generated by eTrac through which        eiMicr, eiQuality
                           end-users can analyze historical data to generate
                           key performance indicators, item processing volume
                           data, productivity statistics and quality control
                           benchmarks.

eTransactions              Enables banks to transition away from paper-based       CheckLink, CheckLink PC, Deposit Manager, Branch
                           payment systems to electronic by automating key         Truncation Management, Cnotes
                           elements of the processing stream as well as
                           improving a bank's yield from float management. The
                           aim of this product and service is to reduce and
                           eventually eliminate the movement of paper payment
                           instruments through the system, automate
                           error-prone payment processing functions,
                           consolidate payment information and provide a
                           measure of fraud prevention.

Float Management           Focuses on funding requirements and overall             Float Analysis System, Float Pricing System,
                           profitability by properly managing a bank's float       Consulting
                           through float analysis, pricing and a comprehensive
                           consulting practice to improve profitability,
                           reporting, workflow and check-clearing operations.
                           It provides critical activity summaries, aids in
                           creating multiple availability and pricing
                           schedules as well as pinpointing the
                           cost/profitability of any transaction or
                           relationship.

Recon Solutions            Improves efficiency and control over the daily          Bankrec
                           activity of balancing and reconciling financial
                           transactions. It redefines reconciliation processes
                           through technology and process improvements. In
                           addition to recommendations that improve
                           automation, control and risk management practices,
                           we employ an automated reconciliation software,
                           BankrecTM-Corporate, to provide significant gains
                           in efficiency and control.
</TABLE>


                                      13


<PAGE>


ENTERPRISE SOLUTIONS. Enterprise Solutions provides conversion, consolidation
and integration consulting services and products on a bank-wide basis. These
services and products are particularly in demand in the context of continuing
consolidation activity in the banking industry and the pressure by customers
on banks to define and implement their e-finance strategies. Key elements of
this group include:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
         SOLUTION                              DESCRIPTION                                        PRODUCTS OFFERED
-----------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>                                                     <C>
Enterprise                 Solutions Offers customized, bank-wide conversions,     Project Management, eSolutions, Integration,
                           consolidation and integration consulting solutions      Process Optimization, Line of Business
                           in areas beyond payments systems, including consulting  Consulting
                           and project management services and IT consulting for
                           various projects.

Strategic Services         Assists customers in planning and implementing a        BVIP, Customer Experience Consulting, Strategy
                           total e-finance and payment strategy.                   Consulting
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


CASHSOLUTIONS. CashSolutions optimizes the inventory management of a bank's
cash-on-hand, including managing how much is needed, when it is needed and where
it is needed. We believe our solutions reduce the amount of cash banks need to
hold in reserve accounts and as cash-on-hand, while ensuring a high level of
customer service through timely replenishment of cash in ATMs. Specific
solutions within this group include:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
         SOLUTION                              DESCRIPTION                                        PRODUCTS OFFERED
------------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>                                                     <C>
eiService                  Advances ATM monitoring and management through the      eiManager, eiGateway, eiForecaster
                           use of Internet connectivity to provide electronic
                           notification of cash and/or servicing needs.
                           Scalable to the largest ATM networks, it forecasts
                           cash and servicing needs, dispatches vendors for cash
                           replenishment and maintenance services, records
                           completed work and reconciles vendor invoices, all
                           via an electronic communication infrastructure.

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

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

eCashPro                   Reduces transaction cost of centralized currency        eVaultMaster II, eDepositMaster, eVaultForecaster
                           and ATM depositing processing, typically provides
                           significant cash reductions throughout the vault
                           network, establishes a standardized inventory
                           measurement process and allows a reduction in the
                           number of branch and vault employees, as well as
                           improves Internet-based customer reporting.
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      14


<PAGE>


RESULTS OF OPERATIONS

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

<TABLE>\
<CAPTION>
                                                                Three Months Ended
                                                                    April 30,
                                                            ---------------------------
                                                                2001          2000
                                                            -------------  ------------
<S>                                                         <C>            <C>
     Revenues:
       Consulting fees ..................................       58.4%          59.5%
       Software license fees ............................       20.6           18.9
       Software maintenance fees  .......................       12.6           10.3
       Software implementation fees .....................        8.4           11.3
                                                            -------------  ------------
         Total revenues  ................................      100.0          100.0

     Cost of revenues:
       Consulting fees ..................................       39.4           38.9
       Software license fees ............................        4.6            5.2
       Software maintenance fees ........................        5.1            2.4
       Software implementation fees .....................        6.8            5.5
                                                            -------------  ------------
         Total cost of revenues .........................       55.9           52.0

                                                            -------------  ------------
     Gross profit .......................................       44.1           48.0
                                                            -------------  ------------

     Operating costs and expenses:
       Selling, general and administrative ..............       35.2           34.4
       Research and development .........................        3.4            4.5
                                                            -------------  ------------
         Total operating costs and expenses .............       38.6           38.9

     Income from operations .............................        5.5            9.1
     Other income .......................................        2.7            1.7
                                                            -------------  ------------

     Income before provision for income taxes ...........        8.2           10.8
     Provision for income taxes .........................        3.0            4.1

                                                            -------------  ------------
     Net income .........................................        5.2   %         6.7  %
                                                            =============  ============
</TABLE>

                                      15


<PAGE>


REVENUES

    REVENUES: Our total revenues increased 15.2% to $25.4 million for the
quarter ended April 30, 2001 from $22.1 million for the quarter ended April 30,
2000.

    CONSULTING FEES: Revenues from consulting fees increased 13.2% to $14.8
million for the quarter ended April 30, 2001 from $13.1 million for the quarter
ended April 30, 2000. Consulting fees have increased primarily as a result of
continued demand for value-priced Revenue Enhancement services. Revenue
Enhancement revenues increased 37.2% to $7.8 million for the quarter ended April
30, 2001 from $5.7 million in the quarter ended April 30, 2000. Value-priced
engagements received a favorable reception from customers in both the United
States and in our foreign markets, especially the United Kingdom. Revenues
related to value-priced opportunities tend to fluctuate period to period and are
likely to fluctuate in future periods. Enterprise Solutions consulting services
increased 3.4% to $6.4 million in the quarter ended April 30, 2001 from $6.2
million in the quarter ended April 30, 2000. Enterprise Solutions was negatively
affected by a general decline in discretionary spending by banks for IT
consulting services.

    SOFTWARE LICENSE FEES: Revenues from software license fees increased 25.4%
to $5.2 million for the quarter ended April 30, 2001 from $4.2 million for the
quarter ended April 30, 2000. This increase was primarily precipitated by
increased demand for our FraudLink solutions.

    SOFTWARE MAINTENANCE FEES: Revenues from software maintenance fees increased
40.1% to $3.2 million for the quarter ended April 30, 2001 from $2.3 million for
the quarter ended April 30, 2000. Increases in software maintenance has been
driven by increased software sales during the last three fiscal quarters,
resulting in an increased number of customers and products under maintenance
contracts. Additionally, increases in software maintenance fees have been driven
by the acquisition of new products mainly within the CashSolutions group that
were already subject to maintenance contracts and by annual rate increases.

    SOFTWARE IMPLEMENTATION FEES: Revenues from software implementation fees
decreased 14.7% to $2.1 million for the quarter ended April 30, 2001 from $2.5
million for the quarter ended April 30, 2001. Decreases in software
implementations is due to our software revenue mix. The decrease in software
implementation fees is attributable to revenue derived from our FraudLink
solutions, which generally require less complicated and therefore less expensive
installations.

COST OF REVENUES

    COST OF REVENUES:  Overall, our total cost of revenues have increased due
primarily to greater personnel costs.

    COST OF CONSULTING: Cost of consulting increased 16.8% to $10.0 million for
the quarter ended April 30, 2001 from $8.6 million for the quarter ended April
30, 2000. Cost of consulting as a percentage of consulting fees increased to
67.5% for the three months ended April 30, 2001 from 65.4% for the three months
ended April 30, 2000. Increases in the cost of consulting were due primarily to
increased costs associated with related personnel cost. Cost of consulting
consists primarily of personnel costs associated with value priced efforts and
time and material contracts.

    COST OF SOFTWARE LICENSES: Cost of software licenses increased 1.9% to $1.2
million for the quarter ended April 30, 2001 from $1.1 million for the quarter
ended April 30, 2000. Cost of software licenses as a percentage of software
license fees decreased to 22.3% for the three months ended April 30, 2001 from
27.4% for the three months ended April 30, 2000. Costs of software licenses
includes amortization costs relating to capitalized software, as well as royalty
costs associated with sales of PaymentSolutions and CashSolutions software
products. Overall, the costs of software license fees were relatively unchanged
for the quarters ended April 30, 2001 and 2000, respectively. Increases in
software amortization, especially in the CashSolutions group, were offset by
decreases in software royalties.

    COST OF SOFTWARE MAINTENANCE: Cost of software maintenance increased 143% to
$1.3 million for the quarter ended April 30, 2001 from $535,000 for the quarter
ended April 30, 2000. Costs of software maintenance as a percentage of software
maintenance fees increased to 40.7% for the quarter ended April 30, 2001 from
23.4% for the quarter ended April 30, 2000. Cost of software maintenance
consists primarily of personnel costs and subcontract services associated with
providing customer support for software products sold. Increases in costs
associated with software maintenance reflect an increase in personnel and
contract service costs during the three months ended April 30, 2001.

                                      16


<PAGE>


    COST OF SOFTWARE IMPLEMENTATION: Cost of software implementation
increased 41.7% to $1.7 million for the quarter ended April 30, 2001 from
$1.2 million for the quarter ended April 30, 2000. Cost of software
implementation as a percentage of related fees increased to 81.1% for the
quarter ended April 30, 2001 from 48.8% for the quarter ended April 30, 2000.
Cost of software implementation consists primarily of personnel costs
associated with implementation, training, and providing customer support for
software products sold. Increases in costs associated with software
implementation reflect increased personnel costs.

OPERATING COSTS AND EXPENSES

    SELLING GENERAL AND ADMINISTRATIVE: Selling general and administrative
expenses increased 17.6% to $8.9 million for the quarter ended April 30, 2001
from $7.6 million for the quarter ended April 30, 2000. Selling, general and
administrative expenses generally consist of personnel costs associated with
selling, marketing, general management, software management, provision for
doubtful accounts as well as fees for professional services and other related
costs. The increase in these expenses reflected growth in additional
management, marketing, and administrative staff over the prior periods to
support our continued growth.

    RESEARCH AND DEVELOPMENT: Research and development expenses decreased
11.9% to $867,000 for the quarter ended April 30, 2001 from $984,000 for the
quarter ended April 30, 2000. The decrease reflects a higher rate of research
and development spending, however more of these costs have been spent on
projects that have reached technological feasibility and therefore were
capitalized during the quarter ended April 30, 2001.

    OTHER INCOME: Other income increased 84.4% to $686,000 for the quarter
ended April 30, 2001 from $372,000 for the quarter ended April 30, 2000.
Other income consists primarily of interest income on tax-exempt short-term
investments.

    PROVISION FOR INCOME TAXES: The provision for income taxes is based on
the estimated annual effective tax rate, and includes federal, state and
foreign income taxes. Our effective income tax rate was 37% for the three
months ended April 30, 2001 compared to 38% for the three months ended April
30, 2000.

LIQUIDITY AND CAPITAL RESOURCES

    As of April 30, 2001, we had $113.9 million of working capital, including
$55.1 million in cash and cash equivalents, as compared to $111.8 million of
working capital as of January 31, 2001, including $63.1 million of cash and
cash equivalents.

    During the quarter ended April 30, 2001, we used operating cash of $7.7
million. Operating cash was used to fund the Strategic Alliance with Xchange
Applications, Inc., which is discussed in the Notes to Condensed Consolidated
Unaudited Financial Statements. Another use of cash was the increase in
Accounts Receivable due to negotiated payment terms associated with certain
contracts which also resulted in an increase in days sales outstanding
described below.

    Average days' sales outstanding fluctuate for a variety of reasons,
including the timing of billings specified by contractual agreement, and
receivables for expense reimbursements. The following table contains the
quarterly days sales outstanding (DSO) with a comparative column, which adds
reimbursed expenses to the revenue portion of the computation:

<TABLE>
<CAPTION>
       QUARTER ENDED             DSO       DSO INCLUDING EXPENSE REIMBURSEMENTS*
       -------------             ---       ------------------------------------
<S>                              <C>       <C>
       April 30, 2001            169                        151
       January 31, 2001          131                        119
       October 31, 2000          120                        108
       July 31, 2000             123                        112
       April 30, 2000            142                        128
</TABLE>

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

    Cash used in investing activities during the three months ended April 30,
2001 was $792,000 and was characterized by the purchase of $976,000 of property
and equipment and the capitalization of $1.6 million of software costs offset by
a $1.8 million decrease in short-term investments.

                                      17


<PAGE>


    Cash provided by financing activities for the three months ended April
30, 2001 was $411,000 and primarily resulted from the exercise of stock
options.

    On November 3, 2000, the Securities and Exchange Commission declared
effective a Registration Statement on Form S-3 relating to our public
offering of 2,000,000 shares of common stock, at a price of $17.00 per share.
In connection with this offering, existing stockholders sold an additional
3,175,000 shares. The $32,011,000 of net proceeds that we received will be
used primarily to fund the cash portion of our acquisition of Check
Solutions, as further described below.

    Our future liquidity and capital requirements will depend upon numerous
factors. We believe our current cash and cash equivalents and short-term
investment balances and cash generated from operations will be sufficient to
meet our operating and capital requirements through at least the next twelve
months. As discussed in the Notes to Condensed Consolidated Unaudited
Financial Statements, we have acquired Check Solutions Company. We paid
$109.5 million in cash and funded the acquisition through the use of $55.0
million of our own cash and borrowed $54.5 million from a group of financial
institutions. However, there can be no assurance that we will not require
additional financing within this time frame. Our forecast of the period of
time through which our financial resources will be adequate to support our
operations is a forward-looking statement that involves risks and
uncertainties, and actual results could vary. Our failure to raise capital
when needed could have a material adverse effect on our business, financial
condition and results of operation.

RECENTLY ISSUED ACCOUNTING STANDARDS

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

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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

    Investments in both fixed rate and floating rate interest earning
instruments carry a degree of interest rate risk. Fixed rate securities may
have their fair market value adversely impacted due to a rise in interest
rates, while floating rate securities may produce less income than expected
if interest rates fall. Due in part to these factors, our future investment
income may fall short of expectations due to changes in interest rates or we
may suffer losses in principal if forced to sell securities which have seen a
decline in market value due to changes in interest rates. Our investment
securities are held for purposes other than trading. The weighted-average
interest rate on investment securities at April 30, 2001 was 4.07%. Amortized
costs of short-term investments held at April 30, 2001 was $13.6 million,
which approximates fair value.

                                      18


<PAGE>


                            PART II OTHER INFORMATION

ITEM 1.         LEGAL PROCEEDINGS

    The Company began to develop with Knowledge Based Systems, Inc.,
("KBSI"), its CashForecaster suite of products in 1996 pursuant to a
development contract. KBSI provided the algorithm-based components for these
products. This contract was subject of a lawsuit filed in September 2000 and
was pending in the United States District Court for the Northern District of
Texas. On April 9, 2001, the Company entered into a settlement agreement with
KBSI and on April 11, 2001 all legal proceedings were dismissed. This
settlement did not have a material adverse effect on the Company's business,
financial position or results of operations.

    We are subject from time to time to certain claims and legal proceedings
arising in the ordinary course of our business. Although we do not believe
that the cost or liability that may result from the resolution of currently
pending claims or legal proceedings against us will be material, there can be
no assurance in this regard.

ITEM 2.        CHANGES IN SECURITIES AND USE OF PROCEEDS

    None.

ITEM 3.        DEFAULTS UPON SENIOR SECURITIES

    None.

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

    None.

ITEM 5.  OTHER INFORMATION

    None.

ITEM 6.        EXHIBITS AND REPORTS ON FORM 8-K

               (a)  Exhibits

<TABLE>
<CAPTION>
                    NUMBER            EXHIBIT DESCRIPTION
                    ------            -------------------
                    <S>               <C>
                    10.1              Xchange Reseller Agreement between Exchange
                                      Applications, Inc. and the Company,
                                      dated as of  March 31, 2001

                    10.2              Employment Agreement between the Company and
                                      Robert Hall dated April 1, 2001.

                    10.3              Limited Recourse Promissory Note executed by
                                      Robert E. Hall in favor of the Company, as dated
                                      March 31, 2001.

                    10.4              Loan Agreement between Robert E. Hall and the
                                      Company dated March 31, 2001
</TABLE>

               (b)  Reports on Form 8-K
                    We filed the following Current Report on Form 8-K with the
                    Securities and Exchange Commission during the quarter ended
                    April 30, 2001:

                   (i)  A current report on Form 8-K dated February 22, 2001 was
                        filed with Securities and Exchange Commission on
                        February 22, 2001. (Item 9)

                                      19


<PAGE>


SIGNATURES

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

                              CARREKER CORPORATION

<TABLE>
<S>  <C>                                                 <C>    <C>
By:              /s/ JOHN D. CARREKER, JR.               Date:  JUNE 12, 2001
   ---------------------------------------------              ---------------------------------
     John D. Carreker, Jr.
     Chairman of the Board and
     Chief Executive Officer


By:             /s/ TERRY L. GAGE                        Date: JUNE 12, 2001
   ---------------------------------------------              ---------------------------------

     Terry L. Gage
     Executive Vice President and
     Chief Financial Officer
</TABLE>

                                      20