##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K


þ ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE ACT OF 1934


For the fiscal year ended December 31, 2004


OR


o TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE ACT OF 1934


For the transition period from

to


Commission file number 0-29291





Corillian Corporation


(Exact name of registrant as specified in its charter)


|                                                                                   |  |                                                      
|---------------------------------------------------------------------------------- |  | -----------------------------------------------------
|Oregon(State or other Jurisdiction of
     Incorporation or Organization)          |  | 91-1795219(I.R.S. Employer
    Identification Number)
|                                                                                  
|3400 NW John Olsen Place Hillsboro, Oregon(Address of principal executive offices) |  | 97124(Zip Code)                                      

(503) 629-3300


(Telephone number)


Securities registered pursuant to Section 12(b) of the
Act:


None


Securities registered pursuant to Section 12(g) of the
Act:


Common Stock, no par value


(Title of class)


þ o


o


þ o




DOCUMENTS INCORPORATED BY REFERENCE












---



FORM 10-K







TABLE OF CONTENTS


|             |  |                                                                                                                          |  |  |    | 
|------------ |  | ------------------------------------------------------------------------------------------------------------------------ |  |  | -- | 
|PART I      
|Item 1.      |  | Business                                                                                                                 |  |  | 2  | 
|Item 2.      |  | Properties                                                                                                               |  |  | 20 | 
|Item 3.      |  | Legal Proceedings                                                                                                        |  |  | 21 | 
|Item 4.      |  | Submission of Matters to a Vote of Security
    Holders                                                                  |  |  | 21 | 
|PART II     
|Item 5.      |  | Market for the Registrants Common
    Equity, Related Shareholder Matters and Issuer Purchases of
    Equity Securities |  |  | 21 | 
|Item 6.      |  | Selected Financial Data                                                                                                  |  |  | 22 | 
|Item 7.      |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                                |  |  | 23 | 
|Item 7A.     |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                           |  |  | 33 | 
|Item 8.      |  | Financial Statements and Supplementary
    Data                                                                          |  |  | 34 | 
|Item 9.      |  | Changes in and Disagreements With
    Accountants on Accounting and Financial Disclosures                                |  |  | 35 | 
|Item 9A.     |  | Controls and Procedures                                                                                                  |  |  | 35 | 
|Item 9B.     |  | Other Information                                                                                                        |  |  | 37 | 
|PART III    
|Item 10.     |  | Directors and Executive Officers of the
    Registrant                                                                   |  |  | 37 | 
|Item 11.     |  | Executive Compensation                                                                                                   |  |  | 37 | 
|Item 12.     |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Shareholder Matters                       |  |  | 37 | 
|Item 13.     |  | Certain Relationships and Related
    Transactions                                                                       |  |  | 39 | 
|Item 14.     |  | Principal Accountant Fees and Services                                                                                   |  |  | 39 | 
|PART IV     
|Item 15.     |  | Exhibits and Financial Statement
    Schedules                                                                           |  |  | 40 | 
|EXHIBIT 21.1
|EXHIBIT 23.1
|EXHIBIT 31.1
|EXHIBIT 31.2
|EXHIBIT 32.1



1



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##### Table of Contents






PART I







|        |         
|------- | --------
|Item 1. | Business

Special Note Regarding Forward-Looking Statements


This Annual Report on Form 10-K and the documents
incorporated herein by reference contain forward-looking
statements within the meaning of the Private Securities
Litigation Reform Act of 1995. All statements other than
statements of historical fact made in this Annual Report on
Form 10-K are forward-looking including but not limited to,
statements regarding industry prospects; future results of
operations or position; Corillians expectations and
beliefs regarding future revenue growth; the future capabilities
and functionality of Corillians products and services;
Corillians strategies and intentions regarding
acquisitions; the outcome of any litigation to which Corillian
is a party; Corillians accounting and tax policies;
Corillians future strategies regarding investments,
product offerings, research and development, market share, and
strategic relationships and collaboration; Corillians
dividend policies; Corillians future capital requirements;
and Corillians intentions and expectations regarding
credit facilities. These statements relate to future events or
Corillians future financial performance. In some cases,
you can identify forward-looking statements by terminology
including intend, could,
may, will, should,
expect, plan, anticipate,
believe, estimate, predict,
potential, future, or
continue, the negative of these terms or other
comparable terminology. These statements are only predictions.
Actual events or results may differ materially from those
expressed or implied in such forward-looking statements. In
evaluating these statements, you should specifically consider
various factors, including the risks described in greater detail
in Item 1, Part 1, Business  Risk
Factors, Corillians registration statements and
reports filed with the Securities and Exchange Commission, and
contained in Corillians press releases from time to
time.


Corillian does not guarantee future results, levels of
activity, performance or achievements. Corillian does not intend
to update any of the forward-looking statements after the date
of this document to conform them to actual results or to changes
in its expectations.


Overview






www.corillian.com/investors/


2



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Industry Background






| |   |                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------
| |  | twenty-four hour, real-time, secure access to information and
    financial services from any Internet device;
|
| |  | convenient and inexpensive bill presentment and payment tools;                                                
|
| |  | improved personal finance management; and                                                                     
|
| |  | the presentation of comprehensive consolidated financial data.                                                





The Corillian Solution






3



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Accelerated Time to Market.


Highly Scalable and Extensible Platform.


Flexibility and Control.


Advanced Technology and Continued Innovation.


Reduced Cost of Internet Operations.


Strategy




Increase Market Share.


Expand Breadth of Product and Service Offerings.


4



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Leverage and Expand Strategic Relationships.


Collaborate with Technology Leaders.


Products and Services






| |                       
| | ----------------------
| | Corillian
    Voyager





| |                              
| | -----------------------------
| | Line of Business Applications

Consumer Banking.


Small Business Banking.


Corporate Banking.


5



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Credit Card Management.


Wealth Management.




| |                        
| | -----------------------
| | Enterprise Applications

Corillian Payments.


Corillian Alerts.


Corillian eStatements.


Corillian OFX.


Corillian Register.


ACH and Wire Transfers.


6



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Enterprise Entitlements.


Corillian Security Solutions.




| |   |                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------
| |  | Corillian Fraud Detection System. Early Warning system
    for Internet-based attacks against web sites;                            
|
| |  | Web site Investigation & Forensics. Tools and
    techniques for separating normal from abusive or fraudulent web
    site activity;
|
| |  | Secure Coding Workshop. Workshop covering
    state-of-the-art secure coding techniques for web sites;                              
|
| |  | Delivery System Security Review. Delivery system review
    to help ensure resistance to security threats; and                      
|
| |  | Code-level Security Review. Code-level review by Sr.
    Security Engineers for potential security issues
    (Voyager-Specific).   



| |                      
| | ---------------------
| | Professional Services



Implementation Services.


Hosting Services.


Consulting Services.


7



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Support Services.


Training Services.


Customers




Systems and Technology




| |                  
| | -----------------
| | Corillian Voyager







| |                     
| | --------------------
| | Corillian Technology





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Scalable Framework. Each of the layers of Corillian
    Voyager is a software component that can be replicated within
    the Corillian Voyager configuration for redundancy and
    scalability. By adding an incremental component, work is
    distributed among servers across a network.                                                                                                                                                                                                                                                                   
|
| |  | Flexible Interfaces. Corillians solutions are
    designed to integrate with virtually any existing host system,
    providing a means for financial service providers to easily
    bring existing applications to the Internet. Corillians
    host server technology allows multiple simultaneous access to
    different existing and third-party systems. In addition, browser
    interfaces are customizable in form and function, allowing the
    financial service provider to display unique branding,
    advertising, and extended functionality.
|
| |  | Advanced Architecture. The open architecture of Corillian
    Voyager enables flexible integration and rapid deployment of
    Corillian line of business applications, as well as
    Corillian-certified applications                                                                                                                                                                                                                                                                                                                                         

8



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | from Corillian partners. Powered by Microsoft® Windows
    Server 2003 and Microsoft.NET, Corillian Voyager is built to
    incorporate emerging Internet finance technology. This
    architectural standard allows Corillians applications to
    interoperate with other application servers, such as teller and
    call center platforms and automated teller machine delivery
    systems.                                                                                                                                                                                                                                                                                                                           
|
| |  | Open Financial Exchange Data Standard. Corillians
    solutions employ the Open Financial Exchange data standard,
    which was developed by Microsoft, CheckFree and Intuit to
    provide a unified specification for the electronic exchange of
    financial data among financial institutions, businesses and
    consumers over the Internet. This data specification
    standardizes the connection to financial data centers and to
    personal financial management software. By using the Open
    Financial Exchange data standard, all financial information
    retrieved from a financial institution can be quickly downloaded
    to consumer software programs, such as Microsoft Money and
    Quicken.

Strategic Alliances and Partnerships






| |         
| | --------
| | CashEdge





| |          
| | ---------
| | CheckFree





| |          
| | ---------
| | Microsoft





| |    
| | ---
| | NCR

tm


9



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| |               
| | --------------
| | Princeton eCom





| |       
| | ------
| | Yodlee



Sales and Marketing








10



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Research and Development






| |   |                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Enhancements to Existing Products and Services. Corillian
    continues to update and modify its solutions to enhance quality,
    performance and scalability, to extend functionality to address
    Corillians customers changing needs, and to take
    advantage of improved technology within Corillians
    industry.                                                            
|
| |  | Developing New Products and Services. Corillian is
    working to expand its product and service offerings. Corillian
    intends to expand its product offerings to include new consumer
    banking functions, as well as applications for wealth management
    and corporate cash management.                                                                                          
|
| |  | Participating in Technology Testing and Collaboration.
    Corillian has participated in the development of industry data
    standards and will continue to collaborate with companies to
    develop new technologies and to encourage the adoption and
    implementation of open standards that can foster and simplify
    the exchange of financial information through the Internet.

Competition








| |   |                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------
| |  | Corillians market presence with financial service
    providers;                                       
|
| |  | the reliability, scalability, security, speed and performance of
    Corillians solutions and services;
|
| |  | the comprehensiveness, ease of use and service level of
    Corillians products and services;          
|
| |  | Corillians ability to continue to interface with financial
    service providers and their technology; 
|
| |  | Corillians pricing policies and the pricing policies of
    its competitors and suppliers;             
|
| |  | the timing of introductions of new products and services by
    Corillian and its competitors; and      
|
| |  | Corillians ability to meet its customers
    expectations.                                            



11



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Intellectual Property








Government Regulation










12



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Backlog




Employees




Certain Financial Information




Risk Factors


You should carefully consider the following factors regarding
information included in this Annual Report. The risks and
uncertainties described below are not the only ones Corillian
faces. Additional risks and uncertainties not presently known to
Corillian or that Corillian currently deems immaterial also may
impair its business operations. If any of the following risks
actually occur, Corillians business, financial condition
and operating results could be materially adversely affected.




| |                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | While Corillian Generated Net Income in the Last Seven
    Fiscal Quarters, Corillian Has a History of Losses and May Incur
    Losses in Future Periods if it is Not Able to, Among Other
    Things, Increase Its Sales to New and Existing Customers





| |                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Corillians Quarterly Results Fluctuate Significantly
    and May Fall Short of Anticipated Levels, Which May Cause the
    Price of Its Common Stock to Decline



13



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| |                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If Corillian, or Its Implementation Partners, Do Not
    Effectively Implement Corillians Solutions, Corillian May
    Not Achieve Anticipated Revenues or Gross Margins







| |                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Corillians Products Lengthy Sales Cycles May
    Cause Revenues and Operating Results to Be Unpredictable and to
    Vary Significantly from Period to Period





| |                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Corillian May Not Achieve Anticipated Revenues If
    Corillian Does Not Successfully Introduce New Products or
    Develop Upgrades or Enhancements to Its Existing Products





| |                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A Small Number of Customers Account for a Substantial
    Portion of Corillians Revenues in Each Period;
    Corillians Results of Operations and Financial Condition
    Could Suffer if it Loses Customers or Fails to Add Additional
    Customers to Its Customer Base



14



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| |                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| | Corillian Partners May Be Unable to Fulfill Their Service
    Obligations and Cause Corillian to Incur Penalties or Other
    Expenses with Its Customers





| |                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------
| | Corillian May Need to Raise Additional Financing to
    Fund Its Operations and May Not be Able to Raise Funds on
    Beneficial Terms or at All





| |                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Corillians Facility and Operations May Be Disabled
    by a Disaster or Similar Event, Which Could Damage Its
    Reputation and Require Corillian to Incur Financial Loss





| |                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Competition in the Market for Internet-Based Financial
    Services is Intense and Could Reduce Corillians Sales and
    Prevent Corillian from Achieving Profitability



15



---



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| |   |                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a longer operating history;                                                                                                                                                                                     
|
| |  | more extensive name recognition and marketing power;                                                                                                                                                            
|
| |  | preferred vendor status with Corillians existing and
    potential customers; and                                                                                                                              
|
| |  | Significantly greater financial, technical, marketing and other
    resources, giving them the ability to respond more quickly to
    new or changing opportunities, technologies and customer
    requirements.





| |                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------
| | Consolidation in the Financial Services Industry Could
    Reduce the Number of Corillians Customers and Potential
    Customers







| |                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Corillian May Incur Substantial Losses from Non-Operating
    Activities, Such as Its Minority Investments in Other Companies,
    or Lose the Entire Amount Corillian Has Invested in Other
    Companies



16



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| |                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------
| | If Corillian Loses Key Personnel, Corillian Could
    Experience Reduced Sales, Delayed Product Development and
    Diversion of Management Resources





| |                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If Corillian Does Not Develop International Operations as
    Expected or Fails to Address International Market Risks,
    Corillian May Not Achieve Anticipated Sales Growth





| |   |                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------
| |  | longer accounts receivable collection cycles;                                                                            
|
| |  | expenses associated with localizing products for foreign markets;                                                        
|
| |  | difficulties in managing operations and partners across
    disparate geographic areas;                                  
|
| |  | difficulties in hiring qualified local personnel, finding
    qualified partners and complying with disparate labor laws;
|
| |  | foreign currency exchange rate fluctuations;                                                                             
|
| |  | difficulties associated with enforcing agreements and collecting
    receivables through foreign legal systems; and      
|
| |  | unexpected changes in regulatory requirements that impose
    multiple conflicting tax laws and regulations.             





| |                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------
| | Acquisitions May Be Costly and Difficult to Integrate,
    Divert Management Resources or Dilute Shareholder Value





| |   |                                                                                                
| | - | -----------------------------------------------------------------------------------------------
| |  | issue stock that would dilute its current shareholders
    percentage ownership;              
|
| |  | incur debt and assume liabilities; and                                                         
|
| |  | incur amortization expenses related to intangible assets or
    incur large impairment charges.

17



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| |   |                                                                                       
| | - | --------------------------------------------------------------------------------------
| |  | problems combining the purchased operations, technologies or
    products;            
|
| |  | problems integrating the business models of acquisition targets
    with Corillians; 
|
| |  | unanticipated costs;                                                                  
|
| |  | diversion of managements attention from Corillians
    core business;               
|
| |  | adverse effects on existing business relationships with
    suppliers and customers;  
|
| |  | entering markets in which Corillian has no or limited prior
    experience; and       
|
| |  | potential loss of key employees, particularly those of the
    purchased organization.



| |                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If Corillian Becomes Subject to Intellectual Property
    Infringement Claims, These Claims Could Be Costly and Time
    Consuming to Defend, Divert Management Attention or Cause
    Product Delays







| |                                                                                           
| | ------------------------------------------------------------------------------------------
| | Network or Internet Security Problems Could Damage
    Corillians Reputation and Business







| |                                                                
| | ---------------------------------------------------------------
| | New Technologies Could Render Corillians Products
    Obsolete



18



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| |                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Defects in Corillians Solutions and System Errors in
    Its Customers Data Processing Systems After Installing
    Corillians Solutions Could Result in Loss of Revenues,
    Delay in Market Acceptance and Injury to Corillians
    Reputation





| |                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------
| | Corillians Products and Services Must Interact With
    Other Vendors Products, Which May Not Function
    Properly





| |                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------
| | If Corillian Becomes Subject to Product Liability
    Litigation, it Could be Costly and Time Consuming to
    Defend





| |                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If Corillian is Unable to Protect Its Intellectual
    Property, Corillian May Lose a Valuable Competitive Advantage or
    be Forced to Incur Costly Litigation to Protect Its
    Rights





19



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| |                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Increasing Government Regulation of the Internet and the
    Financial Services Industry Could Limit the Market for
    Corillians Products and Services, Impose on Corillian
    Liability for Transmission of Protected Data and Increase Its
    Expenses














|        |           
|------- | ----------
|Item 2. | Properties





20



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|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings








|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders






PART II







|        |                                                                                                                         
|------- | ------------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for the Registrants Common Equity, Related
    Shareholder Matters and Issuer Purchases of Equity
    Securities



|                             |  |      |      |  |     |   |      | 
|---------------------------- |  | ---- | ---- |  | --- | - | ---- | 
|                             |  | High |      |  | Low |  
|                             |  |      |      |  |     |  
|Year ended December 31, 2003 |  |      |      |  |     |   |      | 
|First Quarter                |  | $    | 1.00 |  |     | $ | 0.61 | 
|Second Quarter               |  | $    | 2.10 |  |     | $ | 0.64 | 
|Third Quarter                |  | $    | 4.20 |  |     | $ | 1.70 | 
|Fourth Quarter               |  | $    | 7.45 |  |     | $ | 3.52 | 
|Year ended December 31, 2004 |  |      |      |  |     |   |      | 
|First Quarter                |  | $    | 8.15 |  |     | $ | 4.30 | 
|Second Quarter               |  | $    | 5.69 |  |     | $ | 3.72 | 
|Third Quarter                |  | $    | 6.25 |  |     | $ | 4.04 | 
|Fourth Quarter               |  | $    | 6.05 |  |     | $ | 4.38 | 





21



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|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data



|                                           |         |                                              |        |        |      |   |        |        |  |   |         |        |   |      |         |        |   |   |         |        |  
|------------------------------------------ | ------- | -------------------------------------------- | ------ | ------ | ---- | - | ------ | ------ |  | - | ------- | ------ | - | ---- | ------- | ------ | - | - | ------- | ------ | -
|                                           |         | Year Ended December 31,                      |       
|                                           |         |                                              |       
|                                           |         | 2004                                         |        |        | 2003 |   |        | 2002   |  |   | 2001    |        |   | 2000 |        
|                                           |         |                                              |        |        |      |   |        |        |  |   |         |        |   |      |        
|                                           |         | (In thousands, except for per share amounts) |       
|Consolidated Statement of Operations Data: |         |                                              |        |        |      |   |        |        |  |   |         |        |   |      |         |        |   |   |         |       
|Revenues                                   |         | $                                            | 50,794 |        |      | $ | 46,132 |        |  | $ | 39,141  |        |   | $    | 53,848  |        |   | $ | 30,853  |       
|Gross profit                               |         |                                              | 32,345 |        |      |   | 25,631 |        |  |   | 18,719  |        |   |      | 23,491  |        |   |   | 8,354   |       
|Income (loss) from operations              |         |                                              | 11,185 | (1)    |      |   | 6,396  |        |  |   | (15,910 | )(2)   |   |      | (48,998 | )(3)   |   |   | (35,169 | )     
|Net income (loss)                          |         |                                              | 10,480 |        |      |   | 5,126  |        |  |   | (17,257 | )      |   |      | (49,301 | )      |   |   | (33,255 | )     
|Net income (loss) per share:               |         |                                              |        |        |      |   |        |        |  |   |         |        |   |      |         |        |   |   |         |       
|                                           | Basic   |                                              | $      | 0.28   |      |   | $      | 0.14   |  |   | $       | (0.49  | ) |      | $       | (1.42  | ) |   | $       | (1.33  | )
|                                           | Diluted |                                              | $      | 0.26   |      |   | $      | 0.14   |  |   | $       | (0.49  | ) |      | $       | (1.42  | ) |   | $       | (1.33  | )
|Weighted average shares:                   |         |                                              |        |        |      |   |        |        |  |   |         |        |   |      |         |        |   |   |         |       
|                                           | Basic   |                                              |        | 37,727 |      |   |        | 36,431 |  |   |         | 35,477 |   |      |         | 34,645 |   |   |         | 25,106 |  
|                                           | Diluted |                                              |        | 40,474 |      |   |        | 37,813 |  |   |         | 35,477 |   |      |         | 34,645 |   |   |         | 25,106 |  






|    |                                                                                                                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Corillian recorded an impairment charge of $491 during the year
    ended December 31, 2004. See Note 9 to the
    consolidated financial statements for further discussion.                                                                
|   
|(2) | Corillian recorded restructuring and litigation settlement
    charges of $682 and $2,580, respectively, during the year ended
    December 31, 2002. See Notes 7 and 9 to the
    consolidated financial statements for further discussion.
|   
|(3) | Corillian recorded restructuring and impairment charges of
    $18,097 during the year ended December 31, 2001.                                                                                                                             

|                                               |  |                                              |        |  |      |   |        |      |  |   |        |  |  |      |        |  |  |   |         | 
|---------------------------------------------- |  | -------------------------------------------- | ------ |  | ---- | - | ------ | ---- |  | - | ------ |  |  | ---- | ------ |  |  | - | ------- | 
|                                               |  | Year Ended December 31,                      |       
|                                               |  |                                              |       
|                                               |  | 2004                                         |        |  | 2003 |   |        | 2002 |  |   | 2001   |  |  | 2000 |       
|                                               |  |                                              |        |  |      |   |        |      |  |   |        |  |  |      |       
|                                               |  | (In thousands, except for per share amounts) |       
|Consolidated Balance Sheet Data:               |  |                                              |        |  |      |   |        |      |  |   |        |  |  |      |        |  |  |   |         | 
|Cash and cash equivalents                      |  | $                                            | 29,200 |  |      | $ | 16,943 |      |  | $ | 13,221 |  |  | $    | 15,203 |  |  | $ | 20,850  | 
|Restricted cash                                |  |                                              |       |  |      |   |       |      |  |   | 1,003  |  |  |      |       |  |  |   |        | 
|Short-term investments                         |  |                                              | 10,150 |  |      |   | 9,901  |      |  |   | 4,410  |  |  |      | 2,500  |  |  |   | 28,300  | 
|Working capital                                |  |                                              | 29,417 |  |      |   | 14,417 |      |  |   | 5,924  |  |  |      | 17,759 |  |  |   | 41,299  | 
|Total assets                                   |  |                                              | 55,269 |  |      |   | 42,818 |      |  |   | 37,479 |  |  |      | 50,243 |  |  |   | 101,158 | 
|Debt and capital leases, long-term
    portion |  |                                              | 629    |  |      |   | 1,075  |      |  |   | 1,600  |  |  |      | 3,730  |  |  |   | 5,265   | 
|Total shareholders equity                     |  |                                              | 32,602 |  |      |   | 19,554 |      |  |   | 13,121 |  |  |      | 28,104 |  |  |   | 72,593  | 
|Cash dividends declared                        |  |                                              |       |  |      |   |       |      |  |   |       |  |  |      |       |  |  |   |        | 

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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

Forward-Looking Statements


The following discussion contains forward-looking statements
that involve risks and uncertainties. Our actual results could
differ materially from those anticipated in the forward-looking
statements as a result of certain factors, including the risks
described in greater detail in Item 1, Part 1,
Business  Risk Factors, and elsewhere in
this Form 10-K. See Part I 
Item 1  Special Note Regarding
Forward Looking Statements.




Overview










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Critical Accounting Policies and Estimates






Revenue Recognition. Software
Revenue Recognition, Modification of SOP No. 97-2, Software Revenue
Recognition, with Respect to Certain Transactions. Accounting for Performance
of Construction-Type and Certain Production-Type Contracts. Application of AICPA Statement
of Position 97-2 to Arrangements that Include the Right to Use
Software Stored on Another Entitys Hardware.






25



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Income Taxes.


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Results of Operations




|                                      |                                                   |              |      |      |      |  |      |      |  |  |       |      | 
|------------------------------------- | ------------------------------------------------- | ------------ | ---- | ---- | ---- |  | ---- | ---- |  |  | ----- | ---- | 
|                                      |                                                   | Year Ended   |     
|                                      |                                                   | December 31, |     
|                                      |                                                   |              |     
|                                      |                                                   | 2004         |      |      | 2003 |  |      | 2002 | 
|                                      |                                                   |              |      |      |      |  |      |      | 
|Revenues                              |                                                   |              | 100  | %    |      |  | 100  | %    |  |  | 100.0 | %   
|Cost of revenues                      |                                                   |              | 36.3 |      |      |  | 44.4 |      |  |  | 52.2  |     
|                                      |                                                   |              |      |      |      |  |      |      | 
|Gross profit                          |                                                   |              | 63.7 |      |      |  | 55.6 |      |  |  | 47.8  |     
|                                      |                                                   |              |      |      |      |  |      |      | 
|Operating expenses:                   |                                                   |              |      |      |      |  |      |      |  |  |       |     
|                                      | Sales and marketing                               |              |      | 14.3 |      |  |      | 13.9 |  |  |       | 29.9 | 
|                                      | Research and development                          |              |      | 13.2 |      |  |      | 12.9 |  |  |       | 19.8 | 
|                                      | General and administrative                        |              |      | 13.2 |      |  |      | 14.8 |  |  |       | 28.2 | 
|                                      | Amortization of deferred stock-based compensation |              |      |     |      |  |      | 0.1  |  |  |       | 2.3  | 
|Litigation settlement charges         |                                                   |              |     |      |      |  |     |      |  |  | 6.6   |     
|Restructuring and impairment charges  |                                                   |              | 1.0  |      |      |  |     |      |  |  | 1.7   |     
|                                      |                                                   |              |      |      |      |  |      |      | 
|Total operating expenses              |                                                   |              | 41.7 |      |      |  | 41.7 |      |  |  | 88.5  |     
|                                      |                                                   |              |      |      |      |  |      |      | 
|Income (loss) from operations         |                                                   |              | 22.0 |      |      |  | 13.9 |      |  |  | (40.7 | )   
|                                      |                                                   |              |      |      |      |  |      |      | 
|Other income (expenses), net          |                                                   |              | (1.1 | )    |      |  | (2.5 | )    |  |  | (3.4  | )   
|                                      |                                                   |              |      |      |      |  |      |      | 
|Net income (loss) before income taxes |                                                   |              | 20.9 | %    |      |  | 11.4 | %    |  |  | (44.1 | )%  
|Income taxes                          |                                                   |              | 0.3  |      |      |  | 0.3  |      |  |  |      |     
|                                      |                                                   |              |      |      |      |  |      |      | 
|Net income (loss)                     |                                                   |              | 20.6 | %    |      |  | 11.1 | %    |  |  | (44.1 | )%  
|                                      |                                                   |              |      |      |      |  |      |      | 



| |                                                                
| | ---------------------------------------------------------------
| | Comparison of Years Ended December 31, 2004, 2003,
    and 2002

Revenues










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Cost of Revenues








28



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Operating Expenses


Sales and Marketing Expenses.






Research and Development Expenses.






Research and
Development Arrangements


General and Administrative Expenses.




29



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Amortization of Deferred Stock-based Compensation.


Litigation Settlement Charges.


Restructuring and Impairment Charges.




30



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Other Income (Expense), Net






Income Taxes






Liquidity and Capital Resources






31



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Accounting for
Costs Associated with Exit or Disposal Activities, Accounting for the Impairment or
Disposal of Long-Lived Assets,








|                              |  |                |        |           |        |   |       |       |  |     |       |  |           |         |       |  |  |   |       | 
|----------------------------- |  | -------------- | ------ | --------- | ------ | - | ----- | ----- |  | --- | ----- |  | --------- | ------- | ----- |  |  | - | ----- | 
|                              |  |                |        | Less than |        |   | 1-3   |       |  | 3-5 |       |  | More than |        
|                              |  | Total          |        |           | 1 Year |   |       | Years |  |     | Years |  |           | 5 Years |      
|                              |  |                |        |           |        |   |       |       |  |     |       |  |           |         |      
|                              |  | (In thousands) |       
|Lines of credit(1)            |  | $              | 1,003  |           |        | $ | 329   |       |  | $   | 547   |  |           | $       | 127   |  |  | $ |      | 
|Capital lease obligations     |  |                | 15     |           |        |   | 11    |       |  |     | 4     |  |           |         |      |  |  |   |      | 
|Operating lease commitment    |  |                | 13,356 |           |        |   | 2,333 |       |  |     | 4,706 |  |           |         | 4,560 |  |  |   | 1,757 | 
|                              |  |                |        |           |        |   |       |       |  |     |       |  |           |         |      
|Total contractual obligations |  | $              | 14,374 |           |        | $ | 2,673 |       |  | $   | 5,257 |  |           | $       | 4,687 |  |  | $ | 1,757 | 
|                              |  |                |        |           |        |   |       |       |  |     |       |  |           |         |      






|    |                                              
|--- | ---------------------------------------------
|(1) | Line of credit was paid off in February 2005.






|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market
    Risk

Foreign Exchange Rate Sensitivity




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Interest Rate Sensitivity









|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data





| |                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------
| | 1. Annual Financial Statements                                                                                                         
|
| | The following consolidated financial statements of the Company
    are filed as part of this Annual Report on Form 10-K as
    follows:

INDEX TO FINANCIAL STATEMENTS


|                                                                                                             |  |      |     | 
|------------------------------------------------------------------------------------------------------------ |  | ---- | --- | 
|                                                                                                             |  | Page |    
|                                                                                                             |  |      |    
|Report of Independent Registered Public
    Accounting Firm                                                  |  |      | F-1 | 
|Consolidated Balance Sheets as of
    December 31, 2004 and 2003                                             |  |      | F-2 | 
|Consolidated Statements of Operations for
    the years ended December 31, 2004, 2003 and 2002               |  |      | F-3 | 
|Consolidated Statements of
    Shareholders Equity for the years ended December 31,
    2004, 2003 and 2002 |  |      | F-4 | 
|Consolidated Statements of Cash Flows for
    the years ended December 31, 2004, 2003 and 2002               |  |      | F-5 | 
|Notes to Consolidated Financial
    Statements                                                               |  |      | F-6 | 



| |                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2. Financial Statement Schedules                                                                                                                                                                            
|
| | Financial statement schedules have been omitted because the
    information required to be set forth therein is not applicable
    or is included in the notes to the Consolidated Financial
    Statements.
|
| | 3. Selected Quarterly Results of Operations                                                                                                                                                                 
|
| | The Selected Quarterly Results of Operations required by this
    Item 8 are included in Note 12 to the Consolidated
    Financial Statements.                                                              

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|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures













Internal
Control  Integrated Framework












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Internal Control  Integrated Framework








Internal
Control  Integrated Framework Internal Control  Integrated
Framework










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|         |                  
|-------- | -----------------
|Item 9B. | Other Information






PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant



www.corillian.com







|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation








|         |                                                                   
|-------- | ------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management





| |                                     
| | ------------------------------------
| | Equity Compensation Plan Information



|                                                       |  |                                    |           |     |                     |   |                  |                         |  |  |           |       
|------------------------------------------------------ |  | ---------------------------------- | --------- | --- | ------------------- | - | ---------------- | ----------------------- |  |  | --------- | ------
|                                                       |  | Securities Authorized for Issuance |          
|                                                       |  | Under Equity Compensation Plans    |          
|                                                       |  |                                    |          
|                                                       |  | Number of Shares to                |           |     |                     |   | Number of Shares |                        
|                                                       |  | be Issued Upon                     |           |     | Weighted-Average    |   |                  | Remaining Available for | 
|                                                       |  | Exercise of                        |           |     | Exercise Price of   |   |                  | Issuance Under Equity   | 
|                                                       |  | Outstanding Options                |           |     | Outstanding Options |   |                  | Compensation Plans      | 
|                                                       |  |                                    |           |     |                     |   |                  |                         | 
|Equity compensation plans approved by shareholders     |  |                                    | 4,410,225 | (1) |                     | $ | 4.00             |                         |  |  | 2,240,607 | (2)(3)
|Equity compensation plans not approved by shareholders |  |                                    | 984,500   |     |                     |   | 4.05             |                         |  |  | 15,500    |       
|                                                       |  |                                    |           |     |                     |   |                  |                         | 
|                                                       |  |                                    | 5,394,725 |     |                     | $ | 4.01             |                         |  |  | 2,256,107 |       
|                                                       |  |                                    |           |     |                     |   |                  |                         | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Excludes 780 shares of Corillians common stock that
    are issuable upon the exercise of outstanding options that were
    assumed in connection with Corillians acquisition of
    Hatcher Associates Inc. (now Corillian Services, Inc.), with a
    weighted average exercise price of $6.73.                                                                                                                                                                                                                                                                                                                                                            
|   
|(2) | Includes 2,180,423 shares remaining available for purchase
    under Corillians 2000 Stock Incentive Compensation Plan.
    The 2000 Stock Incentive Compensation Plan includes an evergreen
    formula pursuant to which the number of shares authorized for
    grant will be increased annually by the lesser of
    (1) 400,000 shares, and (2) an amount equal to
    one percent of the average outstanding shares of the common
    stock of the Company as of the end of the immediately preceding
    fiscal year on a fully-diluted basis; plus any shares subject to
    outstanding awards under Corillians 1997 Stock Option Plan
    as of the

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | effective date of the 2000 Stock Incentive Compensation Plan
    that cease to be subject to such awards other than by reason of
    exercise or payment of such awards. Excludes 400,000 additional
    shares of common stock that became available for purchase under
    the 2000 Stock Incentive Compensation Plan on January 1,
    2005 pursuant to the evergreen formula.                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(3) | Includes 60,184 shares remaining available for issuance
    under Corillians 2000 Employee Stock Purchase Plan. The
    2000 Employee Stock Purchase Plan includes an evergreen formula
    pursuant to which the number of shares authorized for grant will
    be increased annually by the lesser of
    (1) 333,333 shares, (2) an amount equal to two
    percent of the average number of shares of common stock
    outstanding on a fully diluted basis as of the end of our
    immediately preceding fiscal year, and (3) a lesser amount
    determined by our Board of Directors. Excludes 333,333
    additional shares of common stock that became available for
    issuance under the 2000 Employee Stock Purchase Plan on
    January 1, 2005 pursuant to the evergreen formula.

2003 Nonqualified Stock Incentive Compensation Plan.












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|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services



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PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules





| |                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) Financial Statements                                                                                                                                                                                    
|
| | All consolidated financial statements of the Company as set
    forth under Item 8 of this Report.                                                                                                          
|
| | (2) Financial Statement Schedules                                                                                                                                                                           
|
| | Financial statement schedules have been omitted because the
    information required to be set forth therein is not applicable
    or is included in the notes to the Consolidated Financial
    Statements.
|
| | (3) Exhibits                                                                                                                                                                                                
|
| | The exhibits listed on the accompanying index to exhibits
    immediately following the financial statement schedule are filed
    as part of, or incorporated by reference into, this
    Form 10-K.       

|        |    |             |  |                                                                                                                                                                                                                                               
|------- | -- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|No.     |    | Description
|        |    |            
|        | 3  | .1          |  | Articles of Incorporation (incorporated by reference to
    Exhibit 3.2 of Corillians Form S-1, as amended,
    File No. 333-95513)                                                                                                          
|        | 3  | .2          |  | Bylaws (incorporated by reference to Exhibit 3.4 of
    Corillians Form S-1, as amended, File
    No. 333-95513)                                                                                                                             
|       
|        | 4  | .1          |  | Form of Common Stock certificate (incorporated by reference to
    Exhibit 4.1 of Corillians Form S-1, as amended,
    File No. 333-95513)                                                                                                   
|       
|        | 10 | .1*         |  | Corillians Amended and Restated 2000 Stock Incentive
    Compensation Plan (incorporated by reference to
    Exhibit 99.2 of Corillians Form S-8 filed on
    November 1, 2001, File No. 333-72652)                                         
|       
|        | 10 | .2*         |  | Corillians 2000 Employee Stock Purchase Plan (incorporated
    by reference to Exhibit 99.1 of Corillians
    Form S-8 filed on November 1, 2001, File
    No. 333-72652)                                                                   
|       
|        | 10 | .3*         |  | Corillians Amended and Restated 1997 Stock Option Plan
    (incorporated by reference to Exhibit 10.3 of
    Corillians report on Form 10-Q for the quarter ended
    September 30, 2000)                                                   
|       
|        | 10 | .4          |  | Lease between Carramerica Realty Corporation and Corillian,
    dated May 22, 2000 (incorporated by reference to
    Exhibit 10.1 of Corillians report on Form 10-Q for
    the quarter ended March 31, 2000)                                
|       
|        | 10 | .5          |  | Loan Agreement between Corillian Corporation and Silicon Valley
    Bank, dated November 9, 2000 (incorporated by reference to
    Exhibit 10.5 of Corillians report on Form 10-K for
    the year ended December 31, 2000)                  
|       
|        | 10 | .6*         |  | Form of Stock Option Agreement with certain employees
    (incorporated by reference to Exhibit 10.9 of
    Corillians report on Form 10-Q for the quarter ended
    September 30, 2000)                                                     
|       
|        | 10 | .7          |  | Loan Modification Agreement between Corillian Corporation and
    Silicon Valley Bank, dated November 30, 2001 (incorporated
    by reference to Exhibit 10.9 of Corillians report on
    Form 10-K for the year ended December 31, 2001)    
|       
|        | 10 | .8*         |  | Form of Indemnification Agreement between Corillian and its
    directors and executive officers (incorporated by reference to
    Exhibit 10.13 of Corillians report on Form 10-Q for
    the quarter ended March 31, 2001)                 
|       
|        | 10 | .9*         |  | Form of Severance Agreement with Executive Officers and Certain
    Other Key Employees (incorporated by reference to
    Exhibit 10.1 of Corillians report on Form 10-Q for
    the quarter ended June 30, 2002)                            
|       
|        | 10 | .10         |  | Loan Modification Agreement between Corillian Corporation and
    Silicon Valley Bank, dated November 13, 2002 (incorporated
    by reference to Exhibit 10.5 of Corillians report on
    Form 10-Q for the quarter ended September 30, 2002)
|       
|        | 10 | .11*        |  | Corillian Corporation 2003 Nonqualified Stock Incentive
    Compensation Plan (incorporated by reference to
    Exhibit 10.1 of Corillians report on Form 10-Q for
    the quarter ended June 30, 2003)                                      

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|        |    |      |             |                                                                                                                                                                                                                                                                         
|------- | -- | ---- | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |      |            
|No.     |    |      | Description
|        |    |      |            
|       
|        | 10 | .12* |             | Form of Stock Option Agreement under Corillian Corporation 2003
    Nonqualified Stock Incentive Compensation Plan (incorporated by
    reference to Exhibit 10.2 of Corillians report on
    Form 10-Q for the quarter ended June 30, 2003)                           
|       
|        | 10 | .13* |             | Form of Stock Option Agreement with certain employees under
    Corillian Corporation 2003 Nonqualified Stock Incentive
    Compensation Plan (incorporated by reference to
    Exhibit 10.3 of Corillians report on Form 10-Q for
    the quarter ended June 30, 2003)
|       
|        | 10 | .14  |             | Loan Modification Agreement between Corillian Corporation and
    Silicon Valley Bank, dated June 16, 2003 (incorporated by
    reference to Exhibit 10.4 of Corillians report on
    Form 10-Q for the quarter ended June 30, 2003)                                   
|       
|        | 10 | .15* |             | Form of Amendment to Stock Option Letter Agreements for Certain
    Employees under the 2000 Stock Incentive Compensation Plan
    (incorporated by reference to Exhibit 10.1 of
    Corillians report on Form 10-Q for the quarter ended
    September 30, 2003)      
|       
|        | 10 | .16* |             | Form of Severance Agreement for Certain Employees (incorporated
    by reference to Exhibit 10.2 of Corillians report on
    Form 10-Q for the quarter ended September 30, 2003)                                                                                       
|       
|        | 10 | .17  |             | First Amendment to Lease Agreement between CarrAmerica Realty
    Operating Partnership, L.P. and Corillian Corporation, dated
    August 23, 2004 (incorporated by reference to
    Exhibit 99.1 of Corillians report on Form 8-K dated
    August 23, 2004)          
|       
|        | 10 | .18* |             | Separation Agreement and General Release between Corillian
    Corporation and an Executive Officer, dated February, 17,
    2005 (incorporated by reference to Exhibit 10.1 of
    Corillians report on Form 8-K dated February 17, 2005)                             
|       
|        | 21 | .1   |             | Subsidiaries of the Company                                                                                                                                                                                                                                             
|       
|        | 23 | .1   |             | Consent of KPMG LLP, Independent Registered Public Accounting
    Firm                                                                                                                                                                                                  
|       
|        | 31 | .1   |             | Certification Pursuant to 18 U.S.C. Section 1350, as
    Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002                                                                                                                                          
|       
|        | 31 | .2   |             | Certification Pursuant to 18 U.S.C. Section 1350, as
    Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002                                                                                                                                          
|       
|        | 32 | .1   |             | Certification Pursuant to 18 U.S.C. Section 1350, as
    Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002                                                                                                                                          






|  |                                         
|- | ----------------------------------------
|* | Management contract or compensatory plan

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SIGNATURES






| |                      
| | ---------------------
| | CORILLIAN CORPORATION



| |     |                  
| | --- | -----------------
| | By: | /s/ PAUL K. WILDE

| |                              
| | -----------------------------
| |                              
| | Chief Financial Officer      
| | (Principal Financial Officer)



|                                             |  |                                                                   |  | 
|-------------------------------------------- |  | ----------------------------------------------------------------- |  | 
|Signature                                    |  | Capacities                                                       
|                                             |  |                                                                  
|                                            
|/s/ ALEX P. HARTAlex
    P. Hart             |  | Chief Executive Officer and DirectorPrincipal Executive Officer  
|                                            
|/s/ PAUL K. WILDEPaul
    K. Wilde           |  | Chief Financial OfficerPrincipal Financial and Accounting Officer
|                                            
|/s/ ROBERT G. BARRETTRobert
    G. Barrett   |  | Director                                                         
|                                            
|/s/ ERIC DUNNEric
    Dunn                   |  | Director                                                         
|                                            
|/s/ RAVI MOHANRavi
    Mohan                 |  | Director                                                         
|                                            
|James
    R. Stojak                          |  | Director                                                         
|                                            
|/s/ JAY N. WHIPPLE IIIJay
    N. Whipple III |  | Director                                                         

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|        |    |             |  |                                                                                                                                                                                                                                                                         
|------- | -- | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|No.     |    | Description
|        |    |            
|        | 3  | .1          |  | Articles of Incorporation (incorporated by reference to
    Exhibit 3.2 of Corillians Form S-1, as amended,
    File No. 333-95513)                                                                                                                                    
|        | 3  | .2          |  | Bylaws (incorporated by reference to Exhibit 3.4 of
    Corillians Form S-1, as amended, File
    No. 333-95513)                                                                                                                                                       
|       
|        | 4  | .1          |  | Form of Common Stock certificate (incorporated by reference to
    Exhibit 4.1 of Corillians Form S-1, as amended,
    File No. 333-95513)                                                                                                                             
|       
|        | 10 | .1*         |  | Corillians Amended and Restated 2000 Stock Incentive
    Compensation Plan (incorporated by reference to
    Exhibit 99.2 of Corillians Form S-8 filed on
    November 1, 2001, File No. 333-72652)                                                                   
|       
|        | 10 | .2*         |  | Corillians 2000 Employee Stock Purchase Plan (incorporated
    by reference to Exhibit 99.1 of Corillians
    Form S-8 filed on November 1, 2001, File
    No. 333-72652)                                                                                             
|       
|        | 10 | .3*         |  | Corillians Amended and Restated 1997 Stock Option Plan
    (incorporated by reference to Exhibit 10.3 of
    Corillians report on Form 10-Q for the quarter ended
    September 30, 2000)                                                                             
|       
|        | 10 | .4          |  | Lease between Carramerica Realty Corporation and Corillian,
    dated May 22, 2000 (incorporated by reference to
    Exhibit 10.1 of Corillians report on Form 10-Q for
    the quarter ended March 31, 2000)                                                          
|       
|        | 10 | .5          |  | Loan Agreement between Corillian Corporation and Silicon Valley
    Bank, dated November 9, 2000 (incorporated by reference to
    Exhibit 10.5 of Corillians report on Form 10-K for
    the year ended December 31, 2000)                                            
|       
|        | 10 | .6*         |  | Form of Stock Option Agreement with certain employees
    (incorporated by reference to Exhibit 10.9 of
    Corillians report on Form 10-Q for the quarter ended
    September 30, 2000)                                                                               
|       
|        | 10 | .7          |  | Loan Modification Agreement between Corillian Corporation and
    Silicon Valley Bank, dated November 30, 2001 (incorporated
    by reference to Exhibit 10.9 of Corillians report on
    Form 10-K for the year ended December 31, 2001)                              
|       
|        | 10 | .8*         |  | Form of Indemnification Agreement between Corillian and its
    directors and executive officers (incorporated by reference to
    Exhibit 10.13 of Corillians report on Form 10-Q for
    the quarter ended March 31, 2001)                                           
|       
|        | 10 | .9*         |  | Form of Severance Agreement with Executive Officers and Certain
    Other Key Employees (incorporated by reference to
    Exhibit 10.1 of Corillians report on Form 10-Q for
    the quarter ended June 30, 2002)                                                      
|       
|        | 10 | .10         |  | Loan Modification Agreement between Corillian Corporation and
    Silicon Valley Bank, dated November 13, 2002 (incorporated
    by reference to Exhibit 10.5 of Corillians report on
    Form 10-Q for the quarter ended September 30, 2002)                          
|       
|        | 10 | .11*        |  | Corillian Corporation 2003 Nonqualified Stock Incentive
    Compensation Plan (incorporated by reference to
    Exhibit 10.1 of Corillians report on Form 10-Q for
    the quarter ended June 30, 2003)                                                                
|       
|        | 10 | .12*        |  | Form of Stock Option Agreement under Corillian Corporation 2003
    Nonqualified Stock Incentive Compensation Plan (incorporated by
    reference to Exhibit 10.2 of Corillians report on
    Form 10-Q for the quarter ended June 30, 2003)                           
|       
|        | 10 | .13*        |  | Form of Stock Option Agreement with certain employees under
    Corillian Corporation 2003 Nonqualified Stock Incentive
    Compensation Plan (incorporated by reference to
    Exhibit 10.3 of Corillians report on Form 10-Q for
    the quarter ended June 30, 2003)
|       
|        | 10 | .14         |  | Loan Modification Agreement between Corillian Corporation and
    Silicon Valley Bank, dated June 16, 2003 (incorporated by
    reference to Exhibit 10.4 of Corillians report on
    Form 10-Q for the quarter ended June 30, 2003)                                   
|       
|        | 10 | .15*        |  | Form of Amendment to Stock Option Letter Agreements for Certain
    Employees under the 2000 Stock Incentive Compensation Plan
    (incorporated by reference to Exhibit 10.1 of
    Corillians report on Form 10-Q for the quarter ended
    September 30, 2003)      
|       
|        | 10 | .16*        |  | Form of Severance Agreement for Certain Employees (incorporated
    by reference to Exhibit 10.2 of Corillians report on
    Form 10-Q for the quarter ended September 30, 2003)                                                                                       
|       
|        | 10 | .17         |  | First Amendment to Lease Agreement between CarrAmerica Realty
    Operating Partnership, L.P. and Corillian Corporation, dated
    August 23, 2004 (incorporated by reference to
    Exhibit 99.1 of Corillians report on Form 8-K dated
    August 23, 2004)          

43



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|        |    |      |             |                                                                                                                                                                                                                                            
|------- | -- | ---- | ----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |      |            
|No.     |    |      | Description
|        |    |      |            
|       
|        | 10 | .18* |             | Separation Agreement and General Release between Corillian
    Corporation and an Executive Officer, dated February, 17,
    2005 (incorporated by reference to Exhibit 10.1 of
    Corillians report on Form 8-K dated February 17, 2005)
|       
|        | 21 | .1   |             | Subsidiaries of the Company                                                                                                                                                                                                                
|       
|        | 23 | .1   |             | Consent of KPMG LLP, Independent Registered Public Accounting
    Firm                                                                                                                                                                     
|       
|        | 31 | .1   |             | Certification Pursuant to 18 U.S.C. Section 1350, as
    Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002                                                                                                             
|       
|        | 31 | .2   |             | Certification Pursuant to 18 U.S.C. Section 1350, as
    Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002                                                                                                             
|       
|        | 32 | .1   |             | Certification Pursuant to 18 U.S.C. Section 1350, as
    Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002                                                                                                             






44



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##### Table of Contents






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM












Internal Control 
Integrated Framework








F-1



---



##### Table of Contents



CORILLIAN CORPORATION





CONSOLIDATED BALANCE SHEETS


|                                                |                                                                                                                                                            |                                            |       |         |        |  |       |          |        | 
|----------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ----- | ------- | ------ |  | ----- | -------- | ------ | 
|                                                |                                                                                                                                                            | December 31,                               |      
|                                                |                                                                                                                                                            |                                            |      
|                                                |                                                                                                                                                            | 2004                                       |       |         | 2003   | 
|                                                |                                                                                                                                                            |                                            |       |         |        | 
|                                                |                                                                                                                                                            | (In thousands)                             |      
|ASSETS                                         
|Current assets:                                 |                                                                                                                                                            |                                            |       |         |        |  |       |         
|                                                | Cash and cash equivalents                                                                                                                                  |                                            | $     | 29,200  |        |  | $     | 16,943   |       
|                                                | Short-term investments                                                                                                                                     |                                            |       | 10,150  |        |  |       | 9,901    |       
|                                                | Accounts receivable, net                                                                                                                                   |                                            |       | 8,218   |        |  |       | 6,103    |       
|                                                | Other receivables                                                                                                                                          |                                            |       | 206     |        |  |       | 226      |       
|                                                | Revenue in excess of billings                                                                                                                              |                                            |       | 1,363   |        |  |       | 1,258    |       
|                                                | Prepaid expenses and deposits                                                                                                                              |                                            |       | 1,696   |        |  |       | 1,319    |       
|                                                |                                                                                                                                                            |                                            |       |         |        | 
|                                                |                                                                                                                                                            | Total current assets                       |       |         | 50,833 |  |       |          | 35,750 | 
|Property and equipment, net                     |                                                                                                                                                            |                                            | 3,800 |         |        |  | 5,765 |         
|Investment in joint venture                     |                                                                                                                                                            |                                            | 128   |         |        |  | 941   |         
|Other assets                                    |                                                                                                                                                            |                                            | 508   |         |        |  | 362   |         
|                                                |                                                                                                                                                            |                                            |       |         |        | 
|                                                |                                                                                                                                                            | Total assets                               |       | $       | 55,269 |  |       | $        | 42,818 | 
|                                                |                                                                                                                                                            |                                            |       |         |        | 
|                                               
|LIABILITIES AND SHAREHOLDERS EQUITY           
|Current liabilities:                            |                                                                                                                                                            |                                            |       |         |        |  |       |         
|                                                | Accounts payable                                                                                                                                           |                                            | $     | 979     |        |  | $     | 1,224    |       
|                                                | Accrued liabilities                                                                                                                                        |                                            |       | 2,468   |        |  |       | 2,052    |       
|                                                | Deferred revenue                                                                                                                                           |                                            |       | 16,630  |        |  |       | 15,560   |       
|                                                | Current portion of capital lease obligations                                                                                                               |                                            |       | 10      |        |  |       | 19       |       
|                                                | Current portion of long-term debt                                                                                                                          |                                            |       | 286     |        |  |       | 1,510    |       
|                                                | Other current liabilities                                                                                                                                  |                                            |       | 1,043   |        |  |       | 968      |       
|                                                |                                                                                                                                                            |                                            |       |         |        | 
|                                                |                                                                                                                                                            | Total current liabilities                  |       |         | 21,416 |  |       |          | 21,333 | 
|Capital lease obligations, less current portion |                                                                                                                                                            |                                            | 4     |         |        |  | 12    |         
|Long-term debt, less current portion            |                                                                                                                                                            |                                            | 625   |         |        |  | 1,063 |         
|Other long-term liabilities                     |                                                                                                                                                            |                                            | 622   |         |        |  | 856   |         
|                                                |                                                                                                                                                            |                                            |       |         |        | 
|                                                |                                                                                                                                                            | Total liabilities                          |       |         | 22,667 |  |       |          | 23,264 | 
|                                                |                                                                                                                                                            |                                            |       |         |        | 
|Commitments and contingencies                   |                                                                                                                                                            |                                            |       |         |        |  |       |         
|Shareholders equity:                           |                                                                                                                                                            |                                            |       |         |        |  |       |         
|                                                | Common stock, no par value; 150,000 shares authorized;
    38,408 and 36,891 shares issued and outstanding at
    December 31, 2004 and 2003, respectively |                                            |       | 129,969 |        |  |       | 127,414  |       
|                                                | Accumulated other comprehensive income                                                                                                                     |                                            |       | 61      |        |  |       | 48       |       
|                                                | Accumulated deficit                                                                                                                                        |                                            |       | (97,428 | )      |  |       | (107,908 | )     
|                                                |                                                                                                                                                            |                                            |       |         |        | 
|                                                |                                                                                                                                                            | Total shareholders equity                 |       |         | 32,602 |  |       |          | 19,554 | 
|                                                |                                                                                                                                                            |                                            |       |         |        | 
|                                                |                                                                                                                                                            | Total liabilities and shareholders equity |       | $       | 55,269 |  |       | $        | 42,818 | 
|                                                |                                                                                                                                                            |                                            |       |         |        | 



F-2



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##### Table of Contents



CORILLIAN CORPORATION





CONSOLIDATED STATEMENTS OF OPERATIONS


|                                                                                                                                               |                                                                                                                                                          |                                       |        |       |        |   |        |        |        |   |        |        |         |  
|---------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------- | ------ | ----- | ------ | - | ------ | ------ | ------ | - | ------ | ------ | ------- | -
|                                                                                                                                               |                                                                                                                                                          | Year Ended December 31,               |       
|                                                                                                                                               |                                                                                                                                                          |                                       |       
|                                                                                                                                               |                                                                                                                                                          | 2004                                  |        |       | 2003   |   |        | 2002   |       
|                                                                                                                                               |                                                                                                                                                          |                                       |        |       |        |   |        |        |       
|                                                                                                                                               |                                                                                                                                                          | (In thousands, except per share data) |       
|Revenues                                                                                                                                       |                                                                                                                                                          | $                                     | 50,794 |       |        | $ | 46,132 |        |        | $ | 39,141 |       
|Cost of revenues, excluding $0, $7 and $148 in 2004, 2003 and
    2002, respectively, of amortization of deferred stock-based
    compensation |                                                                                                                                                          |                                       | 18,449 |       |        |   | 20,501 |        |        |   | 20,422 |       
|                                                                                                                                               |                                                                                                                                                          |                                       |        |       |        |   |        |        |       
|                                                                                                                                               |                                                                                                                                                          | Gross profit                          |        |       | 32,345 |   |        |        | 25,631 |   |        |        | 18,719  |  
|                                                                                                                                               |                                                                                                                                                          |                                       |        |       |        |   |        |        |       
|Operating expenses:                                                                                                                            |                                                                                                                                                          |                                       |        |       |        |   |        |        |        |   |        |       
|                                                                                                                                               | Sales and marketing, excluding $0, $14 and $401 in 2004, 2003
    and 2002, respectively, of amortization of deferred stock-based
    compensation       |                                       |        | 7,291 |        |   |        | 6,422  |        |   |        | 11,720 |        
|                                                                                                                                               | Research and development, excluding $0, $5 and $83 in 2004, 2003
    and 2002, respectively, of amortization of deferred stock-based
    compensation    |                                       |        | 6,690 |        |   |        | 5,968  |        |   |        | 7,733  |        
|                                                                                                                                               | General and administrative, excluding $0, $9 and $253 in 2004,
    2003 and 2002, respectively, of amortization of deferred
    stock-based compensation |                                       |        | 6,688 |        |   |        | 6,810  |        |   |        | 11,029 |        
|                                                                                                                                               | Amortization of deferred stock-based compensation                                                                                                        |                                       |        |      |        |   |        | 35     |        |   |        | 885    |        
|                                                                                                                                               | Litigation settlement charges                                                                                                                            |                                       |        |      |        |   |        |       |        |   |        | 2,580  |        
|                                                                                                                                               | Restructuring and impairment charges                                                                                                                     |                                       |        | 491   |        |   |        |       |        |   |        | 682    |        
|                                                                                                                                               |                                                                                                                                                          |                                       |        |       |        |   |        |        |       
|                                                                                                                                               |                                                                                                                                                          | Total operating expenses              |        |       | 21,160 |   |        |        | 19,235 |   |        |        | 34,629  |  
|                                                                                                                                               |                                                                                                                                                          |                                       |        |       |        |   |        |        |       
|                                                                                                                                               |                                                                                                                                                          | Income (loss) from operations         |        |       | 11,185 |   |        |        | 6,396  |   |        |        | (15,910 | )
|                                                                                                                                               |                                                                                                                                                          |                                       |        |       |        |   |        |        |       
|Other income (expense), net:                                                                                                                   |                                                                                                                                                          |                                       |        |       |        |   |        |        |        |   |        |       
|                                                                                                                                               | Interest income                                                                                                                                          |                                       |        | 412   |        |   |        | 224    |        |   |        | 184    |        
|                                                                                                                                               | Interest expense                                                                                                                                         |                                       |        | (140  | )      |   |        | (244   | )      |   |        | (542   | )      
|                                                                                                                                               | Loss on joint venture                                                                                                                                    |                                       |        | (813  | )      |   |        | (1,133 | )      |   |        | (916   | )      
|                                                                                                                                               | Other (expense) income, net                                                                                                                              |                                       |        | (4    | )      |   |        | 7      |        |   |        | (73    | )      
|                                                                                                                                               |                                                                                                                                                          |                                       |        |       |        |   |        |        |       
|                                                                                                                                               |                                                                                                                                                          | Total other expense, net              |        |       | (545   | ) |        |        | (1,146 | ) |        |        | (1,347  | )
|                                                                                                                                               |                                                                                                                                                          |                                       |        |       |        |   |        |        |       
|                                                                                                                                               |                                                                                                                                                          | Net income (loss) before income taxes |        |       | 10,640 |   |        |        | 5,250  |   |        |        | (17,257 | )
|Income taxes                                                                                                                                   |                                                                                                                                                          |                                       | 160    |       |        |   | 124    |        |        |   |       |       
|                                                                                                                                               |                                                                                                                                                          |                                       |        |       |        |   |        |        |       
|                                                                                                                                               |                                                                                                                                                          | Net income (loss)                     |        | $     | 10,480 |   |        | $      | 5,126  |   |        | $      | (17,257 | )
|                                                                                                                                               |                                                                                                                                                          |                                       |        |       |        |   |        |        |       
|Basic net income (loss) per share                                                                                                              |                                                                                                                                                          | $                                     | 0.28   |       |        | $ | 0.14   |        |        | $ | (0.49  | )     
|Diluted net income (loss) per share                                                                                                            |                                                                                                                                                          | $                                     | 0.26   |       |        | $ | 0.14   |        |        | $ | (0.49  | )     
|Shares used in computing basic net income (loss) per share                                                                                     |                                                                                                                                                          |                                       | 37,727 |       |        |   | 36,431 |        |        |   | 35,477 |       
|Shares used in computing diluted net income (loss) per share                                                                                   |                                                                                                                                                          |                                       | 40,474 |       |        |   | 37,813 |        |        |   | 35,477 |       



F-3



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##### Table of Contents



CORILLIAN CORPORATION





CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY


|                                                             |  |                |        |  |             |             |         |               |  |   |               |   |       |               |     |   |        |   |          |   |  |   |         |  
|------------------------------------------------------------ |  | -------------- | ------ |  | ----------- | ----------- | ------- | ------------- |  | - | ------------- | - | ----- | ------------- | --- | - | ------ | - | -------- | - |  | - | ------- | -
|                                                             |  |                |        |  |             | Accumulated |         |               |  |   |              
|                                                             |  | Common Stock   |        |  | Deferred    |             |         | Other         |  |   |               |   | Total |              
|                                                             |  |                |        |  | Stock-Based |             |         | Comprehensive |  |   | Accumulated   |   |       | Shareholders |    
|                                                             |  | Shares         |        |  | Amount      |             |         | Compensation  |  |   | Income (Loss) |   |       | Deficit       |     |   | Equity |  
|                                                             |  |                |        |  |             |             |         |               |  |   |               |   |       |               |     |   |        |  
|                                                             |  | (In thousands) |       
|Balance, December 31, 2001                                   |  |                | 35,038 |  |             | $           | 125,069 |               |  | $ | (1,169        | ) |       | $             | (19 | ) |        | $ | (95,777  | ) |  | $ | 28,104  |  
|Issuance of common shares in settlement of litigation        |  |                | 500    |  |             |             | 745     |               |  |   |              |   |       |               |    |   |        |   |         |   |  |   | 745     |  
|Issuance of common shares in exchange for services           |  |                | 30     |  |             |             | 45      |               |  |   | (45           | ) |       |               |    |   |        |   |         |   |  |   |        |  
|Exercise of common stock options                             |  |                | 360    |  |             |             | 226     |               |  |   |              |   |       |               |    |   |        |   |         |   |  |   | 226     |  
|Issuance of common shares under employee stock purchase plan |  |                | 219    |  |             |             | 350     |               |  |   |              |   |       |               |    |   |        |   |         |   |  |   | 350     |  
|Deferred stock-based compensation                            |  |                |       |  |             |             | (294    | )             |  |   | 294           |   |       |               |    |   |        |   |         |   |  |   |        |  
|Amortization of deferred stock-based compensation            |  |                |       |  |             |             |        |               |  |   | 885           |   |       |               |    |   |        |   |         |   |  |   | 885     |  
|Foreign currency translation                                 |  |                |       |  |             |             |        |               |  |   |              |   |       |               | 68  |   |        |   |         |   |  |   | 68      |  
|Net loss                                                     |  |                |       |  |             |             |        |               |  |   |              |   |       |               |    |   |        |   | (17,257  | ) |  |   | (17,257 | )
|                                                             |  |                |        |  |             |             |         |               |  |   |               |   |       |               |     |   |        |  
|Balance, December 31, 2002                                   |  |                | 36,147 |  |             | $           | 126,141 |               |  | $ | (35           | ) |       | $             | 49  |   |        | $ | (113,034 | ) |  | $ | 13,121  |  
|Exercise of common stock options                             |  |                | 490    |  |             |             | 1,115   |               |  |   |              |   |       |               |    |   |        |   |         |   |  |   | 1,115   |  
|Issuance of common shares under employee stock purchase plan |  |                | 254    |  |             |             | 158     |               |  |   |              |   |       |               |    |   |        |   |         |   |  |   | 158     |  
|Amortization of deferred stock-based compensation            |  |                |       |  |             |             |        |               |  |   | 35            |   |       |               |    |   |        |   |         |   |  |   | 35      |  
|Foreign currency translation                                 |  |                |       |  |             |             |        |               |  |   |              |   |       |               | (1  | ) |        |   |         |   |  |   | (1      | )
|Net income                                                   |  |                |       |  |             |             |        |               |  |   |              |   |       |               |    |   |        |   | 5,126    |   |  |   | 5,126   |  
|                                                             |  |                |        |  |             |             |         |               |  |   |               |   |       |               |     |   |        |  
|Balance, December 31, 2003                                   |  |                | 36,891 |  |             | $           | 127,414 |               |  | $ |              |   |       | $             | 48  |   |        | $ | (107,908 | ) |  | $ | 19,554  |  
|Exercise of common stock options                             |  |                | 1,009  |  |             |             | 1,969   |               |  |   |              |   |       |               |    |   |        |   |         |   |  |   | 1,969   |  
|Issuance of common shares under employee stock purchase plan |  |                | 508    |  |             |             | 505     |               |  |   |              |   |       |               |    |   |        |   |         |   |  |   | 505     |  
|Income tax benefit of equity transactions                    |  |                |       |  |             |             | 81      |               |  |   |              |   |       |               |    |   |        |   |         |   |  |   | 81      |  
|Foreign currency translation                                 |  |                |       |  |             |             |        |               |  |   |               |   |       |               | 13  |   |        |   |          |   |  |   | 13      |  
|Net income                                                   |  |                |       |  |             |             |        |               |  |   |              |   |       |               |    |   |        |   | 10,480   |   |  |   | 10,480  |  
|                                                             |  |                |        |  |             |             |         |               |  |   |               |   |       |               |     |   |        |  
|Balance, December 31, 2004                                   |  |                | 38,408 |  |             | $           | 129,969 |               |  | $ |              |   |       | $             | 61  |   |        | $ | (97,428  | ) |  | $ | 32,602  |  
|                                                             |  |                |        |  |             |             |         |               |  |   |               |   |       |               |     |   |        |  



F-4



---



##### Table of Contents



CORILLIAN CORPORATION





CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                             |                                                                                              |                                                      |                                             |                                                                   |       |        |        |         |       |        |        |         |       |        |        |  
|---------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------- | ---------------------------------------------------- | ------------------------------------------- | ----------------------------------------------------------------- | ----- | ------ | ------ | ------- | ----- | ------ | ------ | ------- | ----- | ------ | ------ | -
|                                                                             |                                                                                              | Year Ended December 31,                              |                                            
|                                                                             |                                                                                              |                                                      |                                            
|                                                                             |                                                                                              | 2004                                                 |                                             |                                                                   | 2003  |        |        | 2002    |      
|                                                                             |                                                                                              |                                                      |                                             |                                                                   |       |        |        |         |      
|                                                                             |                                                                                              | (In thousands)                                       |                                            
|Cash flows from operating activities:                                        |                                                                                              |                                                      |                                             |                                                                   |       |        |        |         |       |        |        |        
|                                                                             | Net income (loss)                                                                            |                                                      | $                                           | 10,480                                                            |       |        | $      | 5,126   |       |        | $      | (17,257 | )    
|                                                                             | Adjustments to reconcile net income (loss) to net cash provided
    by operating activities: |                                                      |                                             |                                                                   |       |        |        |         |       |        |        |         |      
|                                                                             |                                                                                              | Depreciation                                         |                                             |                                                                   | 2,200 |        |        |         | 3,715 |        |        |         | 5,431 |       
|                                                                             |                                                                                              | Amortization of deferred stock-based compensation    |                                             |                                                                   |      |        |        |         | 35    |        |        |         | 885   |       
|                                                                             |                                                                                              | Impairment of long-lived assets                      |                                             |                                                                   | 491   |        |        |         |      |        |        |         |      |       
|                                                                             |                                                                                              | Issuance of common stock in settlement of litigation |                                             |                                                                   |      |        |        |         |      |        |        |         | 745   |       
|                                                                             |                                                                                              | Equity in losses of joint venture                    |                                             |                                                                   | 813   |        |        |         | 1,133 |        |        |         | 916   |       
|                                                                             |                                                                                              | (Recovery of) provision for bad debts                |                                             |                                                                   | (199  | )      |        |         | (173  | )      |        |         | 1,317 |       
|                                                                             |                                                                                              | (Gain) loss on sale of assets                        |                                             |                                                                   | (7    | )      |        |         | 8     |        |        |         | 114   |       
|                                                                             |                                                                                              | Income tax benefit of equity transactions            |                                             |                                                                   | 81    |        |        |         |      |        |        |         |      |       
|                                                                             |                                                                                              | Changes in operating assets and liabilities          |                                             |                                                                   |       |        |        |         |       |        |        |         |       |       
|                                                                             |                                                                                              |                                                      | Restricted cash                             |                                                                   |       |       |        |         |       | 1,003  |        |         |       | (1,003 | )     
|                                                                             |                                                                                              |                                                      | Accounts receivable                         |                                                                   |       | (1,925 | )      |         |       | (1,931 | )      |         |       | 4,122  |       
|                                                                             |                                                                                              |                                                      | Other receivables                           |                                                                   |       | 20     |        |         |       | 1,562  |        |         |       | (1,488 | )     
|                                                                             |                                                                                              |                                                      | Revenue in excess of billings               |                                                                   |       | (105   | )      |         |       | 284    |        |         |       | 4,868  |       
|                                                                             |                                                                                              |                                                      | Prepaid expenses, deposits and other assets |                                                                   |       | (523   | )      |         |       | 380    |        |         |       | (644   | )     
|                                                                             |                                                                                              |                                                      | Accounts payable and accrued liabilities    |                                                                   |       | 190    |        |         |       | (596   | )      |         |       | (1,272 | )     
|                                                                             |                                                                                              |                                                      | Deferred revenue                            |                                                                   |       | 1,070  |        |         |       | 1,579  |        |         |       | 5,100  |       
|                                                                             |                                                                                              |                                                      | Other liabilities                           |                                                                   |       | (159   | )      |         |       | (840   | )      |         |       | 868    |       
|                                                                             |                                                                                              |                                                      |                                             |                                                                   |       |        |        |         |      
|                                                                             |                                                                                              |                                                      |                                             | Net cash provided by operating activities                         |       |        | 12,427 |         |       |        | 11,285 |         |       |        | 2,702  |  
|                                                                             |                                                                                              |                                                      |                                             |                                                                   |       |        |        |         |      
|Cash flows from investing activities:                                        |                                                                                              |                                                      |                                             |                                                                   |       |        |        |         |       |        |        |        
|                                                                             | Purchase of property and equipment                                                           |                                                      |                                             | (728                                                              | )     |        |        | (1,112  | )     |        |        | (780    | )    
|                                                                             | Proceeds from sale of property and equipment                                                 |                                                      |                                             | 9                                                                 |       |        |        |        |       |        |        |        |      
|                                                                             | Purchase of available-for-sale investments                                                   |                                                      |                                             | (19,000                                                           | )     |        |        | (15,450 | )     |        |        | (8,500  | )    
|                                                                             | Proceeds from the sales of available-for-sale investments                                    |                                                      |                                             | 18,150                                                            |       |        |        | 9,650   |       |        |        | 6,400   |      
|                                                                             | Purchase of held-to-maturity investments                                                     |                                                      |                                             | (1,200                                                            | )     |        |        | (601    | )     |        |        | (2,010  | )    
|                                                                             | Proceeds from the maturities of held-to-maturity investments                                 |                                                      |                                             | 1,801                                                             |       |        |        | 910     |       |        |        | 2,200   |      
|                                                                             | Investment in joint venture                                                                  |                                                      |                                             |                                                                  |       |        |        | (1,000  | )     |        |        |        |      
|                                                                             |                                                                                              |                                                      |                                             |                                                                   |       |        |        |         |      
|                                                                             |                                                                                              |                                                      |                                             | Net cash used in investing activities                             |       |        | (968   | )       |       |        | (7,603 | )       |       |        | (2,690 | )
|                                                                             |                                                                                              |                                                      |                                             |                                                                   |       |        |        |         |      
|Cash flows from financing activities:                                        |                                                                                              |                                                      |                                             |                                                                   |       |        |        |         |       |        |        |        
|                                                                             | Proceeds from the issuance of common stock                                                   |                                                      |                                             | 2,474                                                             |       |        |        | 1,273   |       |        |        | 576     |      
|                                                                             | Proceeds from line of credit borrowings                                                      |                                                      |                                             |                                                                  |       |        |        | 1,000   |       |        |        |        |      
|                                                                             | Payments on line of credit borrowings                                                        |                                                      |                                             | (1,662                                                            | )     |        |        | (1,860  | )     |        |        | (2,163  | )    
|                                                                             | Principal payments on capital lease obligations                                              |                                                      |                                             | (17                                                               | )     |        |        | (381    | )     |        |        | (467    | )    
|                                                                             |                                                                                              |                                                      |                                             |                                                                   |       |        |        |         |      
|                                                                             |                                                                                              |                                                      |                                             | Net cash provided by (used in) financing activities               |       |        | 795    |         |       |        | 32     |         |       |        | (2,054 | )
|                                                                             |                                                                                              |                                                      |                                             |                                                                   |       |        |        |         |      
|                                                                             |                                                                                              |                                                      |                                             | Effect of exchange rate fluctuations on cash and cash equivalents |       |        | 3      |         |       |        | 8      |         |       |        | 60     |  
|                                                                             |                                                                                              |                                                      |                                             |                                                                   |       |        |        |         |      
|                                                                             |                                                                                              |                                                      |                                             | Increase (decrease) in cash and cash equivalents                  |       |        | 12,257 |         |       |        | 3,722  |         |       |        | (1,982 | )
|Cash and cash equivalents at beginning of year                               |                                                                                              |                                                      | 16,943                                      |                                                                   |       |        | 13,221 |         |       |        | 15,203 |        
|                                                                             |                                                                                              |                                                      |                                             |                                                                   |       |        |        |         |      
|Cash and cash equivalents at end of year                                     |                                                                                              | $                                                    | 29,200                                      |                                                                   |       | $      | 16,943 |         |       | $      | 13,221 |        
|                                                                             |                                                                                              |                                                      |                                             |                                                                   |       |        |        |         |      
|Supplemental disclosures of cash flow information:                           |                                                                                              |                                                      |                                             |                                                                   |       |        |        |         |       |        |        |        
|                                                                             | Cash paid during the period for:                                                             |                                                      |                                             |                                                                   |       |        |        |         |       |        |        |         |      
|                                                                             |                                                                                              | Interest                                             |                                             | $                                                                 | 140   |        |        | $       | 244   |        |        | $       | 542   |       
|                                                                             |                                                                                              | Taxes                                                |                                             |                                                                   | 97    |        |        |         | 131   |        |        |         | 187   |       
|Supplemental disclosures of non-cash investing and financing
    activities: |                                                                                              |                                                      |                                             |                                                                   |       |        |        |         |       |        |        |        
|                                                                             | Property and equipment acquired through capital leases                                       |                                                      |                                             |                                                                  |       |        |        |        |       |        |        | 146     |      



F-5



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##### Table of Contents



CORILLIAN CORPORATION





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|    |                       
|--- | ----------------------
|(1) | Description of Company





|    |                                           
|--- | ------------------------------------------
|(2) | Summary of Significant Accounting Policies



|    |                 
|--- | ----------------
|(a) | Use of Estimates





|    |                            
|--- | ---------------------------
|(b) | Principles of Consolidation





|    |                    
|--- | -------------------
|(c) | Revenue Recognition

Software Revenue Recognition, Modification of SOP
No. 97-2, Software Revenue Recognition, with Respect to
Certain Transactions. Accounting for Performance
of Construction-Type and Certain Production-Type Contracts.


F-6



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##### Table of Contents



CORILLIAN CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Application of
AICPA Statement of Position 97-2 to Arrangements that Include
the Right to Use Software Stored on Another Entitys
Hardware.














F-7



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##### Table of Contents



CORILLIAN CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|    |                 
|--- | ----------------
|(d) | Cash Equivalents





|    |                
|--- | ---------------
|(e) | Restricted Cash





|    |                       
|--- | ----------------------
|(f) | Short-Term Investments





F-8



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##### Table of Contents



CORILLIAN CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|    |                  
|--- | -----------------
|(g) | Long-Lived Assets

Accounting for the Impairment or Disposal of Long-Lived
Assets




|    |                            
|--- | ---------------------------
|(h) | Investment in Joint Venture

Accounting for Investments in Limited
Liability Companies








|    |                    
|--- | -------------------
|(i) | Accounts Receivable



F-9



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##### Table of Contents



CORILLIAN CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                            |  |      |      |   |      |   |      |      |  |   |       |  
|--------------------------- |  | ---- | ---- | - | ---- | - | ---- | ---- |  | - | ----- | -
|                            |  | 2004 |      |   | 2003 |   |      | 2002 | 
|                            |  |      |      |   |      |   |      |      | 
|Beginning allowance balance |  | $    | 101  |   |      | $ | 399  |      |  | $ |      |  
|(Recovery) provision        |  |      | (199 | ) |      |   | (173 | )    |  |   | 1,317 |  
|Charge-offs                 |  |      | 199  |   |      |   | (125 | )    |  |   | (918  | )
|                            |  |      |      |   |      |   |      |      | 
|Ending allowance balance    |  | $    | 101  |   |      | $ | 101  |      |  | $ | 399   |  
|                            |  |      |      |   |      |   |      |      | 



|    |                       
|--- | ----------------------
|(j) | Property and Equipment





|    |                         
|--- | ------------------------
|(k) | Research and Development





|    |                     
|--- | --------------------
|(l) | Capitalized Software

Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise Marketed.




Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use.




|    |                                          
|--- | -----------------------------------------
|(m) | Concentration of Business and Credit Risk



F-10



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##### Table of Contents



CORILLIAN CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












|    |                             
|--- | ----------------------------
|(n) | Risk of Technological Change





|    |                         
|--- | ------------------------
|(o) | Stock-Based Compensation

Accounting for Stock Issued
to Employees, Accounting for Certain
Transactions involving Stock Compensation, an interpretation of
APB Opinion No. 25 Accounting for Stock-Based Compensation Accounting for Stock-Based
Compensation  Transition and Disclosure, an amendment
of FASB Statement No. 123,


F-11



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##### Table of Contents



CORILLIAN CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                                                                                                    |  |                           |        |   |      |   |        |      |  |   |         |  
|------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------- | -
|                                                                                                                    |  | Year Ended December 31,   |       
|                                                                                                                    |  |                           |       
|                                                                                                                    |  | 2004                      |        |   | 2003 |   |        | 2002 | 
|                                                                                                                    |  |                           |        |   |      |   |        |      | 
|                                                                                                                    |  | (In thousands, except for |       
|                                                                                                                    |  | per share data)           |       
|Net income (loss), as reported                                                                                      |  | $                         | 10,480 |   |      | $ | 5,126  |      |  | $ | (17,257 | )
|Add: Stock-based compensation expense determined using the
    intrinsic value method                               |  |                           |       |   |      |   | 35     |      |  |   | 885     |  
|Deduct: Total stock-based employee compensation expense
    determined under fair value based method for all awards |  |                           | (2,103 | ) |      |   | (3,314 | )    |  |   | (6,328  | )
|                                                                                                                    |  |                           |        |   |      |   |        |      | 
|Pro forma net income (loss)                                                                                         |  | $                         | 8,377  |   |      | $ | 1,847  |      |  | $ | (22,700 | )
|                                                                                                                    |  |                           |        |   |      |   |        |      | 
|Basic  as reported                                                                                                 |  | $                         | 0.28   |   |      | $ | 0.14   |      |  | $ | (0.49   | )
|Basic  pro forma                                                                                                   |  | $                         | 0.22   |   |      | $ | 0.05   |      |  | $ | (0.64   | )
|Diluted  as reported                                                                                               |  | $                         | 0.26   |   |      | $ | 0.14   |      |  | $ | (0.49   | )
|Diluted  pro forma                                                                                                 |  | $                         | 0.21   |   |      | $ | 0.05   |      |  | $ | (0.64   | )



Accounting for Equity Instruments That Are Issued
to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services.




|    |                            
|--- | ---------------------------
|(p) | Net Income (Loss) Per Share

Earnings Per Share.




|                                                |                                                |                         |        |        |      |  |        |        |  |  |        |        | 
|----------------------------------------------- | ---------------------------------------------- | ----------------------- | ------ | ------ | ---- |  | ------ | ------ |  |  | ------ | ------ | 
|                                                |                                                | Year Ended December 31, |       
|                                                |                                                |                         |       
|                                                |                                                | 2004                    |        |        | 2003 |  |        | 2002   | 
|                                                |                                                |                         |        |        |      |  |        |        | 
|                                                |                                                | (In thousands)          |       
|Shares for basic net income (loss) per share:   |                                                |                         |        |        |      |  |        |        |  |  |        |       
|                                                | Weighted-average common shares                 |                         |        | 37,727 |      |  |        | 36,431 |  |  |        | 35,477 | 
|Effect of dilutive securities:                  |                                                |                         |        |        |      |  |        |        |  |  |        |       
|                                                | Stock options and employee stock purchase plan |                         |        | 2,747  |      |  |        | 1,382  |  |  |        |       | 
|                                                |                                                |                         |        |        |      |  |        |        | 
|Shares for diluted net income (loss) per share: |                                                |                         | 40,474 |        |      |  | 37,813 |        |  |  | 35,477 |       
|                                                |                                                |                         |        |        |      |  |        |        | 

F-12



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##### Table of Contents



CORILLIAN CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                    |  |                         |       |  |      |  |       |      |  |  |       | 
|----------------------------------- |  | ----------------------- | ----- |  | ---- |  | ----- | ---- |  |  | ----- | 
|                                    |  | Year Ended December 31, |      
|                                    |  |                         |      
|                                    |  | 2004                    |       |  | 2003 |  |       | 2002 | 
|                                    |  |                         |       |  |      |  |       |      | 
|                                    |  | (In thousands)          |      
|Shares issuable under stock options |  |                         | 1,202 |  |      |  | 3,128 |      |  |  | 4,623 | 
|Shares issuable under a warrant     |  |                         |      |  |      |  |      |      |  |  | 250   | 
|                                    |  |                         |       |  |      |  |       |      | 
|                                    |  |                         | 1,202 |  |      |  | 3,128 |      |  |  | 4,873 | 
|                                    |  |                         |       |  |      |  |       |      | 



|    |                            
|--- | ---------------------------
|(q) | Comprehensive Income (Loss)

Reporting on Comprehensive Income.




|    |             
|--- | ------------
|(r) | Income Taxes

Accounting for Income Taxes.




|    |                                    
|--- | -----------------------------------
|(s) | Fair Value of Financial Instruments





|    |            
|--- | -----------
|(t) | Advertising





|    |                                 
|--- | --------------------------------
|(u) | Recent Accounting Pronouncements

Share-Based
Payment,


F-13



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##### Table of Contents



CORILLIAN CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|    |                  
|--- | -----------------
|(v) | Reclassifications







|    |                         
|--- | ------------------------
|(3) | Balance Sheet Components



|    |                       
|--- | ----------------------
|(a) | Short-Term Investments



|                   |  |                |        |  |      |   |       | 
|------------------ |  | -------------- | ------ |  | ---- | - | ----- | 
|                   |  | 2004           |        |  | 2003 |  
|                   |  |                |        |  |      |  
|                   |  | (In thousands) |       
|Available-for-sale |  | $              | 10,150 |  |      | $ | 9,300 | 
|Held-to-maturity   |  |                |       |  |      |   | 601   | 
|                   |  |                |        |  |      |  
|                   |  | $              | 10,150 |  |      | $ | 9,901 | 
|                   |  |                |        |  |      |  





|    |                            
|--- | ---------------------------
|(b) | Property and Equipment, Net



|                                               |  |                |         |   |      |   |         |  
|---------------------------------------------- |  | -------------- | ------- | - | ---- | - | ------- | -
|                                               |  | 2004           |         |   | 2003 |  
|                                               |  |                |         |   |      |  
|                                               |  | (In thousands) |        
|Computer equipment and software                |  | $              | 11,959  |   |      | $ | 13,568  |  
|Furniture, fixtures and other equipment        |  |                | 2,909   |   |      |   | 3,332   |  
|Leashold improvements                          |  |                | 3,830   |   |      |   | 4,257   |  
|                                               |  |                |         |   |      |  
|                                               |  |                | 18,698  |   |      |   | 21,157  |  
|Less accumulated depreciation and amortization |  |                | (14,898 | ) |      |   | (15,392 | )
|                                               |  |                |         |   |      |  
|                                               |  | $              | 3,800   |   |      | $ | 5,765   |  
|                                               |  |                |         |   |      |  



F-14



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##### Table of Contents



CORILLIAN CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                    
|--- | -------------------
|(c) | Accrued Liabilities



|                             |  |                |       |  |      |   |       | 
|---------------------------- |  | -------------- | ----- |  | ---- | - | ----- | 
|                             |  | 2004           |       |  | 2003 |  
|                             |  |                |       |  |      |  
|                             |  | (In thousands) |      
|Payroll and related expenses |  | $              | 1,564 |  |      | $ | 1,267 | 
|Other accrued liabilities    |  |                | 904   |  |      |   | 785   | 
|                             |  |                |       |  |      |  
|                             |  | $              | 2,468 |  |      | $ | 2,052 | 
|                             |  |                |       |  |      |  



|    |             
|--- | ------------
|(4) | Income Taxes



|         |  |                |        |  |      |   |       |      |  |   |         |  
|-------- |  | -------------- | ------ |  | ---- | - | ----- | ---- |  | - | ------- | -
|         |  | 2004           |        |  | 2003 |   |       | 2002 | 
|         |  |                |        |  |      |   |       |      | 
|         |  | (In thousands) |       
|Domestic |  | $              | 9,942  |  |      | $ | 5,034 |      |  | $ | (12,052 | )
|Foreign  |  |                | 698    |  |      |   | 216   |      |  |   | (5,205  | )
|         |  |                |        |  |      |   |       |      | 
|         |  | $              | 10,640 |  |      | $ | 5,250 |      |  | $ | (17,257 | )
|         |  |                |        |  |      |   |       |      | 





|                                      |                                               |      |     |       |      |  |     |       |   |  |     |      | 
|------------------------------------- | --------------------------------------------- | ---- | --- | ----- | ---- |  | --- | ----- | - |  | --- | ---- | 
|                                      |                                               | 2004 |     |       | 2003 |  |     | 2002  |  
|                                      |                                               |      |     |       |      |  |     |       |  
|Federal statutory rate                |                                               |      | 34  | %     |      |  | 34  | %     |   |  | (34 | )%  
|Increases (decreases) resulting from: |                                               |      |     |       |      |  |     |       |   |  |     |     
|                                      | Losses for which no benefit has been provided |      |     |      |      |  |     |      |   |  |     | 34.0 | 
|                                      | Utilization of net operating losses           |      |     | (31.9 | )    |  |     | (31.0 | ) |  |     |     | 
|                                      | Other                                         |      |     | (0.6  | )    |  |     | (1.0  | ) |  |     |     | 
|                                      |                                               |      |     |       |      |  |     |       |  
|                                      |                                               |      | 1.5 | %     |      |  | 2.0 | %     |   |  | 0.0 | %   
|                                      |                                               |      |     |       |      |  |     |       |  

F-15



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##### Table of Contents



CORILLIAN CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                          |                                                   |                                      |         |        |        |  |         |        |        | 
|------------------------- | ------------------------------------------------- | ------------------------------------ | ------- | ------ | ------ |  | ------- | ------ | ------ | 
|                          |                                                   | 2004                                 |         |        | 2003   | 
|                          |                                                   |                                      |         |        |        | 
|                          |                                                   | (In thousands)                       |        
|Deferred tax assets:      |                                                   |                                      |         |        |        |  |         |       
|                          | Research and experimentation credit carryforwards |                                      | $       | 2,914  |        |  | $       | 2,552  |       
|                          | Accrued expenses and allowances                   |                                      |         | 414    |        |  |         | 510    |       
|                          | Deferred compensation                             |                                      |         | 130    |        |  |         | 599    |       
|                          | Domestic net operating loss carryforwards         |                                      |         | 20,355 |        |  |         | 22,714 |       
|                          | Foreign net operating loss carryforwards          |                                      |         | 2,583  |        |  |         | 2,721  |       
|                          | Equity investments                                |                                      |         |       |        |  |         | 247    |       
|                          | Goodwill                                          |                                      |         | 293    |        |  |         | 321    |       
|                          | Depreciable assets                                |                                      |         | 1,128  |        |  |         | 923    |       
|                          | Alternative minimum tax credit carryforwards      |                                      |         | 198    |        |  |         | 83     |       
|                          | Other                                             |                                      |         |       |        |  |         | 36     |       
|                          |                                                   |                                      |         |        |        | 
|                          |                                                   | Total gross deferred tax asset       |         |        | 28,015 |  |         |        | 30,706 | 
|Less valuation allowance  |                                                   |                                      | (27,799 | )      |        |  | (30,590 | )     
|                          |                                                   |                                      |         |        |        | 
|                          |                                                   |                                      | 216     |        |        |  | 116     |       
|Deferred tax liabilities: |                                                   |                                      |         |        |        |  |         |       
|                          | Prepaid expenses                                  |                                      |         | 167    |        |  |         |       |       
|                          | Equity investments                                |                                      |         | 49     |        |  |         | 116    |       
|                          |                                                   |                                      |         |        |        | 
|                          |                                                   | Total gross deferred tax liabilities |         |        | 216    |  |         |        | 116    | 
|                          |                                                   |                                      |         |        |        | 
|                          |                                                   | Net deferred tax assets              |         | $      |       |  |         | $      |       | 
|                          |                                                   |                                      |         |        |        | 









|    |                     
|--- | --------------------
|(5) | Shareholders Equity



|    |        
|--- | -------
|(a) | Warrant



F-16



---



##### Table of Contents



CORILLIAN CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|    |                                  
|--- | ---------------------------------
|(b) | 2000 Employee Stock Purchase Plan





Accounting under Statement 123 for
Certain Employee Stock Purchase Plans with a Look-Back Option,


|                        |  |                         |             |  |      |  |             |      |  |  |             | 
|----------------------- |  | ----------------------- | ----------- |  | ---- |  | ----------- | ---- |  |  | ----------- | 
|                        |  | Year Ended December 31, |            
|                        |  |                         |            
|                        |  | 2004                    |             |  | 2003 |  |             | 2002 | 
|                        |  |                         |             |  |      |  |             |      | 
|Risk free interest rate |  |                         | 1.64-3.01%  |  |      |  | 1.05-1.86%  |      |  |  | 3.10%       | 
|Expected volatility     |  |                         | 21-29%      |  |      |  | 22-44%      |      |  |  | 100%        | 
|Expected life in years  |  |                         | 6-24 months |  |      |  | 6-24 months |      |  |  | 6-24 months | 
|Dividend yield          |  |                         |            |  |      |  |            |      |  |  |            | 



|    |                                       
|--- | --------------------------------------
|(6) | 1997, 2000 and 2003 Stock Option Plans





F-17



---



##### Table of Contents



CORILLIAN CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|                          |  |           |            |          |          |   |       |  
|------------------------- |  | --------- | ---------- | -------- | -------- | - | ----- | -
|                          |  |           |            | Weighted |         
|                          |  |           |            | Average  |         
|                          |  | Number of |            |          | Exercise |  
|                          |  | Shares    |            |          | Price    |  
|                          |  |           |            |          |          |  
|Balance December 31, 2001 |  |           | 6,051,920  |          |          | $ | 6.93  |  
|Granted                   |  |           | 1,290,550  |          |          |   | 2.69  |  
|Exercised                 |  |           | (359,857   | )        |          |   | (0.63 | )
|Cancelled                 |  |           | (3,097,417 | )        |          |   | (8.72 | )
|                          |  |           |            |          |          |  
|Balance December 31, 2002 |  |           | 3,885,196  |          |          |   | 4.69  |  
|Granted                   |  |           | 4,279,750  |          |          |   | 2.24  |  
|Exercised                 |  |           | (490,058   | )        |          |   | (2.28 | )
|Cancelled                 |  |           | (1,072,640 | )        |          |   | (3.30 | )
|                          |  |           |            |          |          |  
|Balance December 31, 2003 |  |           | 6,602,248  |          |          |   | 3.51  |  
|Granted                   |  |           | 565,999    |          |          |   | 4.93  |  
|Exercised                 |  |           | (1,009,226 | )        |          |   | 1.95  |  
|Cancelled                 |  |           | (763,516   | )        |          |   | 3.11  |  
|                          |  |           |            |          |          |  
|Balance December 31, 2004 |  |           | 5,395,505  |          |          | $ | 4.01  |  
|                          |  |           |            |          |          |  

F-18



---



##### Table of Contents



CORILLIAN CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|               |  |                     |           |           |                     |  |          |          |  |             |           |          |         |          |           |  |  |   |       | 
|-------------- |  | ------------------- | --------- | --------- | ------------------- |  | -------- | -------- |  | ----------- | --------- | -------- | ------- | -------- | --------- |  |  | - | ----- | 
|               |  | Options Outstanding |           |           | Options Exercisable | 
|               |  |                     |           |           |                     | 
|               |  |                     |           | Weighted  |                     |  |          |          | 
|               |  |                     |           | Average   |                     |  | Weighted |          |  |             |           | Weighted |        
|               |  |                     |           | Remaining |                     |  | Average  |          |  | Exercisable |           |          | Average |         
|               |  | Number of           |           |           | Contractual         |  |          | Exercise |  |             | Number of |          |         | Exercise |          
|Exercise Price |  | Shares              |           |           | Life                |  |          | Price    |  |             | Shares    |          |         | Price    |          
|               |  |                     |           |           |                     |  |          |          |  |             |           |          |         |          |          
|$ 0.56- 0.86   |  |                     | 1,225,626 |           |                     |  | 8.31     |          |  | $           | 0.86      |          |         |          | 353,202   |  |  | $ | 0.86  | 
|0.88- 2.71     |  |                     | 569,626   |           |                     |  | 7.93     |          |  |             | 1.63      |          |         |          | 253,000   |  |  |   | 1.72  | 
|2.75- 3.00     |  |                     | 1,444,053 |           |                     |  | 8.17     |          |  |             | 2.95      |          |         |          | 568,275   |  |  |   | 2.93  | 
|3.02- 4.47     |  |                     | 540,573   |           |                     |  | 6.17     |          |  |             | 3.70      |          |         |          | 432,524   |  |  |   | 3.67  | 
|4.52- 6.01     |  |                     | 899,656   |           |                     |  | 9.18     |          |  |             | 5.43      |          |         |          | 12,094    |  |  |   | 5.60  | 
|6.05-12.50     |  |                     | 572,346   |           |                     |  | 6.00     |          |  |             | 10.68     |          |         |          | 535,972   |  |  |   | 10.98 | 
|12.94-19.50    |  |                     | 143,625   |           |                     |  | 5.45     |          |  |             | 16.81     |          |         |          | 143,625   |  |  |   | 16.81 | 
|               |  |                     |           |           |                     |  |          |          |  |             |           |          |         |          |          
|0.56-19.50     |  |                     | 5,395,505 |           |                     |  | 7.84     |          |  | $           | 4.01      |          |         |          | 2,298,692 |  |  | $ | 5.38  | 
|               |  |                     |           |           |                     |  |          |          |  |             |           |          |         |          |          





|                        |  |              |      |   |      |  |      |      |  |  |      |  
|----------------------- |  | ------------ | ---- | - | ---- |  | ---- | ---- |  |  | ---- | -
|                        |  | Year Ended   |     
|                        |  | December 31, |     
|                        |  |              |     
|                        |  | 2004         |      |   | 2003 |  |      | 2002 | 
|                        |  |              |      |   |      |  |      |      | 
|Risk free interest rate |  |              | 1.65 | % |      |  | 1.48 | %    |  |  | 3.10 | %
|Expected volatility     |  |              | 28   | % |      |  | 39   | %    |  |  | 100  | %
|Expected life in years  |  |              | 3.91 |   |      |  | 4.00 |      |  |  | 3.99 |  
|Dividend yield          |  |              |     |   |      |  |     |      |  |  |     |  



|    |                              
|--- | -----------------------------
|(7) | Commitments and Contingencies



|    |           
|--- | ----------
|(a) | Litigation



F-19



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##### Table of Contents



CORILLIAN CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |            
|--- | -----------
|(b) | 401(k) Plan





|    |                  
|--- | -----------------
|(c) | Lease Obligations



|                              |  |                |     |   |      |   |        |  
|----------------------------- |  | -------------- | --- | - | ---- | - | ------ | -
|                              |  | 2004           |     |   | 2003 |  
|                              |  |                |     |   |      |  
|                              |  | (In thousands) |    
|Computer and other equipment  |  | $              | 34  |   |      | $ | 1,416  |  
|Less accumulated depreciation |  |                | (34 | ) |      |   | (1,213 | )
|                              |  |                |     |   |      |  
|                              |  | $              |    |   |      | $ | 203    |  
|                              |  |                |     |   |      |  







|                                   |      |                                             |     |    |           |  |       |       |        | 
|---------------------------------- | ---- | ------------------------------------------- | --- | -- | --------- |  | ----- | ----- | ------ | 
|                                   |      | Capital                                     |     |    | Operating | 
|                                   |      | Leases                                      |     |    | Leases    | 
|                                   |      |                                             |     |    |           | 
|                                   |      | (In thousands)                              |    
|Year ending December 31:           |      |                                             |     |    |           |  |       |      
|                                   | 2005 |                                             |     | 11 |           |  |       | 2,333 |       
|                                   | 2006 |                                             |     | 4  |           |  |       | 2,351 |       
|                                   | 2007 |                                             |     | 0  |           |  |       | 2,355 |       
|                                   | 2008 |                                             |     | 0  |           |  |       | 2,255 |       
|                                   | 2009 |                                             |     | 0  |           |  |       | 2,305 |       
|Thereafter                         |      |                                             | 0   |    |           |  | 1,757 |      
|                                   |      |                                             |     |    |           | 
|                                   |      | Total minimum lease payments                |     |    | 15        |  |       |       | 13,356 | 
|                                   |      |                                             |     |    |           | 
|Less amounts representing interest |      |                                             | (1) |    |           |  |       |      
|                                   |      |                                             |     |    |           |  |      
|                                   |      | Present value of minimum lease payments     |     |    | 14        |  |       |       |        | 
|Less current portion               |      |                                             | 10  |    |           |  |       |      
|                                   |      |                                             |     |    |           |  |      
|                                   |      | Long-term portion of minimum lease payments |     |    | 4         |  |       |       |        | 
|                                   |      |                                             |     |    |           | 

F-20



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##### Table of Contents



CORILLIAN CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |               
|--- | --------------
|(d) | Line of credit





|                                                                                                                       |  |                |      |   |      |  |        |  
|---------------------------------------------------------------------------------------------------------------------- |  | -------------- | ---- | - | ---- |  | ------ | -
|                                                                                                                       |  | 2004           |      |   | 2003 | 
|                                                                                                                       |  |                |      |   |      | 
|                                                                                                                       |  | (In thousands) |     
|Line of credit facility due January 2005 through June 2008 with
    interest rates of 5.0 to 6.0% at December 31, 2004 |  |                | 911  |   |      |  | 2,573  |  
|                                                                                                                       |  |                |      |   |      | 
|                                                                                                                       |  |                | 911  |   |      |  | 2,573  |  
|Less current portion                                                                                                   |  |                | (286 | ) |      |  | (1,510 | )
|                                                                                                                       |  |                |      |   |      | 
|                                                                                                                       |  |                | 625  |   |      |  | 1,063  |  
|                                                                                                                       |  |                |      |   |      | 



|      |  |   |     | 
|----- |  | - | --- | 
|2005  |  | $ | 286 | 
|2006  |  |   | 250 | 
|2007  |  |   | 250 | 
|2008  |  |   | 125 | 
|      |  |   |    
|Total |  | $ | 911 | 
|      |  |   |    





|    |                
|--- | ---------------
|(e) | Indemnification

Accounting for
Contingencies.




|    |                    
|--- | -------------------
|(8) | Segment Information

Disclosures about Segments of an
Enterprise and Related Information,


F-21



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##### Table of Contents



CORILLIAN CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                       
|--- | ----------------------
|(a) | Geographic Information







|                      |  |                         |        |  |      |   |        |      |  |   |        | 
|--------------------- |  | ----------------------- | ------ |  | ---- | - | ------ | ---- |  | - | ------ | 
|                      |  | Year Ended December 31, |       
|                      |  |                         |       
|                      |  | 2004                    |        |  | 2003 |   |        | 2002 | 
|                      |  |                         |        |  |      |   |        |      | 
|                      |  | (In thousands)          |       
|Revenues from:        |  |                         |        |  |      |   |        |      |  |   |        | 
|United States         |  | $                       | 49,806 |  |      | $ | 45,473 |      |  | $ | 38,315 | 
|All foreign countries |  |                         | 988    |  |      |   | 659    |      |  |   | 826    | 
|                      |  |                         |        |  |      |   |        |      | 
|                      |  | $                       | 50,794 |  |      | $ | 46,132 |      |  | $ | 39,141 | 
|                      |  |                         |        |  |      |   |        |      | 



|    |                
|--- | ---------------
|(b) | Major Customers



|           |  |                         |       |  |      |   |       |      |  |   |       | 
|---------- |  | ----------------------- | ----- |  | ---- | - | ----- | ---- |  | - | ----- | 
|           |  | Year Ended December 31, |      
|           |  |                         |      
|           |  | 2004                    |       |  | 2003 |   |       | 2002 | 
|           |  |                         |       |  |      |   |       |      | 
|           |  | (In thousands)          |      
|Customer A |  | $                       |      |  |      | $ | 6,069 |      |  | $ | 4,341 | 
|Customer B |  |                         | 9,739 |  |      |   | 6,743 |      |  |   |      | 
|Customer C |  |                         | 5,160 |  |      |   |      |      |  |   |      | 



|    |         
|--- | --------
|(c) | Revenues



F-22



---



##### Table of Contents



CORILLIAN CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                  |  |                         |        |  |      |   |        |      |  |   |        | 
|--------------------------------- |  | ----------------------- | ------ |  | ---- | - | ------ | ---- |  | - | ------ | 
|                                  |  | Year Ended December 31, |       
|                                  |  |                         |       
|                                  |  | 2004                    |        |  | 2003 |   |        | 2002 | 
|                                  |  |                         |        |  |      |   |        |      | 
|                                  |  | (In thousands)          |       
|License and professional services |  | $                       | 35,803 |  |      | $ | 35,195 |      |  | $ | 30,623 | 
|Post-contractual support          |  |                         | 11,352 |  |      |   | 8,771  |      |  |   | 6,904  | 
|Hosting                           |  |                         | 3,639  |  |      |   | 2,166  |      |  |   | 1,614  | 
|                                  |  |                         |        |  |      |   |        |      | 
|                                  |  | $                       | 50,794 |  |      | $ | 46,132 |      |  | $ | 39,141 | 
|                                  |  |                         |        |  |      |   |        |      | 



|    |                                     
|--- | ------------------------------------
|(9) | Restructuring and Impairment Charges

Liability
Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring).


Accounting for Costs Associated with Exit or
Disposal Activities, Accounting for the Impairment or Disposal of Long-Lived
Assets,




|     |                           
|---- | --------------------------
|(10) | Related Party Transactions







F-23



---



##### Table of Contents



CORILLIAN CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|     |                 
|---- | ----------------
|(11) | Subsequent Event





|     |                                            
|---- | -------------------------------------------
|(12) | Quarterly Financial Information  Unaudited



|                                    |  |                    |        |   |         |   |        |              |  |   |             |  |  |   |        | 
|----------------------------------- |  | ------------------ | ------ | - | ------- | - | ------ | ------------ |  | - | ----------- |  |  | - | ------ | 
|                                    |  | Quarter Ended 2003 |       
|                                    |  |                    |       
|                                    |  | March 31           |        |   | June 30 |   |        | September 30 |  |   | December 31 | 
|                                    |  |                    |        |   |         |   |        |              |  |   |             | 
|Total Revenues                      |  | $                  | 10,848 |   |         | $ | 11,482 |              |  | $ | 11,586      |  |  | $ | 12,216 | 
|Gross Profit                        |  |                    | 5,787  |   |         |   | 6,549  |              |  |   | 6,492       |  |  |   | 6,803  | 
|Income (loss) from operations       |  |                    | (7     | ) |         |   | 2,072  |              |  |   | 1,947       |  |  |   | 2,384  | 
|Net income (loss)                   |  |                    | (441   | ) |         |   | 1,794  |              |  |   | 1,649       |  |  |   | 2,124  | 
|Basic net income (loss) per share   |  |                    | (0.01  | ) |         |   | 0.05   |              |  |   | 0.05        |  |  |   | 0.06   | 
|Diluted net income (loss) per share |  |                    | (0.01  | ) |         |   | 0.05   |              |  |   | 0.04        |  |  |   | 0.05   | 

|                             |  |                    |        |  |         |   |        |              |  |   |             |     |  |   |        | 
|---------------------------- |  | ------------------ | ------ |  | ------- | - | ------ | ------------ |  | - | ----------- | --- |  | - | ------ | 
|                             |  | Quarter Ended 2004 |       
|                             |  |                    |       
|                             |  | March 31           |        |  | June 30 |   |        | September 30 |  |   | December 31 |    
|                             |  |                    |        |  |         |   |        |              |  |   |             |    
|Total Revenues               |  | $                  | 11,697 |  |         | $ | 12,429 |              |  | $ | 13,517      |     |  | $ | 13,151 | 
|Gross Profit                 |  |                    | 6,687  |  |         |   | 7,644  |              |  |   | 9,018       |     |  |   | 8,996  | 
|Income from operations       |  |                    | 2,045  |  |         |   | 2,561  |              |  |   | 3,214       | (1) |  |   | 3,365  | 
|Net income                   |  |                    | 1,833  |  |         |   | 2,299  |              |  |   | 3,072       |     |  |   | 3,276  | 
|Basic net income per share   |  |                    | 0.05   |  |         |   | 0.06   |              |  |   | 0.08        |     |  |   | 0.09   | 
|Diluted net income per share |  |                    | 0.05   |  |         |   | 0.06   |              |  |   | 0.08        |     |  |   | 0.08   | 








|    |                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------
|(1) | Corillian recorded an impairment charge of approximately $491
    during the quarter ended September 30, 2004.

F-24