content: <PAGE>
  
                        SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C.  20549
  
  
                                     FORM 8-K
  
  
                                  CURRENT REPORT
                        PURSUANT TO SECTION 13 OR 15(d) OF
                        THE SECURITIES EXCHANGE ACT OF 1934
  
  
       Date of Report (Date of earliest event reported): September 18, 2000
  
  
                              CYBERSOURCE CORPORATION
           ------------------------------------------------------------
              (Exact Name of Registrant as Specified in its Charter)
  
  
                                     DELAWARE
               ----------------------------------------------------
                  (State or Other Jurisdiction of Incorporation)
  
  
               000-26477                             77-0472961
       ------------------------         --------------------------------------
       (Commission File Number)          (I.R.S. Employer Identification No.)
  
  
            1295 Charleston Road, Mountain View, California        94043
            ------------------------------------------------------------
            (Address of Principal Executive Offices)          (Zip Code)
  
  
                                  (650) 965-6000
             --------------------------------------------------------
               (Registrant's telephone number, including area code)
  
  
         550 South Winchester Blvd., Suite 301, San Jose, California 95128
         -----------------------------------------------------------------
           (Former Name or Former Address, if Changed Since Last Report)
  
                                         1
  <PAGE>
  
                       INFORMATION TO BE INCLUDED IN REPORT
  
  
  Item 2.  Acquisition or Disposition of Assets.
  
       On September 18, 2000, pursuant to the Agreement and Plan of Merger, dated
  as of July 9, 2000, by and among CyberSource Corporation, a Delaware corporation
  (the "Registrant"), Sapphire Merger, Inc., a Delaware corporation ("Merger
  Sub"), and PaylinX Corporation, a privately held Delaware corporation
  ("PaylinX") (the "Agreement"), the Registrant completed the merger of Merger
  Sub, a wholly-owned subsidiary of the Registrant, with and into PaylinX, with
  PaylinX being the surviving corporation of the merger and becoming a wholly-
  owned subsidiary of the Registrant. The transaction was closed on September 18,
  2000 and is being accounted for as a purchase.
  
       As consideration for the transaction, the Registrant issued an aggregate of
  8,807,831 shares of the Registrant's common stock, $0.001 par value, in exchange
  for all of the outstanding shares of capital stock of PaylinX, subject to the
  withholding of 10% of such shares in escrow in accordance with the terms of the
  Agreement.  At the effective time of the merger, all outstanding options and
  warrants to purchase shares of PaylinX common stock were automatically converted
  into options and warrants to purchase 2,571,090 shares of the Registrant's
  common stock based upon the conversion factor set forth in the Agreement with
  corresponding adjustments to their respective exercise prices.
  
       The Registrant currently intends that PaylinX's business will continue to
  be operated in its current manner.  Certain of the assets of PaylinX were used
  in the development and support of PaylinX's Internet-based payment transaction
  processing platform, and the Registrant currently intends to use such assets in
  substantially the same manner.
  
       The total value of consideration paid for the purchase transaction was
  determined based on arm's length negotiations between the Registrant and
  PaylinX, which took into account PaylinX's financial position, operating
  history, products, intellectual property and other factors relating to PaylinX's
  business and certain income tax aspects of the transaction.  There are no
  material relationships between PaylinX and either the Registrant or Merger Sub
  or any of their respective affiliates or any director or officer of the
  Registrant or Merger Sub or any associate of such director or officer.
  
                                         2
  <PAGE>
  
  Item 7.  Financial Statements, Pro Forma Financial Information and Exhibits.
  
  (a)  Financial Statements of Acquired Business.
       ------------------------------------------
  
  
       (1)  PaylinX Corporation audited financial statements for the years ended
            December 31, 1999, 1998 and 1997.
  
       (2)  PaylinX Corporation unaudited financial statements for the three and
            six months ended June 30, 2000 and 1999.
  
                                         3
  <PAGE>
  
                 REPORT OF ARTHUR ANDERSEN LLP INDEPENDENT AUDITORS
  
  To PaylinX Corporation:
  
     We have audited the accompanying balance sheets of PaylinX Corporation (a
  Missouri corporation) as of December 31, 1999 and 1998, and the related
  statements of operations, stockholders' equity (deficit) and cash flows for
  each of the three years in the period ended December 31, 1999. These financial
  statements are the responsibility of the Company's management. Our
  responsibility is to express an opinion on these financial statements based on
  our audits.
  
     We conducted our audits in accordance with auditing standards generally
  accepted in the United States. Those standards require that we plan and perform
  the audit to obtain reasonable assurance about whether the financial statements
  are free of material misstatement. An audit includes examining, on a test
  basis, evidence supporting the amounts and disclosures in the financial
  statements. An audit also includes assessing the accounting principles used and
  significant estimates made by management, as well as evaluating the overall
  financial statement presentation. We believe that our audits provide a
  reasonable basis for our opinion.
  
     In our opinion, the financial statements referred to above present fairly,
  in all material respects, the financial position of PaylinX Corporation as of
  December 31, 1999 and 1998, and the results of its operations and its cash
  flows for each of the three years in the period ended December 31, 1999, in
  conformity with accounting principles generally accepted in the United States.
  
                                            /s/ Arthur Andersen LLP
  
  St. Louis, Missouri,
  February 4, 2000
  
                                         4
  <PAGE>
  
                                PAYLINX CORPORATION
  
                  BALANCE SHEETS AS OF DECEMBER 31, 1999 AND 1998
  
  <TABLE>
  <CAPTION>
                                                           1999         1998
                                                       ------------  -----------
  <S>                                                  <C>           <C>
                         ASSETS
                         ------
  
  CURRENT ASSETS:
    Cash and cash equivalents......................... $    745,769  $ 3,198,437
    Accounts receivable...............................      851,027      235,366
    Other current assets..............................      118,000       43,547
                                                       ------------  -----------
      Total current assets............................    1,714,796    3,477,350
  PROPERTY AND EQUIPMENT..............................    4,327,430      153,038
  OTHER ASSETS........................................      376,634       32,000
                                                       ------------  -----------
      Total assets.................................... $  6,418,860  $ 3,662,388
                                                       ============  ===========
  
          LIABILITIES AND STOCKHOLDERS' EQUITY
          ------------------------------------
                        (DEFICIT)
                        ---------
  
  CURRENT LIABILITIES:
    Accounts payable and accrued liabilities.......... $  5,660,126  $    40,900
    Accrued compensation and related expenses.........      158,299       17,714
    Deferred revenue..................................      787,846      122,885
    Notes payable.....................................    4,000,000          --
    Other current liabilities.........................       79,535          --
                                                       ------------  -----------
      Total current liabilities.......................   10,685,806      181,499
  OTHER LONG-TERM OBLIGATIONS.........................      813,961          --
  LONG-TERM DEBT......................................    5,787,000          --
    Series A convertible redeemable preferred stock
     ($.01 par value, 400,800 shares issued and
     outstanding, liquidation value of $4,008,000)....    4,437,000    4,008,000
  
  STOCKHOLDERS' EQUITY (DEFICIT):
    Common stock ($.01 par value, 2,000,000 shares
     authorized, 1,868,908 and 1,866,200 shares issued
     and outstanding).................................       18,689       18,662
    Additional paid-in capital........................    4,532,270    2,095,961
    Deferred compensation.............................   (2,360,577)  (1,620,600)
    Retained deficit..................................  (17,495,289)  (1,021,134)
                                                       ------------  -----------
      Total stockholders' equity (deficit)............  (15,304,907)    (527,111)
                                                       ------------  -----------
      Total liabilities and stockholders' equity
       (deficit)...................................... $  6,418,860  $ 3,662,388
                                                       ============  ===========
  </TABLE>
  
        The accompanying notes are an integral part of these balance sheets.
  
                                         5
  <PAGE>
  
                                PAYLINX CORPORATION
  
                              STATEMENTS OF OPERATIONS
                FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
  
  <TABLE>
  <CAPTION>
                                               1999         1998        1997
                                           ------------  ----------  ----------
  <S>                                      <C>           <C>         <C>
  REVENUE:
    License fees.......................... $  2,693,753  $  590,754  $  374,737
    Maintenance...........................      466,095     154,247      62,010
                                           ------------  ----------  ----------
      Total revenue.......................    3,159,848     745,001     436,747
                                           ------------  ----------  ----------
  OPERATING EXPENSES:
    Cost of revenue.......................      605,697      80,017      30,088
    Research and development..............    4,067,124     262,445     120,354
    Selling and marketing.................    6,985,615     340,035     124,730
    General and administrative............    6,894,161     664,301     290,220
    Loss on disposal of assets............      444,503         --          --
                                           ------------  ----------  ----------
      Total operating expenses............   18,997,100   1,346,798     565,392
                                           ------------  ----------  ----------
  Operating loss..........................  (15,837,252)   (601,797)   (128,645)
                                           ------------  ----------  ----------
  OTHER (INCOME) EXPENSES:
    Interest expense......................      280,149      21,480      19,053
    Other (income) expense................      (72,246)     58,080         --
                                           ------------  ----------  ----------
      Total other expenses................      207,903      79,560      19,053
                                           ------------  ----------  ----------
  Net loss................................ $(16,045,155) $ (681,357) $ (147,698)
                                           ============  ==========  ==========
  Basic and diluted loss per share........ $      (8.82) $    (0.37) $    (0.08)
                                           ============  ==========  ==========
  Weighted average shares used in basic
   and diluted per share computation......    1,867,103   1,855,366   1,799,250
                                           ============  ==========  ==========
  </TABLE>
  
  
          The accompanying notes are an integral part of these statements.
  
                                         6
  <PAGE>
  
                                PAYLINX CORPORATION
  
   STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
                                     (DEFICIT)
               FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
  
  <TABLE>
  <CAPTION>
                                Series A
                              Convertible
                               Redeemable
                            Preferred Stock      Common Stock    Additional
                           ------------------ ------------------  Paid-In      Deferred      Retained
                           Shares    Amount     Shares   Amount   Capital    Compensation    Deficit        Total
                           ------- ---------- ---------- ------- ----------  ------------  ------------  ------------
  <S>                      <C>     <C>        <C>        <C>     <C>         <C>           <C>           <C>
  BALANCE, DECEMBER 31,
  1996....................     --  $      --     850,000 $ 8,500 $      --   $       --    $   (192,079) $   (183,579)
    Issuance of common
    stock.................     --         --      51,800     518    292,707          --             --        293,225
    Net loss..............     --         --         --      --         --           --        (147,698)     (147,698)
                           ------- ---------- ---------- ------- ----------  -----------   ------------  ------------
  BALANCE, DECEMBER 31,
  1997....................     --         --     901,800   9,018    292,707          --        (339,777)      (38,052)
    Issuance of common
    stock.................     --         --      31,300     313    114,885          --             --        115,198
    Compensation expense
    recorded on stock
    options...............     --         --         --      --   1,697,600   (1,620,600)           --         77,000
    Issuance of preferred
    stock and warrants.... 400,800  4,008,100        --      --         --           --             --            --
    Net loss..............     --         --         --      --         --           --        (681,357)     (681,357)
                           ------- ---------- ---------- ------- ----------  -----------   ------------  ------------
  BALANCE, DECEMBER 31,
  1998.................... 400,800  4,008,000    933,100   9,331  2,105,192   (1,620,600)    (1,021,134)    3,480,889
    Stock split...........     --         --     933,100   9,331     (9,331)         --             --            --
                           ------- ---------- ---------- ------- ----------  -----------   ------------  ------------
  BALANCE, DECEMBER 31,
  1998 (Restated for
  stock split)............ 400,800  4,008,000  1,866,200  18,662  2,095,961   (1,620,600)    (1,021,134)    3,480,889
    Issuance of common
    stock.................     --         --       2,708      27      2,681          --             --          2,708
    Compensation expense
    recorded on stock
    options...............     --         --         --      --   2,433,628     (739,977)           --      1,693,651
    Accretion related to
    Series A convertible
    redeemable preferred
    stock.................            429,000        --      --         --           --        (429,000)           --
    Net loss..............     --         --         --      --         --           --     (16,045,155)  (16,045,155)
                           ------- ---------- ---------- ------- ----------  -----------   ------------  ------------
  BALANCE, DECEMBER 31,
  1999.................... 400,800 $4,437,000  1,868,908 $18,689 $4,532,270  $(2,360,577)  $(17,495,289) $(10,867,907)
                           ======= ========== ========== ======= ==========  ===========   ============  ============
  </TABLE>
  
         The accompanying notes are an integral part of these statements.
  
                                         7
  <PAGE>
  
                                PAYLINX CORPORATION
  
                              STATEMENTS OF CASH FLOWS
                FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
  
  <TABLE>
  <CAPTION>
                                                 1999         1998       1997
                                             ------------  ----------  ---------
  <S>                                        <C>           <C>         <C>
  CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss................................ $(16,045,155) $ (681,357) $(147,698)
    Adjustments to reconcile net loss to
     cash used in operating activities:
      Depreciation and amortization.........      387,746      65,000     13,100
      Loss on disposal of assets............      444,503         --         --
      Other long-term obligations...........      813,961         --         --
      Compensation expense recorded on stock
       options..............................    1,693,651      77,000        --
      Other noncash charges.................          --          198        225
    Changes in assets and liabilities--
      Accounts receivable...................     (615,661)   (175,901)   (59,465)
      Accounts payable and accrued
       expenses.............................    5,619,226     (76,578)    23,038
      Accrued compensation and related
       expenses.............................      140,585    (100,355)    73,328
      Deferred revenue......................      664,961      66,896     37,208
      Other.................................     (339,552)    (51,130)   (23,565)
                                             ------------  ----------  ---------
        Total adjustments...................    8,809,420    (194,870)    63,869
                                             ------------  ----------  ---------
        Net cash used in operating
         activities.........................   (7,235,735)   (876,227)   (83,829)
                                             ------------  ----------  ---------
  CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of property and equipment.....   (5,101,641)   (172,774)   (44,824)
    Sale of property........................       95,000         --         --
                                             ------------  ----------  ---------
        Net cash used in investing
         activities.........................   (5,006,641)   (172,774)   (44,824)
                                             ------------  ----------  ---------
  CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from issuance of common stock..        2,708     115,000    293,000
    Proceeds from issuance of preferred
     stock and warrants.....................          --    4,008,100        --
    Proceeds from borrowings................    9,787,000         --         --
    Payments on borrowings..................          --          --     (50,000)
                                             ------------  ----------  ---------
  Net cash provided by financing
   activities...............................    9,789,708   4,123,100    243,000
                                             ------------  ----------  ---------
  Net (decrease) increase in cash and cash
   equivalents..............................   (2,452,668)  3,074,099    114,347
  CASH AND CASH EQUIVALENTS, beginning of
   year.....................................    3,198,437     124,338      9,991
                                             ------------  ----------  ---------
  CASH AND CASH EQUIVALENTS, end of year.... $    745,769  $3,198,437  $ 124,338
                                             ============  ==========  =========
  CASH PAID FOR INTEREST.................... $     18,210  $   21,480  $  19,053
                                             ============  ==========  =========
  </TABLE>
  
          The accompanying notes are an integral part of these statements.
  
                                         8
  <PAGE>
  
                                PAYLINX CORPORATION
  
                           UNAUDITED FINANCIAL STATEMENTS
  
                Quarterly Report for the Period Ended June 30, 2000
  
                                   BALANCE SHEETS
  
  <TABLE>
  <CAPTION>
                                                        June 30,    December 31,
                                                          2000          1999
                                                      ------------  ------------
                                                      (Unaudited)
  <S>                                                 <C>           <C>
                        ASSETS
                        ------
  CURRENT ASSETS:
   Cash and cash equivalents......................... $ 11,535,388  $    745,769
   Accounts receivable, net of allowance of
    $437,315 and $225,000, respectively..............    2,814,576       851,027
   Other current assets..............................      224,525       118,000
                                                      ------------  ------------
     Total current assets............................   14,574,489     1,714,796
  PROPERTY AND EQUIPMENT.............................    3,953,070     4,327,430
  OTHER ASSETS.......................................      403,578       376,634
                                                      ------------  ------------
     Total assets.................................... $ 18,931,137  $  6,418,860
                                                      ============  ============
    LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
    ----------------------------------------------
  CURRENT LIABILITIES:
   Accounts payable and accrued liabilities.......... $    882,455  $  5,660,126
   Accrued compensation and related expenses.........      722,819       158,299
   Deferred revenue..................................    1,360,560       787,846
   Notes payable.....................................          --      4,000,000
   Other current liabilities.........................          --         79,535
                                                      ------------  ------------
     Total current liabilities.......................    2,965,834    10,685,806
  OTHER LONG-TERM OBLIGATIONS........................      835,606       813,961
  LONG-TERM DEBT.....................................          --      5,787,000
   Series A convertible redeemable preferred stock
     ($.01 par value, 801,600 shares issued and
     outstanding, liquidation value of $4,008,000)...    4,614,736     4,437,000
   Series B convertible redeemable preferred stock
    ($.01 par value, 4,066,519 and 0 shares issued
    and outstanding).................................   31,301,840           --
  STOCKHOLDERS' EQUITY (DEFICIT):
   Common stock ($.01 par value, 20,000,000 shares
    authorized, 2,184,202 and 1,868,908 shares
    issued and outstanding)..........................       21,842        18,689
   Additional paid-in capital........................    5,161,179     4,532,170
   Deferred compensation.............................   (1,795,772)   (2,360,577)
   Retained deficit..................................  (24,174,128)  (17,495,289)
                                                      ------------  ------------
     Total stockholders' equity (deficit)............  (20,786,879)  (15,304,907)
                                                      ------------  ------------
     Total liabilities and stockholders' equity
      (deficit)...................................... $ 18,931,137  $  6,418,860
                                                      ============  ============
  </TABLE>
  
     The accompanying notes are an integral part of these financial statements.
  
                                         9
  <PAGE>
  
                                PAYLINX CORPORATION
  
                              STATEMENTS OF OPERATIONS
                                    (Unaudited)
  
  <TABLE>
  <CAPTION>
                              Three months ended         Six months ended
                                   June 30,                  June 30,
                            ------------------------  ------------------------
                               2000         1999         2000         1999
                            -----------  -----------  -----------  -----------
  <S>                       <C>          <C>          <C>          <C>
  REVENUE:
    License fees..........  $ 2,509,580  $   446,660  $ 5,146,319  $   747,668
    Maintenance...........      416,960       77,802      705,491      145,067
                            -----------  -----------  -----------  -----------
      Total revenue.......    2,926,540      524,462    5,851,810      892,735
                            -----------  -----------  -----------  -----------
  OPERATING EXPENSES:
    Cost of revenue.......      297,668      121,475      652,413      178,383
    Research and
     development..........    1,292,755      847,899    2,642,836    1,084,525
    Selling and
     marketing............    2,414,502      750,456    4,922,656    1,037,855
    General and
     administrative.......    2,345,772      725,907    3,878,111    1,250,241
                            -----------  -----------  -----------  -----------
      Total operating
       expenses...........    6,350,697    2,445,737   12,096,016    3,551,004
                            -----------  -----------  -----------  -----------
  Operating loss..........   (3,424,157)  (1,921,275)  (6,244,206)  (2,658,269)
                            -----------  -----------  -----------  -----------
  OTHER (INCOME) EXPENSES:
    Interest expense......     (213,984)     (10,153)     255,410       10,153
    Other (income)
     expense..............          --       (13,241)       1,487      (44,519)
                            -----------  -----------  -----------  -----------
      Total other
       expenses...........     (213,984)      (3,088)     256,897      (34,366)
                            -----------  -----------  -----------  -----------
  Net loss................  $(3,210,173) $(1,918,187) $(6,501,103) $(2,623,903)
                            ===========  ===========  ===========  ===========
  Basic and diluted loss
   per share..............  $     (1.68) $     (1.03) $     (3.27) $     (1.41)
                            ===========  ===========  ===========  ===========
  Weighted average shares
   used in basic and
   diluted per share
   computation............    1,958,981    1,866,200    2,041,555    1,866,200
                            ===========  ===========  ===========  ===========
  </TABLE>
  
  
     The accompanying notes are an integral part of these financial statements.
  
                                        10
  <PAGE>
  
                                PAYLINX CORPORATION
  
                              STATEMENTS OF CASH FLOWS
                                    (Unaudited)
  
  <TABLE>
  <CAPTION>
                                                        Six months ended June
                                                                 30,
                                                       -------------------------
                                                           2000         1999
                                                       ------------  -----------
  <S>                                                  <C>           <C>
  CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss.......................................... $ (6,501,103) $(2,623,903)
    Adjustments to reconcile net loss to cash used in
     operating activities:
      Depreciation and amortization...................      524,169       66,391
      Other long-term obligations.....................       21,645           --
      Compensation expense recorded on stock options..      492,982      271,333
    Changes in assets and liabilities--
      Accounts receivable.............................   (1,963,549)    (441,844)
      Accounts payable and accrued expenses...........   (4,777,671)      70,132
      Accrued compensation and related expenses.......      564,520        7,802
      Deferred revenue................................      572,714      129,358
      Other...........................................     (213,004)      18,537
                                                       ------------  -----------
        Net cash used in operating activities.........  (11,279,297)  (2,502,194)
                                                       ------------  -----------
  CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of property and equipment, net..........     (149,809)  (1,293,749)
                                                       ------------  -----------
        Net cash used in investing activities.........     (149,809)  (1,293,749)
                                                       ------------  -----------
  CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from issuance of common stock............      703,885           --
    Proceeds from issuance of preferred stock, net....   21,514,840           --
    Proceeds from borrowings, net.....................           --    4,033,000
                                                       ------------  -----------
        Net cash provided by financing activities.....   22,218,725    4,033,000
                                                       ------------  -----------
        Net increase in cash and cash equivalents.....   10,789,619      237,057
  CASH AND CASH EQUIVALENTS, beginning of year........      745,769    3,198,437
                                                       ------------  -----------
  CASH AND CASH EQUIVALENTS, end of year.............. $ 11,535,388  $ 3,435,494
                                                       ============  ===========
  </TABLE>
  
  
     The accompanying notes are an integral part of these financial statements.
  
                                        11
  <PAGE>
  
                                PAYLINX CORPORATION
  
                           NOTES TO FINANCIAL STATEMENTS
  
  1. The Company:
  
     PaylinX Corporation (the Company) designs, develops, markets, licenses and
  supports point-of-sale software systems for the processing of electronic
  payments, including those arising from internet e-commerce. The Company's
  payment servers perform real-time authorization, settlement and management
  functions for conventional and corporate purchasing card transactions in
  consumer and business-to-business application environments.
  
  2. Summary of Significant Accounting Policies:
  
   Use of Estimates
  
     The preparation of financial statements in conformity with generally
  accepted accounting principles requires management to make estimates and
  assumptions that affect the reported amounts of assets and liabilities and
  disclosure of contingent assets and liabilities at the date of the financial
  statements and the reported amounts of revenues and expenses during the
  reporting period. Actual results may differ from those estimates.
  
   Cash and Cash Equivalents
  
     Cash and cash equivalents consist of cash on deposit with banks and money
  market instruments with original maturities of 90 days or less.
  
   Asset Impairment
  
     The Company periodically assesses the carrying value of its long-lived
  assets and recognizes impairment losses if it is determined the carrying values
  are not recoverable.
  
   Revenue Recognition
  
     Revenue is recognized when earned. The Company licenses software under
  perpetual license agreements direct to customers and to resellers and provides
  maintenance and support services. The Company's revenue recognition policies
  are in compliance with American Institute of Certified Public Accountants
  Statements of Position 97-2, 98-4 and 98-9, "Software Revenue Recognition."
  License fee revenues are generally recognized when a license agreement has been
  signed, the software product has been shipped, there are no uncertainties
  surrounding product acceptance, the fees are fixed and determinable, and
  collection is considered probable. For customer license agreements, which meet
  these recognition criteria, the portion of the fees related to software
  licenses will generally be recognized in the current period. The Company
  allocates a portion of contractual license fees to postcontract support
  activities covered under the contract including first year maintenance.
  Maintenance revenues are recognized ratably over the maintenance period, which
  generally is one year.
  
   Research and Development
  
     Research and development costs are expensed as incurred. Costs required to
  be capitalized in accordance with Statement of Financial Accounting Standards
  (SFAS) No. 86, "Accounting for the Costs of Computer Software to be Sold,
  Leased or Otherwise Marketed," are not material.
  
   Income Taxes
  
     The Company accounts for income taxes pursuant to SFAS No. 109, "Accounting
  for Income Taxes," which utilizes the liability method to calculate deferred
  income taxes. Under this method, deferred taxes are
  
                                        12
  <PAGE>
  
                                PAYLINX CORPORATION
  
                     NOTES TO FINANCIAL STATEMENTS--(Continued)
  
  determined based on the estimated future tax effects of differences between
  financial statements and tax bases of assets and liabilities given the
  provisions of enacted tax laws.
  
     The significant deferred tax assets and liabilities are as follows:
  
  <TABLE>
  <CAPTION>
                                                              1999        1998
                                                           -----------  ---------
     <S>                                                   <C>          <C>
     Deferred tax assets:
       Start-up and organizational costs.................. $     8,649  $  14,263
       Stock options......................................     672,847     29,260
       Reserves and accruals..............................     843,637      6,166
     Deferred tax liabilities:
       Depreciation and amortization......................    (132,160)       --
     Net operating loss carryforward......................   5,092,215    333,582
     Valuation allowance..................................  (6,485,188)  (383,271)
                                                           -----------  ---------
     Net deferred tax asset............................... $       --   $     --
                                                           ===========  =========
  </TABLE>
  
     The Company has net operating loss carryforwards of approximately
  $13,401,000 at December 31, 1999, which expire through 2019 if not utilized by
  the Company in its tax return. As of December 31, 1999 and 1998, a valuation
  allowance has been established to fully offset the net deferred tax asset.
  
   Earnings Per Share
  
     Basic earnings (loss) per share is computed by dividing net loss applicable
  to common stockholders by the weighted average number of shares of common stock
  outstanding during the year. Diluted earnings (loss) per share is computed by
  dividing the net loss applicable to common stockholders by the weighted average
  number of common and common equivalent shares outstanding, unless the
  calculation is antidilutive. For 1999, the net loss applicable to common
  stockholders has been adjusted to reflect $429,000 of accretion related to the
  Series A convertible redeemable preferred stock.
  
     For all periods presented, the effect of dilutive securities is
  antidilutive. As such, the denominator used in determining earnings per share
  is the same for both basic and dilutive earnings per share.
  
  3. Property and Equipment:
  
     Property and equipment are depreciated using the straight-line method over
  the estimated useful lives of the assets ranging between three and seven years.
  Leasehold improvements are amortized using the straight-line method over their
  useful lives or lease terms, as appropriate.
  
     Property and equipment consist of the following at December 31:
  
  <TABLE>
  <CAPTION>
                                                                1999       1998
                                                             ----------  --------
     <S>                                                     <C>         <C>
     Computer equipment..................................... $1,844,909  $173,722
     Purchased software.....................................  1,214,584    15,144
     Furniture and fixtures.................................  1,116,065     5,932
     Leasehold improvements.................................    607,895    37,700
                                                             ----------  --------
                                                              4,783,453   232,498
     Less--Accumulated depreciation and amortization........   (456,023)  (79,460)
                                                             ----------  --------
       Property and equipment, net.......................... $4,327,430  $153,038
                                                             ==========  ========
  </TABLE>
  
     For the years ended December 31, 1999, 1998 and 1997, depreciation and
  amortization expense was $387,746, $65,000 and $13,100, respectively.
  
                                        13
  <PAGE>
  
                                PAYLINX CORPORATION
  
                     NOTES TO FINANCIAL STATEMENTS--(Continued)
  
  
  4. Debt:
  
   Convertible Debt
  
     From June to September 1999, the Company issued $5,787,000 of Convertible
  Promissory Notes (Convertible Notes). The Convertible Notes are convertible to
  Series B Convertible Preferred Stock (Series B Preferred) at 110% of the
  original note value only upon completion of a subsequent funding round of at
  least $10,000,000. The Convertible Notes have an interest rate of 8% payable
  either in cash or additional Series B Preferred shares. The Convertible Notes
  expire either one year from the date of execution of the Convertible Notes,
  upon issuance of the Series B Preferred shares or upon any merger involving the
  Company. If the Convertible Notes become exercisable and are not exercised, the
  terms of the Convertible Notes are extended for one year. In January 2000, the
  Company issued Series B Preferred shares and all Convertible Notes and the
  associated interest were converted into Series B Preferred shares. See Note 8
  for more information.
  
   Accounts Receivable Purchase Agreement
  
     In October 1999, the Company executed an Accounts Receivable Purchase
  Agreement (the Agreement) which allowed the Company to sell up to $2,000,000 in
  qualified accounts receivable for a finance charge of 1.25% per month
  multiplied by the average outstanding accounts receivable plus 1% of all
  accounts receivable sold that month. The Company agreed to repurchase all
  accounts receivable over 90 days old, as well as any disputed accounts
  receivable. The Agreement gave the issuer a lien on the cash, receivables,
  property and other assets of the Company. The agreement expires in October
  2000, but automatically renews without cancellation by either the Company or
  the issuer. At December 31, 1999, there were no accounts receivable sold under
  the Agreement.
  
     In association with the Agreement, the Company issued warrants to purchase
  14,285 Series A Preferred Stock (Series A) at an initial exercise price of
  $10.50. These warrants expire October 13, 2004.
  
   Short-Term Bridge Notes
  
     In November and December 1999, the Company issued $4,000,000 in Short-Term
  Bridge Notes (Short-Term Notes). The Short-Term Notes pay interest of 9% and
  are due within 90 days of issuance. In January 2000, the Company issued Series
  B Preferred Shares and all Short-Term Notes and the associated interest were
  converted into Series B Preferred Shares. See Note 8 for more information.
  
   Letter of Credit
  
     In association with the Company's lease of office space, the Company was
  required to establish a letter of credit. The maximum amount available under
  the letter of credit was $325,000 and is payable to the lessor. The letter of
  credit is secured by certificates of deposit totaling $325,000 which are
  included in other assets in the accompanying balance sheet. The required letter
  of credit decreases over the term of the lease.
  
  5. Retirement Plan:
  
     In February 1999, the Company established an employee benefit plan qualified
  under Section 401(k) of the Internal Revenue Code through which eligible
  employees may defer a portion of their salaries. The Company's contributions to
  the plan are discretionary. The Company elected not to contribute to the Plan
  in 1999.
  
  6. Convertible Redeemable Preferred Stock and Stockholders' Equity (Deficit):
  
   Common Stock
  
     On July 1, 1999, the shareholders approved a two for one stock split. All
  per share information has been retroactively adjusted to reflect this split for
  all years presented.
  
                                        14
  <PAGE>
  
                                PAYLINX CORPORATION
  
                     NOTES TO FINANCIAL STATEMENTS--(Continued)
  
  
   Series A Convertible Redeemable Preferred Stock
  
     During October and December 1998, the Company issued 400,800 shares of
  Series A Convertible Redeemable Preferred Stock (Series A Preferred) along with
  warrants to purchase up to 30,000 shares of common stock. Total proceeds from
  the issuance were $4,008,100 with $10 per share allocated to the Series A
  Preferred and $100 allocated to the warrants. Any excess of mandatory
  redemption value over original recorded value is accreted to the earliest
  possible redemption date. The periodic accretion is charged directly to
  retained earnings (deficit). The Series A Preferred Shares were exchanged for
  new shares of Series A preferred stock in conjunction with the subsequent event
  described in Note 8.
  
     The Series A Preferred stockholders have preemptive rights to purchase new
  issuances of securities.
  
     Each warrant issued allows the warrant holder to purchase one share of
  common stock for $5 per share, subject to adjustment as defined in the
  certificate of incorporation. The warrants expire in October 2003. The warrants
  vest and become exercisable through December 31, 1999, contingent on the
  occurrence of certain events as defined in the Preferred Stock Agreement.
  
   Stock Options
  
     In connection with the sale and issuance of preferred stock in October 1998,
  the Company issued stock options primarily to the founders and certain
  employees. Options continued to be granted to all new employees through
  December 31, 1999. The options vest over a four-year period. There is no
  vesting for the first six months, options are 6/48 vested at the end of the
  sixth month, then vesting is straight-line through the 48th month. In
  accordance with Accounting Principles Board Opinion No. 25, "Accounting for
  Stock Issued to Employees," compensation expense is recorded evenly over the
  period services are received (the vesting period) and measured based on the
  intrinsic value of the options at the date of grant. In 1999 and 1998,
  $1,693,651 and $77,000 was recorded as compensation expense related to stock
  options, respectively.
  
     A summary of the status of the Company's stock options for 1999 and 1998
  (restated for the 1999 stock split) is presented in the table below:
  
  <TABLE>
  <CAPTION>
                                                 1999                1998
                                          -------------------- -----------------
                                                      Weighted          Weighted
                                                      Average           Average
                                                      Exercise          Exercise
                                            Shares     Price    Shares   Price
                                          ----------  -------- -------- --------
     <S>                                  <C>         <C>      <C>      <C>
     Outstanding--beginning of year......    424,400   $1.00        --   $ --
     Granted.............................    896,350    2.06    424,400   1.00
     Exercised...........................     (2,708)   1.00        --     --
     Canceled/forfeited..................   (210,256)   1.47        --     --
                                          ----------           --------
       Outstanding--end of year..........  1,107,786   $1.81    424,400  $1.00
                                          ==========           ========
     Exercisable--end of year............    356,008   $1.28        --   $ --
     Weighted average fair value for
      grants during year................. $     3.53           $   4.17
  </TABLE>
  
     The fair value of each option granted is estimated on the date of grant
  using the Black-Scholes option pricing model with the following assumptions
  used for grants in 1999 and 1998, respectively: risk-free interest rates
  ranging from 4.61% to 6.14% and 4.48% to 4.75%; expected dividend yield of
  0.0%; and expected lives of four years. The range of exercise prices for the
  options outstanding at December 31, 1999, was $1.00 to $7.50. The exercise
  price for all options outstanding at December 31, 1998, was $1.00. The
  weighted-average
  
                                        15
  <PAGE>
  
                                PAYLINX CORPORATION
  
                     NOTES TO FINANCIAL STATEMENTS--(Continued)
  
  remaining contractual life was 3.3 and 3.8 years for options outstanding at
  December 31, 1999 and 1998, respectively.
  
     The Company's net loss and basic and diluted loss per share would not
  significantly differ for 1999 and 1998 had compensation expense for the
  Company's 1999 and 1998 grants of stock options been determined consistent with
  SFAS No. 123, "Accounting for Stock-Based Compensation." The effects of the
  application of SFAS 123 in this disclosure are not indicative of the pro forma
  effect on net income (loss) in future years.
  
  7. Commitments and Contingencies:
  
     The Company leases its St. Louis facility under an operating lease agreement
  expiring in 2004 with renewal options.
  
     In December 1999, the Company leased facilities in Reston, Virginia, and
  will move the headquarters there. The Company will vacate certain leased space
  in St. Louis, Missouri, and sublease the vacated space through March 31, 2001.
  A reserve for the amount of the lease payments in excess of the sublease has
  been established and constitutes the balance of other long-term obligations in
  the accompanying balance sheets. The sublease renews automatically for a period
  through October 31, 2004, unless canceled by either party. Additionally, the
  Company has recognized a loss on disposal of assets of $444,503 due to writing
  down leasehold improvements and furniture and fixtures to the net realizable
  value as of December 31, 1999.
  
     As of December 31, 1999, minimum future lease payments under leases are as
  follows:
  
  <TABLE>
  <CAPTION>
                                                                Less
                                                     Lease    Sublease  Net Lease
                                                  Commitments Revenue  Commitments
                                                  ----------- -------- -----------
     <S>                                          <C>         <C>      <C>
     For the Year Ending December 31
     2000........................................  $931,808   $207,911  $723,897
     2001........................................   883,303     63,105   820,198
     2002........................................   907,697        --    907,697
     2003........................................   916,735        --    916,735
     2004........................................   652,338        --    652,338
  </TABLE>
  
     Rent expense for the years ended December 31, 1999, 1998 and 1997 was
   $485,411, $47,802 and $10,234, respectively.
  
     The Company at times is a party to various claims and legal proceedings
  arising in the ordinary course of business. Management does not believe that
  the ultimate disposition of any or all such proceedings will have a material
  adverse effect upon the financial condition or results of operations of the
  Company.
  
  8. Subsequent Events:
  
     In January 2000, the shareholders of the Company voted to merge PaylinX
  Corporation, a Missouri corporation, with PaylinX Corporation, a Delaware
  corporation. The new company adopted a certificate of incorporation which
  authorized 20,000,000 shares of common stock with a $0.01 per share par value.
  The certificate of incorporation also authorized 5,000,000 shares of preferred
  stock. In conjunction therewith, PaylinX Corporation, Delaware exchanges
  801,600 shares of Series A Convertible Redeemable Preferred Stock (New Series A
  Preferred) for the 400,800 shares of Series A Preferred from PaylinX
  Corporation, Missouri.
  
     Additionally, the Company issued 3,836,472.15 shares of Series B Convertible
  Redeemable Preferred Stock (Series B Preferred) with a par value of $0.01 for
  $7.824538 per share. The Convertible Notes (at 110%
  
                                        16
  <PAGE>
  
                                PAYLINX CORPORATION
  
                     NOTES TO FINANCIAL STATEMENTS--(Continued)
  
  of the original note value) and Short-Term Bridge Notes plus the associated
  accrued interest were converted or exchanged for shares of the Series B
  Preferred.
  
     Under the certificate of incorporation, each share of New Series A Preferred
  and Series B Preferred may be voluntarily converted into one share of common
  stock, subject to certain conversion adjustments as defined in the certificate
  of incorporation at anytime. The New Series A Preferred and the Series B
  Preferred will automatically be converted into common stock upon an initial
  public offering valued at not less than $20 million.
  
     The New Series A Preferred and Series B Preferred are mandatorily redeemable
  by the Company as follows: half of the then outstanding shares of New Series A
  Preferred and Series B Preferred on the fifth anniversary of the original
  issuance date, half of the then outstanding shares of New Series A Preferred
  and Series B Preferred on the sixth anniversary of the original issuance date
  and the remaining outstanding shares of New Series A Preferred and Series B
  Preferred on the seventh anniversary of the original issuance date. The
  redemption price at each of the redemption dates will be the greater of $5 and
  $7.824538 per share or fair market value, plus any declared and unpaid
  dividends for the New Series A Preferred and Series B Preferred, respectively.
  The fair market value of the New Series A Preferred and Series B Preferred is
  to be determined by independent appraisers appointed by the Company and the New
  Series A Preferred and Series B Preferred stockholders.
  
     The New Series A Preferred and Series B Preferred stockholders have
  preemptive rights to purchase new issuances of securities. If this transaction
  had been completed at December 31, 1999, the effect of this transaction on the
  December 31, 1999, balance sheet would have been as follows:
  
  <TABLE>
  <CAPTION>
                                                        Actual      Pro Forma
                                                         1999          1999
                                                     ------------  ------------
                                                                   (Unaudited)
     <S>                                             <C>           <C>
     CURRENT ASSETS:
       Cash and cash equivalents.................... $    745,769  $ 19,619,974
       Other current assets.........................      969,027       969,027
                                                     ------------  ------------
         Total current assets.......................    1,714,796    20,589,001
     LONG-TERM ASSETS...............................    4,704,064     4,704,064
                                                     ------------  ------------
         Total assets............................... $  6,418,860  $ 25,293,065
                                                     ============  ============
     CURRENT LIABILITIES:
       Notes payable................................ $  4,000,000  $        --
       Other current liabilities....................    6,685,806     6,423,867
                                                     ------------  ------------
         Total current liabilities..................   10,685,806     6,423,867
                                                     ------------  ------------
     OTHER LONG-TERM OBLIGATIONS....................      813,961       813,961
                                                     ------------  ------------
     LONG-TERM DEBT.................................    5,787,000           --
                                                     ------------  ------------
       Series A redeemable, convertible preferred
        stock.......................................    4,437,000     4,437,000
       Series B redeemable, convertible preferred
        stock.......................................          --     29,501,844
     STOCKHOLDERS' EQUITY (DEFICIT):
       Common stock.................................       18,689        18,689
       Additional paid-in capital...................    4,532,270     4,532,270
       Deferred compensation........................   (2,360,577)   (2,360,577)
       Retained deficit.............................  (17,495,289)  (18,073,989)
                                                     ------------  ------------
         Total stockholders' equity (deficit).......  (15,304,907)  (15,883,607)
                                                     ------------  ------------
         Total liabilities and stockholders' equity
          (deficit)................................. $  6,418,860  $ 25,293,065
                                                     ============  ============
  </TABLE>
  
                                        17
  <PAGE>
  
                                PAYLINX CORPORATION
  
                      NOTES TO UNAUDITED FINANCIAL STATEMENTS
  
  1. The Company
  
     PaylinX Corporation (the Company) designs, develops, markets, licenses and
  supports point-of-sale software systems for the processing of electronic
  payments, including those arising from internet e-commerce. The Company's
  payment servers perform real-time authorization, settlement and management
  functions for conventional and corporate purchasing card transactions in
  consumer and business-to-business application environments.
  
  2. Basis of Presentation
  
     The accompanying unaudited, interim financial statements of PaylinX
  Corporation omit or condense certain footnotes and other information normally
  included in financial statements prepared in accordance with generally accepted
  accounting principles. This report should be read in conjunction with the
  audited financial statements and notes to the financial statements as of and
  for the year ended December 31, 1999. In the opinion of Management, all
  adjustments, consisting primarily of normal recurring adjustments, necessary
  for a fair presentation of interim period results have been made. The interim
  results reflected in the financial statements are not necessarily indicative of
  results expected for the full year, or future periods.
  
   Use of Estimates
  
     The preparation of financial statements in conformity with generally
  accepted accounting principles requires management to make estimates and
  assumptions that affect the reported amounts of assets and liabilities and
  disclosure of contingent assets and liabilities at the date of the financial
  statements and the reported amounts of revenues and expenses during the
  reporting period. Actual results may differ from those estimates.
  
   Revenue Recognition
  
     Revenue is recognized when earned. The Company licenses software under
  perpetual license agreements direct to customers and to resellers and provides
  maintenance and support services. The Company's revenue recognition policies
  are in compliance with American Institute of Certified Public Accountants
  Statements of Position 97-2, 98-4 and 98-9, "Software Revenue Recognition."
  License fee revenues are generally recognized when a license agreement has been
  signed, the software product has been shipped, there are no uncertainties
  surrounding product acceptance, the fees are fixed and determinable, and
  collection is considered probable. For customer license agreements, which meet
  these recognition criteria, the portion of the fees related to software
  licenses will generally be recognized in the current period. The Company
  allocates a portion of contractual license fees to postcontract support
  activities covered under the contract including first year maintenance.
  Maintenance revenues are recognized ratably over the maintenance period, which
  generally is one year.
  
   Earnings Per Share
  
     Basic earnings (loss) per share is computed by dividing net loss applicable
  to common stockholders by the weighted average number of shares of common stock
  outstanding during the year. Diluted earnings (loss) per share is computed by
  dividing the net loss applicable to common stockholders by the weighted average
  number of common and common equivalent shares outstanding, unless the
  calculation is antidilutive. For the six months and three months ended June 30,
  1999, the net loss applicable to common stockholders has been adjusted to
  reflect $177,736 and $88,868, respectively, of accretion related to the Series
  A convertible redeemable preferred stock. For all periods presented, the effect
  of dilutive securities is antidilutive. As such, the denominator used in
  determining earnings per share is the same for both basic and dilutive earnings
  per share.
  
                                        18
  <PAGE>
  
                                PAYLINX CORPORATION
  
                     NOTES TO FINANCIAL STATEMENTS--(Continued)
  
  
  3. Debt
  
   Convertible Debt
  
     From June to September 1999, the Company issued $5,787,000 of Convertible
  Promissory Notes (Convertible Notes). The Convertible Notes are convertible to
  Series B Convertible Preferred Stock (Series B Preferred) at 110% of the
  original note value only upon completion of a subsequent funding round of at
  least $10,000,000. The Convertible Notes have an interest rate of 8% payable
  either in cash or additional Series B Preferred shares. In January 2000, the
  Company issued Series B Preferred shares and all Convertible Notes and the
  associated interest were converted into Series B Preferred shares. See Note 4
  for more information.
  
   Short-Term Bridge Notes
  
     In November and December 1999, the Company issued $4,000,000 in Short-Term
  Bridge Notes (Short-Term Notes). In January 2000, the Company issued Series B
  Preferred Shares and all Short-Term Notes and the associated interest were
  converted into Series B Preferred Shares. See Note 4 for more information.
  
  4. Convertible Redeemable Preferred Stock and Stockholders' Equity (Deficit)
  
   Common Stock
  
     On July 1, 1999, the shareholders approved a two for one stock split. All
  per share information has been retroactively adjusted to reflect this split for
  all years presented.
  
   Series A Convertible Redeemable Preferred Stock
  
     During October and December 1998, the Company issued 400,800 shares of
  Series A Convertible Redeemable Preferred Stock (Series A Preferred) along with
  warrants to purchase up to 30,000 shares of common stock. Total proceeds from
  the issuance were $4,008,100 with $10 per share allocated to the Series A
  Preferred and $100 allocated to the warrants. Any excess of mandatory
  redemption value over original recorded value is accreted to the earliest
  possible redemption date. The periodic accretion is charged directly to
  retained earnings (deficit). The Series A Preferred Shares were exchanged for
  new shares of Series A preferred stock in conjunction with the transaction
  described below.
  
     Each warrant issued allows the warrant holder to purchase one share of
  common stock for $5 per share, subject to adjustment as defined in the
  certificate of incorporation. The warrants expire in October 2003. The warrants
  vest and become exercisable through December 31, 1999, contingent on the
  occurrence of certain events as defined in the Preferred Stock Agreement.
  
     In January 2000, the shareholders of the Company voted to merge PaylinX
  Corporation, a Missouri corporation, with PaylinX Corporation, a Delaware
  corporation. The new company issued a certificate of incorporation which
  authorized 20,000,000 shares of common stock with a $0.01 per share par value.
  The certificate of incorporation also authorized 5,000,000 shares of preferred
  stock. In conjunction therewith, PaylinX Corporation, Delaware exchanged
  801,600 shares of Series A Convertible Redeemable Preferred Stock (New Series A
  Preferred) for the 400,800 shares of Series A Preferred from PaylinX
  Corporation, Missouri.
  
     Additionally, in February 2000, the Company issued 3,836,472.15 shares of
  Series B Convertible Redeemable Preferred Stock (Series B Preferred) with a par
  value of $0.01 for $7.824538 per share. The Convertible Notes (at 110% of the
  original note value) and Short-Term Bridge Notes plus the associated accrued
  interest were converted or exchanged for shares of the Series B Preferred.
  
                                        19
  <PAGE>
  
                                PAYLINX CORPORATION
  
                    NOTES TO FINANCIAL STATEMENTS--(Continued)
  
  
     Under the certificate of incorporation, each share of New Series A
  Preferred and Series B Preferred may be voluntarily converted into one share
  of common stock, subject to certain conversion adjustments as defined in the
  certificate of incorporation at anytime. The New Series A Preferred and the
  Series B Preferred will automatically be converted into common stock upon an
  initial public offering or sale valued at not less than $20 million.
  
     The New Series A Preferred and Series B Preferred are mandatorily
  redeemable by the Company as follows: half of the then outstanding shares of
  New Series A Preferred and Series B Preferred on the fifth anniversary of the
  original issuance date, half of the then outstanding shares of New Series A
  Preferred and Series B Preferred on the sixth anniversary of the original
  issuance date and the remaining outstanding shares of New Series A Preferred
  and Series B Preferred on the seventh anniversary of the original issuance
  date. The redemption price at each of the redemption dates will be the greater
  of $5 and $7.824538 per share or fair market value, plus any declared and
  unpaid dividends for the New Series A Preferred and Series B Preferred,
  respectively.
  
     The New Series A Preferred and Series B Preferred stockholders have
  preemptive rights to purchase new issuances of securities.
  
  5. Commitments and Contingencies
  
     The Company at times is a party to various claims and legal proceedings
  arising in the ordinary course of business. Management does not believe that
  the ultimate disposition of any or all such proceedings will have a material
  adverse effect upon the financial condition or results of operations of the
  Company.
  
  6. Subsequent Event
  
     On July 9, 2000, the Company signed an agreement and plan of merger with
  Cybersource Corporation.
  
                                        20
  <PAGE>
  
  (b)  Unaudited Pro Forma Condensed Combined Financial Information and Notes
       ----------------------------------------------------------------------
       thereto.
       -------
  
  
            UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
  
     The unaudited pro forma condensed combined financial information for
  CyberSource set forth below gives effect to the acquisition of PaylinX. The
  historical financial information set forth below has been derived from, and is
  qualified by reference to, the supplemental consolidated financial statements
  of CyberSource and the consolidated financial statements of CyberSource and
  PaylinX, and should be read in conjunction with those financial statements and
  the notes thereto incorporated by reference or included elsewhere herein.
  
     On September 18, 2000, a wholly-owned subsidiary of CyberSource was merged
  with and into PaylinX, and PaylinX became a wholly-owned subsidiary of
  CyberSource. In connection with the merger, we issued approximately 8.8 million
  shares of our common stock to PaylinX stockholders in exchange for PaylinX
  outstanding common and preferred stock, and assumed options in connection with
  the PaylinX merger to purchase approximately 2,571,000 shares of our common
  stock. The unaudited pro forma condensed combined statement of operations data
  for the year ended December 31, 1999 and the six months ended June 30, 2000 set
  forth below give effect to the acquisition as if it occurred on January 1, 1999.
  The unaudited pro forma condensed combined balance sheet as of June 30, 2000 set
  forth below gives effect to the acquisition of PaylinX as if it occurred on June
  30, 2000.
  
    The PaylinX acquisition is being accounted for using the purchase method of
  accounting. The Pro Forma Financial Statements have been prepared on the basis
  of assumptions described herein.
  
     CyberSource expects to incur integration costs, the amount of which is
  uncertain at this time, subsequent to the consummation of the acquisition. The
  Pro Forma Condensed Combined Statements of Operations does not include the
  costs of integration, as these costs will affect future operations and do not
  qualify as liabilities in connection with a purchase business combination under
  EITF 95-3, "Recognition of Liabilities in Connection with a Purchase Business
  Combination."
  
     The unaudited pro forma condensed combined balance sheet set forth herein
  combines the balance sheets of CyberSource and PaylinX as of June 30, 2000. The
  unaudited pro forma condensed financial information set forth herein combines
  the supplemental statement of operations of CyberSource for the year ended
  December 31, 1999 and the PaylinX statement of operations for the year ended
  December 31, 1999. The unaudited pro forma condensed financial information set
  forth herein also combines the statement of operations of CyberSource for the
  six months ended June 30, 2000 and the PaylinX statement of operations for the
  six months ended June 30, 2000. This pro forma condensed financial information
  reflects certain adjustments, including among others, adjustments to reflect
  the amortization of intangible assets and goodwill acquired and deferred
  compensation related to assumed options. The information set forth below should
  be read in conjunction with "Management's Discussion and Analysis of Financial
  Condition and Results of Operations" and the financial statements and notes to
  the financial statements of CyberSource and PaylinX which are incorporated by
  reference or included in the Company's Proxy Statement filed on August 17, 2000,
  in relation to this purchase transaction. The unaudited pro forma condensed
  combined financial information set forth below does not purport to represent
  what the consolidated results of operations or financial condition of
  CyberSource would actually have been if the PaylinX acquisition and related
  transaction had in fact occurred on such date or to project the future
  consolidated results of operations or financial condition of CyberSource.
  
                                        21
  <PAGE>
  
          UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
  
  
                      For the Six Months Ended June 30, 2000
                     (In thousands, except per share amounts)
  
  <TABLE>
  <CAPTION>
                                                                                             Total       Pro Forma
                                                            CyberSource       PaylinX      Combined     Adjustments       Total
                                                            -----------       --------     --------     -----------     --------
  <S>                                                       <C>               <C>          <C>          <C>             <C>
  Net revenues..........................................      $ 13,838        $  5,852      $ 19,690     $       --      $ 19,690
  Cost of revenues......................................        10,747             652        11,399             --        11,399
                                                              --------        --------      --------     ----------      --------
  Gross profit..........................................         3,091           5,200         8,291             --         8,291
  Operating expenses
       Product development..............................         6,543           2,643         9,186             --         9,186
       Sales and marketing..............................        12,616           4,923        17,539             --        17,539
       General and administrative.......................         6,087           3,878         9,965             --         9,965
       Acquisition related costs........................           834              --           834             --           834
       Goodwill and deferred compensation
         amortization...................................           411              --           411         18,857 (7)    26,601
                                                                                                                584 (7)
                                                                                                              1,250 (7)
                                                                                                              1,300 (7)
                                                                                                              1,767 (8)
                                                                                                              2,432 (9)
                                                              --------        --------      --------     ----------      --------
  Total operating expenses..............................        26,491          11,444        37,395         26,190        64,125
  Loss from operations..................................       (23,400)         (6,244)      (29,644)       (26,190)      (55,884)
  Loss on investment in joint venture...................           (31)             --           (31)            --           (31)
  Interest income.......................................         3,879              --         3,879             --         3,879
  Interest and other expense............................           (55)           (257)         (312)            --          (312)
                                                              --------        --------      --------     ----------      --------
  Net loss..............................................      $(19,607)       $ (6,501)     $(26,108)    $  (26,190)     $(52,298)
                                                              ========        ========      ========     ==========      ========
  Basic and diluted net loss per share..................      $  (0.76)       $  (3.27)                                  $  (1.53)
                                                              --------        --------                                   --------
  Weighted average shares of common stock...............        25,801           2,042                                     34,252
                                                              ========        ========                                   ========
  </TABLE>
  
                   See accompanying notes to Unaudited Pro Forma
                     Condensed Combined Financial Information
  
                                        22
  <PAGE>
  
          UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
  
                        For the Year Ended December 31, 1999
                      (In thousands, except per share amounts)
  
  <TABLE>
  <CAPTION>
                                                  Total     Pro Forma
                           CyberSource PaylinX   Combined  Adjustments    Total
                           ----------- --------  --------  -----------   --------
  <S>                      <C>         <C>       <C>       <C>           <C>
  Net revenues............  $ 12,931   $  3,160  $ 16,091   $    --      $ 16,091
  Cost of revenues........    10,948        606    11,554        --        11,554
                            --------   --------  --------   --------     --------
  Gross profit............     1,983      2,554     4,537        --         4,537
  Operating expenses
    Product development...     7,807      4,067    11,874        --        11,874
    Sales and marketing...    15,110      6,986    22,096        --        22,096
    General and
     administrative.......     6,023      6,894    12,917        --        12,917
    Goodwill, purchased
     intangibles and
     deferred
     compensation
     amortization.........     4,716        --      4,716    37,967 (7)    57,332
                                                              1,167 (7)
                                                              2,500 (7)
                                                              2,600 (7)
                                                              3,533 (8)
                                                              4,839 (9)
                            --------   --------  --------   --------     --------
  Total operating
   expenses...............    33,656     17,947    51,603     52,606      104,209
  Loss from operations....   (31,673)   (15,393)  (47,066)   (52,606)     (99,672)
  Interest income.........     2,123        --      2,123        --         2,123
  Interest and other
   expense................      (295)      (652)     (947)       --          (947)
                            --------   --------  --------   --------     --------
  Net loss................  $(29,845)  $(16,045) $(45,890)  $(52,606)    $(98,496)
                            ========   ========  ========   ========     ========
  Basic and diluted net
   loss per share.........  $  (1.95)  $  (8.82)                         $  (4.09)
                            --------   --------                          --------
  Weighted average shares
   of common stock........    15,267      1,867                            24,075
                            ========   ========                          ========
  </TABLE>
  
  
                   See accompanying notes to Unaudited Pro Forma
                      Condensed Combined Financial Information
  
                                        23
  <PAGE>
  
          UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
  
                       For the Six Months Ended June 30, 2000
                      (In thousands, except per share amounts)
  
  <TABLE>
  <CAPTION>
                                                  Total     Pro Forma
                            CyberSource PaylinX  Combined  Adjustments    Total
                            ----------- -------  --------  -----------   --------
  <S>                       <C>         <C>      <C>       <C>           <C>
  Net revenues.............  $ 13,838   $ 5,852  $ 19,690   $    --      $ 19,690
  Cost of revenues.........    10,747       652    11,399        --        11,399
                             --------   -------  --------   --------     --------
  Gross profit.............     3,091     5,200     8,291        --         8,291
  Operating expenses
    Product development....     6,543     2,643     9,186        --         9,186
    Sales and marketing....    12,616     4,923    17,539        --        17,539
    General and
     administrative........     6,087     3,878     9,965        --         9,965
    Acquistion related
     costs.................       834       --        834        --           834
    Goodwill, purchased
     intangibles  and
     deferred compensation
     amortization..........       411       --        411    18,984 (7)    25,480
                                                                584 (7)
                                                              1,250 (7)
                                                              1,300 (7)
                                                              1,767 (8)
                                                              1,184 (9)
                             --------   -------  --------   --------     --------
  Total operating
   expenses................    26,491    11,444    37,935     25,069       63,004
  Loss from operations.....   (23,400)   (6,244)  (29,644)   (25,069)     (54,713)
  Loss on investment in
   joint venture...........       (31)      --        (31)       --           (31)
  Interest income..........     3,879       --      3,879        --         3,879
  Interest and other
   expense.................       (55)     (257)     (312)       --          (312)
                             --------   -------  --------   --------     --------
  Net loss.................  $(19,607)  $(6,501) $(26,108)  $(25,069)    $(51,177)
                             ========   =======  ========   ========     ========
  Basic and diluted net
   loss per share..........  $  (0.76)  $ (3.27)                         $  (1.50)
                             --------   -------                          --------
  Weighted average shares
   of common stock.........    25,801     2,042                            34,069
                             ========   =======                          ========
  </TABLE>
  
  
                   See accompanying notes to Unaudited Pro Forma
                      Condensed Combined Financial Information
  
                                        24
  <PAGE>
  
                UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
  
                                As of June 30, 2000
                                   (In thousands)
  
  <TABLE>
  <CAPTION>
                                                                        Pro Forma
                                        CyberSource PaylinX   Total    Adjustments     Total
                                        ----------- -------  --------  -----------    --------
                 ASSETS
                 ------
  <S>                                   <C>         <C>      <C>       <C>            <C>
  Current Assets:
   Cash and cash equivalents..........   $ 41,076   $11,535  $ 52,611   $    --       $ 52,611
   Short-term investments.............     75,020       --     75,020        --         75,020
   Accounts receivable, net...........      4,583     2,815     7,398        --          7,398
   Prepaid expenses and other current
   assets.............................      1,333       224     1,557        --          1,557
                                         --------   -------  --------   --------      --------
  Total current assets................    122,012    14,574   136,586        --        136,586
   Property and equipment, net........     15,420     3,953    19,373        --         19,373
   Investment in joint venture........        730       --        730        --            730
   Other noncurrent assets............        495       404       899        --            899
   Goodwill and other intangible
    assets............................        --        --        --     146,000 (1)   146,000
                                         --------   -------  --------   --------      --------
     Total assets.....................   $138,657   $18,931  $157,588   $146,000      $303,588
                                         ========   =======  ========   ========      ========
  LIABILITIES AND STOCKHOLDERS' EQUITY
  ------------------------------------
  Current liabilities:
   Accounts payable...................      2,053       276     2,329        --          2,329
   Other accrued liabilities..........      5,344     1,329     6,673      4,000 (1)    12,173
                                                                           1,500 (3)
   Deferred revenue...................        793     1,360     2,153       (680)(2)     1,473
   Current obligations under capital
    leases............................        578       --        578        --            578
                                         --------   -------  --------   --------      --------
  Total current liabilities...........      8,768     2,965    11,733      4,820        16,553
  Non-current obligation under capital
   leases.............................        204       --        204        --            204
  Other long-term obligations.........        --        836       836        --            836
  Redeemable convertible preferred
   stock..............................        --     35,917    35,917    (35,917)(5)       --
  Stockholders' equity (net capital
   deficiency)
   Common stock and paid-in capital....   190,341     5,183   195,524    142,951 (5)   369,800
                                                                          27,859 (5)
                                                                          (5,183)(5)
                                                                           8,649 (1)
   Deferred compensation..............       (903)   (1,796)   (2,699)    (8,649)(1)    (9,552)
                                                                           1,796 (4)
   Accumulated other comprehensive
    loss..............................        (54)      --        (54)       --            (54)
   Accumulated deficit................    (59,699)  (24,174)  (83,873)    24,174 (6)   (74,199)
                                                                         (14,500)(6)
                                         --------   -------  --------   --------      --------
     Total stockholders' equity.......    129,685   (28,787)  108,848    177,097       285,995
                                         --------   -------  --------   --------      --------
     Total liabilities and
      stockholders' equity (net
      capital deficiency).............   $138,657   $18,931  $157,588   $146,000      $303,588
                                         ========   =======  ========   ========      ========
  </TABLE>
  
                   See accompanying notes to Unaudited Pro Forma
                      Condensed Combined Financial Information
  
                                        25
  <PAGE>
  
                  NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
                                FINANCIAL STATEMENTS
  
     For purposes of the pro forma operating data, CyberSource's consolidated
  financial statements as of June 30, 2000 and for the six months ended June 30,
  2000 have been combined with the PaylinX financial statements as of June 30,
  2000 and for the six months ended June 30, 2000. CyberSource's supplemental
  consolidated statement of operations for the year ended December 31, 1999 has
  been combined with the PaylinX statement of operations for the year ended
  December 31, 1999.
  
     The companies have had no significant inter-company activity which would
  require elimination in preparing the combined condensed financial statements.
  In addition, the companies have no significantly different accounting policies
  and procedures which would have required conforming adjustments.
  
     The accompanying pro forma information should be read in conjunction with
  the historical financial statements and supplemental financial statements and
  related notes for both CyberSource and PaylinX, which are either included or
  incorporated by reference in this Form 8-K or CyberSource's Proxy Statement
  filed on August 17, 2000 in relation to this purchase transaction.
  
     The pro forma financial statements give effect to CyberSource's acquisition
  of PaylinX through a merger and exchange of shares. The Unaudited Pro Forma
  Combined Condensed Statements of Operations for the year ended December 31,
  1999 and the six months ended June 30, 2000 reflect this transaction as if it
  had taken place at the beginning of the period presented. The Unaudited Pro
  Forma Combined Condensed Balance Sheet gives effect to this transaction as if
  it had taken place on June 30, 2000.
  
     The merger is being accounted for using the purchase method of accounting.
  The pro forma financial statements have been prepared on the basis of
  assumptions described in the following notes and include assumptions relating
  to the allocation of the consideration paid for the assets and liabilities of
  PaylinX based on estimated fair value. CyberSource does not expect that the
  final allocation of the purchase price will differ materially from the
  preliminary allocations. In the opinion of CyberSource's management, all
  adjustments necessary to present fairly such pro forma financial statements
  have been made on the proposed terms and structure of the PaylinX merger.
  
     In connection with the merger, CyberSource currently expects to incur write-
  offs related to in-process research and development, of approximately $14.5
  million. The Unaudited Pro Forma Combined Condensed Statements of Operations do
  not reflect these charges. The charge related to in-process research and
  development will be reflected in CyberSource's consolidated financial
  statements upon the effective time of the merger. The pro forma financial
  statements do not include the costs of integration, the amount of which is
  uncertain at this time as they will affect future operations.
  
     The pro forma financial statements are not necessarily indicative of what
  the actual financial results would have been had the transaction taken place on
  January 1, 1999 or June 30, 2000 and do not purport to indicate the results of
  future operations.
  
     The pro forma financial statements give effect to the following pro forma
  adjustments:
  
       (1) In accordance with the merger agreement, PaylinX will become a
    wholly owned subsidiary of CyberSource, and all outstanding shares of its
    common and preferred stock will be converted into shares of CyberSource
    common stock.
  
     The PaylinX merger is being accounted for using the purchase method of
  accounting. The purchase price of $16.23 per share was based on the closing
  price of CyberSource's stock on July 10, 2000 (the date of the announcement of
  the merger) and the three days prior and subsequent to the announcement date.
  
                                        26
  <PAGE>
  
                  NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
                         FINANCIAL STATEMENTS--(Continued)
  
  
     The purchase price was determined as follows:
  
  <TABLE>
  <CAPTION>
                                               PaylinX  CyberSource
                                               Shares     Shares      Fair Value
                                              --------- ----------- --------------
                                                                    (in thousands)
    <S>                                       <C>       <C>         <C>
      Shares................................. 7,339,859  8,807,831     $142,951
      Stock options assumed.................. 2,142,575  2,571,090       36,508
      Totals................................. 9,482,434 11,378,921     $179,459
  </TABLE>
  
     The PaylinX shares were first converted to CyberSource equivalent shares by
  taking the number of PaylinX shares multiplied by the exchange ratio of
  approximately 1.2 per share.
  
     With respect to stock options assumed as part of the merger, all PaylinX
  options will be exchanged for CyberSource options and are included as part of
  the purchase price based on their fair value. Any unvested PaylinX options
  issued in exchange for unvested CyberSource options are also included as part
  of the purchase price based on their fair value, however, pursuant to Financial
  Accounting Standards Board Interpretation Number 44, the portion of the
  intrinsic value of unvested options that will be deemed to be earned over the
  remaining vesting period of those options has been deducted from the fair value
  of the unvested options and will be amortized as deferred compensation over
  that remaining vesting period. The fair value of the options assumed is based
  on the Black-Scholes model using the following assumptions:
  
    . Fair market value of the underlying shares is based on the average
      closing price of CyberSource's common stock on July 10, 2000 and the
      three days prior and subsequent to such date.
  
    . Expected life of 4.0 years
  
    . Expected volatility of 1.13
  
    . Risk free interest rate of 5.55%
  
    . Expected dividend rate of 0%
  
     Below is a table of the estimated acquisition cost, allocation of excess
  purchase cost over the fair value of net assets acquired to goodwill and other
  intangible assets acquired and annual amortization of the goodwill and
  intangible assets acquired (in thousands, except for asset life);
  
  <TABLE>
  <CAPTION>
                                           Estimated                 Annual
                                          Acquisition Asset Life Amortization of
                                             Cost     (in years)   Intangibles
                                          ----------- ---------- ---------------
    <S>                                   <C>         <C>        <C>
    Value of common stock and stock
     options issued......................  $179,459
    Transaction costs....................     4,000
                                           --------
      Total estimated acquisition cost...  $183,459
                                           ========
    Historical value of net assets
     acquired of PaylinX at June 30,
     2000................................  $ 15,130      N/A
    Adjustment to state net assets at
     fair market value...................      (820)     N/A
    Assembled workforce..................     3,500        3         $ 1,167
    Customer base........................    13,000        5         $ 2,600
    Developed technology.................    10,600        3         $ 3,533
    In-process technology................    14,500      N/A             N/A
    Covenants-not-to-compete.............     5,000        2         $ 2,500
    Goodwill.............................   113,900        3         $37,967
    Deferred compensation................     8,649      3.5         $ 4,839
                                           --------
      Total..............................  $183,459
                                           ========
  </TABLE>
  
                                        27
  <PAGE>
  
                  NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
                         FINANCIAL STATEMENTS--(Continued)
  
  
     Tangible assets of PaylinX acquired in the merger principally include cash
  and cash equivalents, accounts receivables, and fixed assets. Liabilities of
  PaylinX assumed in the merger principally include accounts payable, deferred
  revenue and other liabilities.
  
     To determine the value of the developed technology the expected future cash
  flow attributable to all existing technology was discounted, taking into
  account risks related to the characteristics and applications of the
  technology, existing and future markets, and assessments of the life cycle
  stage of the technology. The analysis resulted in a valuation of approximately
  $10.6 million for developed technology which has reached technological
  feasibility and therefore was capitalizable. The developed technology is being
  amortized on a straight line basis over a 3 year period.
  
     The value of the assembled workforce was derived by estimating the costs to
  replace the existing employees, including recruiting and hiring costs and
  training costs for each category of employee. The analysis determined a
  valuation of approximately $3.5 million for the assembled workforce, and is
  being amortized on a straight line basis over a 3 year period.
  
     The value of the customer base of approximately $13.0 million was derived by
  considering, among other factors, the historical costs to develop customer
  relationships, the expected income, and the associated risks. Associated risks
  included the inherent difficulties and uncertainties in transitioning business
  relationships. The value of the customer base is being amortized over a 5 year
  period.
  
     The value of deferred compensation of approximately $8.6 million was derived
  using the guidance of Financial Accounting Standards Board Interpretation
  Number 44, the unvested options' intrinsic value, and a vesting ratio of 38%
  for the remaining vesting period of unvested options. The deferred compensation
  is being amortized on a graded basis over a 3.5 year period.
  
     The projects identified as in-process technology at PaylinX are those that
  will be underway at the time of the PaylinX merger and would, after
  consummation of the PaylinX merger, require additional effort to establish
  technological feasibility. These projects have identifiable technological risk
  factors which indicate that even though successful completion is expected, it
  is not assured. If an identified project is not successfully completed, there
  is no alternative future use for the project and the expected future income
  will not be realized. The estimated amount of the in-process research and
  development charge represents a preliminary estimate which could materially
  differ from the actual results that will be experienced by CyberSource as final
  values will not be established until after the closing of the PaylinX merger.
  
     The in-process technology acquired from PaylinX in the transaction consists
  primarily of technology related to replacement and enhancement of PaylinX's
  core technology, principally multi-channel enterprise payment software.
  
       (2) The pro forma adjustment to deferred revenue reflects the writedown
    of deferred revenue to the estimated amount of the cost to provide service
    under maintenance contracts as of June 30, 2000 plus a profit margin
    related to such services.
  
       (3) The pro forma adjustment to accrued liabilities reflects the
    payments under severance agreements to executives of PaylinX who will be
    terminated upon the closing of the merger.
  
       (4) The pro forma adjustment to "deferred compensation" reflects the
    elimination of PaylinX deferred compensation ($1.8 million).
  
       (5) The pro forma adjustment to "common stock and additional paid in
    capital" and "convertible preferred stock" reflects elimination of
    PaylinX's common and preferred stock ($41.1 million) and the impact of the
    issuance of CyberSource common stock ($179.5 million) in connection with
    the merger.
  
                                        28
  <PAGE>
  
                  NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
                         FINANCIAL STATEMENTS--(Continued)
  
  
       (6) The pro forma adjustment to "Accumulated Deficit" reflects the
    elimination of PaylinX's accumulated deficit ($24.0 million) and the inclusion
    of in-process technology charge ($14.5 million).
  
       (7) The pro forma adjustment is for the amortization of goodwill,
    assembled workforce, covenants-not-to-compete and customer base.
  
       (8) The pro forma adjustment is for the amortization of developed
    technology.
  
       (9) The pro forma adjustment is for the amortization of deferred
    compensation.
  
                                        29
  <PAGE>
  
  (c)  Exhibits.
       --------
  
       The Exhibit Index immediately following the signature page is incorporated
       herein by reference.
  
  
                                    SIGNATURES
  
  Pursuant to the requirements of the Securities Exchange Act of 1934, the
  Registrant has duly caused this report to be signed on its behalf by the
  undersigned hereunto duly authorized.
  
  
                                      CYBERSOURCE CORPORATION
                                      (the Registrant)
  
                                      By:  /s/ Charles E. Noreen, Jr.
                                         -----------------------------
                                         Charles E. Noreen, Jr.
                                         Vice President of Finance and
                                         Administration, Chief Financial Officer
                                         (Principal Financial and
                                         Chief Accounting Officer)
  
  Dated:  October 3, 2000
  
                                         4
  <PAGE>
  
                                   EXHIBIT INDEX
  
  
       Exhibit
       Number           Description
       ------           -----------
  
         2              Agreement and Plan of Merger, dated as of July 9, 2000, by
                        and among CyberSource Corporation, Sapphire Merger, Inc.,
                        and PaylinX Corporation and Exhibit A thereto.
  
  
  Pursuant to Item 601(b)(2) of Regulation S-K, the following exhibits and
  schedules to the Agreement have been omitted. Such exhibits and schedules will
  be submitted to the Securities and Exchange Commission upon request.
  
  
            Exhibit/Schedule     Name
            ----------------     ----
  
            Exhibit B            Escrow Agreement
            Exhibit C            Company Financial Statements
            Exhibit D            Proprietary Information and Inventions Agreement
            Exhibit E            Form of Voting Agreement
            Exhibit F            Form of Lock-Up Agreement
            Exhibit G            Opinion from Company Counsel
            Exhibit H            Form of Noncompetition Agreement
            Exhibit I            Opinion from Acquiror's Counsel
            Schedule 6.7         Signatories to Voting Agreement
            Schedule 6.10        Signatories to Lock-Up Agreement
            Schedule 6.17        Parties to Executive Benefit Summaries
metadata_documents: [{"type": "8-K", "sequence": "1", "filename": "0001.txt", "description": "FORM 8-K", "secsgml_size_bytes": 97099}]
metadata_filer: {"company-data": {"conformed-name": "CYBERSOURCE CORP", "cik": "0000934280", "assigned-sic": "7374", "irs-number": "770472961", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-26477", "film-number": "734303"}, "business-address": {"street1": "1295 CHARLESTON ROAD", "city": "MOUNTAIN VIEW", "state": "CA", "zip": "94043", "phone": "4085569100"}, "mail-address": {"street1": "1295 CHARLESTON ROAD", "street2": "NONE", "city": "MOUNTAIN VIEW", "state": "CA", "zip": "94043"}}
text: SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C.  20549
  
                                     FORM 8-K
  
                                  CURRENT REPORT
                        PURSUANT TO SECTION 13 OR 15(d) OF
                        THE SECURITIES EXCHANGE ACT OF 1934
  
       Date of Report (Date of earliest event reported): September 18, 2000
  
                              CYBERSOURCE CORPORATION
           ------------------------------------------------------------
              (Exact Name of Registrant as Specified in its Charter)
  
                                     DELAWARE
               ----------------------------------------------------
                  (State or Other Jurisdiction of Incorporation)
  
               000-26477                             77-0472961
       ------------------------         --------------------------------------
       (Commission File Number)          (I.R.S. Employer Identification No.)
  
            1295 Charleston Road, Mountain View, California        94043
            ------------------------------------------------------------
            (Address of Principal Executive Offices)          (Zip Code)
  
                                  (650) 965-6000
             --------------------------------------------------------
               (Registrant's telephone number, including area code)
  
         550 South Winchester Blvd., Suite 301, San Jose, California 95128
         -----------------------------------------------------------------
           (Former Name or Former Address, if Changed Since Last Report)
  
                                         1
  INFORMATION TO BE INCLUDED IN REPORT
  
  Item 2.  Acquisition or Disposition of Assets.
  
       On September 18, 2000, pursuant to the Agreement and Plan of Merger, dated
  as of July 9, 2000, by and among CyberSource Corporation, a Delaware corporation
  (the "Registrant"), Sapphire Merger, Inc., a Delaware corporation ("Merger
  Sub"), and PaylinX Corporation, a privately held Delaware corporation
  ("PaylinX") (the "Agreement"), the Registrant completed the merger of Merger
  Sub, a wholly-owned subsidiary of the Registrant, with and into PaylinX, with
  PaylinX being the surviving corporation of the merger and becoming a wholly-
  owned subsidiary of the Registrant. The transaction was closed on September 18,
  2000 and is being accounted for as a purchase.
  
       As consideration for the transaction, the Registrant issued an aggregate of
  8,807,831 shares of the Registrant's common stock, $0.001 par value, in exchange
  for all of the outstanding shares of capital stock of PaylinX, subject to the
  withholding of 10% of such shares in escrow in accordance with the terms of the
  Agreement.  At the effective time of the merger, all outstanding options and
  warrants to purchase shares of PaylinX common stock were automatically converted
  into options and warrants to purchase 2,571,090 shares of the Registrant's
  common stock based upon the conversion factor set forth in the Agreement with
  corresponding adjustments to their respective exercise prices.
  
       The Registrant currently intends that PaylinX's business will continue to
  be operated in its current manner.  Certain of the assets of PaylinX were used
  in the development and support of PaylinX's Internet-based payment transaction
  processing platform, and the Registrant currently intends to use such assets in
  substantially the same manner.
  
       The total value of consideration paid for the purchase transaction was
  determined based on arm's length negotiations between the Registrant and
  PaylinX, which took into account PaylinX's financial position, operating
  history, products, intellectual property and other factors relating to PaylinX's
  business and certain income tax aspects of the transaction.  There are no
  material relationships between PaylinX and either the Registrant or Merger Sub
  or any of their respective affiliates or any director or officer of the
  Registrant or Merger Sub or any associate of such director or officer.
  
                                         2
  Item 7.  Financial Statements, Pro Forma Financial Information and Exhibits.
  
  (a)  Financial Statements of Acquired Business.
       ------------------------------------------
  
       (1)  PaylinX Corporation audited financial statements for the years ended
            December 31, 1999, 1998 and 1997.
  
       (2)  PaylinX Corporation unaudited financial statements for the three and
            six months ended June 30, 2000 and 1999.
  
                                         3
  REPORT OF ARTHUR ANDERSEN LLP INDEPENDENT AUDITORS
  
  To PaylinX Corporation:
  
     We have audited the accompanying balance sheets of PaylinX Corporation (a
  Missouri corporation) as of December 31, 1999 and 1998, and the related
  statements of operations, stockholders' equity (deficit) and cash flows for
  each of the three years in the period ended December 31, 1999. These financial
  statements are the responsibility of the Company's management. Our
  responsibility is to express an opinion on these financial statements based on
  our audits.
  
     We conducted our audits in accordance with auditing standards generally
  accepted in the United States. Those standards require that we plan and perform
  the audit to obtain reasonable assurance about whether the financial statements
  are free of material misstatement. An audit includes examining, on a test
  basis, evidence supporting the amounts and disclosures in the financial
  statements. An audit also includes assessing the accounting principles used and
  significant estimates made by management, as well as evaluating the overall
  financial statement presentation. We believe that our audits provide a
  reasonable basis for our opinion.
  
     In our opinion, the financial statements referred to above present fairly,
  in all material respects, the financial position of PaylinX Corporation as of
  December 31, 1999 and 1998, and the results of its operations and its cash
  flows for each of the three years in the period ended December 31, 1999, in
  conformity with accounting principles generally accepted in the United States.
  
                                            /s/ Arthur Andersen LLP
  
  St. Louis, Missouri,
  February 4, 2000
  
                                         4
  PAYLINX CORPORATION
  
                  BALANCE SHEETS AS OF DECEMBER 31, 1999 AND 1998
  1999         1998
                                                       ------------  -----------
  ASSETS
                         ------
  
  CURRENT ASSETS:
    Cash and cash equivalents......................... $    745,769  $ 3,198,437
    Accounts receivable...............................      851,027      235,366
    Other current assets..............................      118,000       43,547
                                                       ------------  -----------
      Total current assets............................    1,714,796    3,477,350
  PROPERTY AND EQUIPMENT..............................    4,327,430      153,038
  OTHER ASSETS........................................      376,634       32,000
                                                       ------------  -----------
      Total assets.................................... $  6,418,860  $ 3,662,388
                                                       ============  ===========
  
          LIABILITIES AND STOCKHOLDERS' EQUITY
          ------------------------------------
                        (DEFICIT)
                        ---------
  
  CURRENT LIABILITIES:
    Accounts payable and accrued liabilities.......... $  5,660,126  $    40,900
    Accrued compensation and related expenses.........      158,299       17,714
    Deferred revenue..................................      787,846      122,885
    Notes payable.....................................    4,000,000          --
    Other current liabilities.........................       79,535          --
                                                       ------------  -----------
      Total current liabilities.......................   10,685,806      181,499
  OTHER LONG-TERM OBLIGATIONS.........................      813,961          --
  LONG-TERM DEBT......................................    5,787,000          --
    Series A convertible redeemable preferred stock
     ($.01 par value, 400,800 shares issued and
     outstanding, liquidation value of $4,008,000)....    4,437,000    4,008,000
  
  STOCKHOLDERS' EQUITY (DEFICIT):
    Common stock ($.01 par value, 2,000,000 shares
     authorized, 1,868,908 and 1,866,200 shares issued
     and outstanding).................................       18,689       18,662
    Additional paid-in capital........................    4,532,270    2,095,961
    Deferred compensation.............................   (2,360,577)  (1,620,600)
    Retained deficit..................................  (17,495,289)  (1,021,134)
                                                       ------------  -----------
      Total stockholders' equity (deficit)............  (15,304,907)    (527,111)
                                                       ------------  -----------
      Total liabilities and stockholders' equity
       (deficit)...................................... $  6,418,860  $ 3,662,388
                                                       ============  ===========
  The accompanying notes are an integral part of these balance sheets.
  
                                         5
  PAYLINX CORPORATION
  
                              STATEMENTS OF OPERATIONS
                FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
  1999         1998        1997
                                           ------------  ----------  ----------
  REVENUE:
    License fees.......................... $  2,693,753  $  590,754  $  374,737
    Maintenance...........................      466,095     154,247      62,010
                                           ------------  ----------  ----------
      Total revenue.......................    3,159,848     745,001     436,747
                                           ------------  ----------  ----------
  OPERATING EXPENSES:
    Cost of revenue.......................      605,697      80,017      30,088
    Research and development..............    4,067,124     262,445     120,354
    Selling and marketing.................    6,985,615     340,035     124,730
    General and administrative............    6,894,161     664,301     290,220
    Loss on disposal of assets............      444,503         --          --
                                           ------------  ----------  ----------
      Total operating expenses............   18,997,100   1,346,798     565,392
                                           ------------  ----------  ----------
  Operating loss..........................  (15,837,252)   (601,797)   (128,645)
                                           ------------  ----------  ----------
  OTHER (INCOME) EXPENSES:
    Interest expense......................      280,149      21,480      19,053
    Other (income) expense................      (72,246)     58,080         --
                                           ------------  ----------  ----------
      Total other expenses................      207,903      79,560      19,053
                                           ------------  ----------  ----------
  Net loss................................ $(16,045,155) $ (681,357) $ (147,698)
                                           ============  ==========  ==========
  Basic and diluted loss per share........ $      (8.82) $    (0.37) $    (0.08)
                                           ============  ==========  ==========
  Weighted average shares used in basic
   and diluted per share computation......    1,867,103   1,855,366   1,799,250
                                           ============  ==========  ==========
  The accompanying notes are an integral part of these statements.
  
                                         6
  PAYLINX CORPORATION
  
   STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
                                     (DEFICIT)
               FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
  Series A
                              Convertible
                               Redeemable
                            Preferred Stock      Common Stock    Additional
                           ------------------ ------------------  Paid-In      Deferred      Retained
                           Shares    Amount     Shares   Amount   Capital    Compensation    Deficit        Total
                           ------- ---------- ---------- ------- ----------  ------------  ------------  ------------
  BALANCE, DECEMBER 31,
  1996....................     --  $      --     850,000 $ 8,500 $      --   $       --    $   (192,079) $   (183,579)
    Issuance of common
    stock.................     --         --      51,800     518    292,707          --             --        293,225
    Net loss..............     --         --         --      --         --           --        (147,698)     (147,698)
                           ------- ---------- ---------- ------- ----------  -----------   ------------  ------------
  BALANCE, DECEMBER 31,
  1997....................     --         --     901,800   9,018    292,707          --        (339,777)      (38,052)
    Issuance of common
    stock.................     --         --      31,300     313    114,885          --             --        115,198
    Compensation expense
    recorded on stock
    options...............     --         --         --      --   1,697,600   (1,620,600)           --         77,000
    Issuance of preferred
    stock and warrants.... 400,800  4,008,100        --      --         --           --             --            --
    Net loss..............     --         --         --      --         --           --        (681,357)     (681,357)
                           ------- ---------- ---------- ------- ----------  -----------   ------------  ------------
  BALANCE, DECEMBER 31,
  1998.................... 400,800  4,008,000    933,100   9,331  2,105,192   (1,620,600)    (1,021,134)    3,480,889
    Stock split...........     --         --     933,100   9,331     (9,331)         --             --            --
                           ------- ---------- ---------- ------- ----------  -----------   ------------  ------------
  BALANCE, DECEMBER 31,
  1998 (Restated for
  stock split)............ 400,800  4,008,000  1,866,200  18,662  2,095,961   (1,620,600)    (1,021,134)    3,480,889
    Issuance of common
    stock.................     --         --       2,708      27      2,681          --             --          2,708
    Compensation expense
    recorded on stock
    options...............     --         --         --      --   2,433,628     (739,977)           --      1,693,651
    Accretion related to
    Series A convertible
    redeemable preferred
    stock.................            429,000        --      --         --           --        (429,000)           --
    Net loss..............     --         --         --      --         --           --     (16,045,155)  (16,045,155)
                           ------- ---------- ---------- ------- ----------  -----------   ------------  ------------
  BALANCE, DECEMBER 31,
  1999.................... 400,800 $4,437,000  1,868,908 $18,689 $4,532,270  $(2,360,577)  $(17,495,289) $(10,867,907)
                           ======= ========== ========== ======= ==========  ===========   ============  ============
  The accompanying notes are an integral part of these statements.
  
                                         7
  PAYLINX CORPORATION
  
                              STATEMENTS OF CASH FLOWS
                FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
  1999         1998       1997
                                             ------------  ----------  ---------
  CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss................................ $(16,045,155) $ (681,357) $(147,698)
    Adjustments to reconcile net loss to
     cash used in operating activities:
      Depreciation and amortization.........      387,746      65,000     13,100
      Loss on disposal of assets............      444,503         --         --
      Other long-term obligations...........      813,961         --         --
      Compensation expense recorded on stock
       options..............................    1,693,651      77,000        --
      Other noncash charges.................          --          198        225
    Changes in assets and liabilities--
      Accounts receivable...................     (615,661)   (175,901)   (59,465)
      Accounts payable and accrued
       expenses.............................    5,619,226     (76,578)    23,038
      Accrued compensation and related
       expenses.............................      140,585    (100,355)    73,328
      Deferred revenue......................      664,961      66,896     37,208
      Other.................................     (339,552)    (51,130)   (23,565)
                                             ------------  ----------  ---------
        Total adjustments...................    8,809,420    (194,870)    63,869
                                             ------------  ----------  ---------
        Net cash used in operating
         activities.........................   (7,235,735)   (876,227)   (83,829)
                                             ------------  ----------  ---------
  CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of property and equipment.....   (5,101,641)   (172,774)   (44,824)
    Sale of property........................       95,000         --         --
                                             ------------  ----------  ---------
        Net cash used in investing
         activities.........................   (5,006,641)   (172,774)   (44,824)
                                             ------------  ----------  ---------
  CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from issuance of common stock..        2,708     115,000    293,000
    Proceeds from issuance of preferred
     stock and warrants.....................          --    4,008,100        --
    Proceeds from borrowings................    9,787,000         --         --
    Payments on borrowings..................          --          --     (50,000)
                                             ------------  ----------  ---------
  Net cash provided by financing
   activities...............................    9,789,708   4,123,100    243,000
                                             ------------  ----------  ---------
  Net (decrease) increase in cash and cash
   equivalents..............................   (2,452,668)  3,074,099    114,347
  CASH AND CASH EQUIVALENTS, beginning of
   year.....................................    3,198,437     124,338      9,991
                                             ------------  ----------  ---------
  CASH AND CASH EQUIVALENTS, end of year.... $    745,769  $3,198,437  $ 124,338
                                             ============  ==========  =========
  CASH PAID FOR INTEREST.................... $     18,210  $   21,480  $  19,053
                                             ============  ==========  =========
  The accompanying notes are an integral part of these statements.
  
                                         8
  PAYLINX CORPORATION
  
                           UNAUDITED FINANCIAL STATEMENTS
  
                Quarterly Report for the Period Ended June 30, 2000
  
                                   BALANCE SHEETS
  June 30,    December 31,
                                                          2000          1999
                                                      ------------  ------------
                                                      (Unaudited)
  ASSETS
                        ------
  CURRENT ASSETS:
   Cash and cash equivalents......................... $ 11,535,388  $    745,769
   Accounts receivable, net of allowance of
    $437,315 and $225,000, respectively..............    2,814,576       851,027
   Other current assets..............................      224,525       118,000
                                                      ------------  ------------
     Total current assets............................   14,574,489     1,714,796
  PROPERTY AND EQUIPMENT.............................    3,953,070     4,327,430
  OTHER ASSETS.......................................      403,578       376,634
                                                      ------------  ------------
     Total assets.................................... $ 18,931,137  $  6,418,860
                                                      ============  ============
    LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
    ----------------------------------------------
  CURRENT LIABILITIES:
   Accounts payable and accrued liabilities.......... $    882,455  $  5,660,126
   Accrued compensation and related expenses.........      722,819       158,299
   Deferred revenue..................................    1,360,560       787,846
   Notes payable.....................................          --      4,000,000
   Other current liabilities.........................          --         79,535
                                                      ------------  ------------
     Total current liabilities.......................    2,965,834    10,685,806
  OTHER LONG-TERM OBLIGATIONS........................      835,606       813,961
  LONG-TERM DEBT.....................................          --      5,787,000
   Series A convertible redeemable preferred stock
     ($.01 par value, 801,600 shares issued and
     outstanding, liquidation value of $4,008,000)...    4,614,736     4,437,000
   Series B convertible redeemable preferred stock
    ($.01 par value, 4,066,519 and 0 shares issued
    and outstanding).................................   31,301,840           --
  STOCKHOLDERS' EQUITY (DEFICIT):
   Common stock ($.01 par value, 20,000,000 shares
    authorized, 2,184,202 and 1,868,908 shares
    issued and outstanding)..........................       21,842        18,689
   Additional paid-in capital........................    5,161,179     4,532,170
   Deferred compensation.............................   (1,795,772)   (2,360,577)
   Retained deficit..................................  (24,174,128)  (17,495,289)
                                                      ------------  ------------
     Total stockholders' equity (deficit)............  (20,786,879)  (15,304,907)
                                                      ------------  ------------
     Total liabilities and stockholders' equity
      (deficit)...................................... $ 18,931,137  $  6,418,860
                                                      ============  ============
  The accompanying notes are an integral part of these financial statements.
  
                                         9
  PAYLINX CORPORATION
  
                              STATEMENTS OF OPERATIONS
                                    (Unaudited)
  Three months ended         Six months ended
                                   June 30,                  June 30,
                            ------------------------  ------------------------
                               2000         1999         2000         1999
                            -----------  -----------  -----------  -----------
  REVENUE:
    License fees..........  $ 2,509,580  $   446,660  $ 5,146,319  $   747,668
    Maintenance...........      416,960       77,802      705,491      145,067
                            -----------  -----------  -----------  -----------
      Total revenue.......    2,926,540      524,462    5,851,810      892,735
                            -----------  -----------  -----------  -----------
  OPERATING EXPENSES:
    Cost of revenue.......      297,668      121,475      652,413      178,383
    Research and
     development..........    1,292,755      847,899    2,642,836    1,084,525
    Selling and
     marketing............    2,414,502      750,456    4,922,656    1,037,855
    General and
     administrative.......    2,345,772      725,907    3,878,111    1,250,241
                            -----------  -----------  -----------  -----------
      Total operating
       expenses...........    6,350,697    2,445,737   12,096,016    3,551,004
                            -----------  -----------  -----------  -----------
  Operating loss..........   (3,424,157)  (1,921,275)  (6,244,206)  (2,658,269)
                            -----------  -----------  -----------  -----------
  OTHER (INCOME) EXPENSES:
    Interest expense......     (213,984)     (10,153)     255,410       10,153
    Other (income)
     expense..............          --       (13,241)       1,487      (44,519)
                            -----------  -----------  -----------  -----------
      Total other
       expenses...........     (213,984)      (3,088)     256,897      (34,366)
                            -----------  -----------  -----------  -----------
  Net loss................  $(3,210,173) $(1,918,187) $(6,501,103) $(2,623,903)
                            ===========  ===========  ===========  ===========
  Basic and diluted loss
   per share..............  $     (1.68) $     (1.03) $     (3.27) $     (1.41)
                            ===========  ===========  ===========  ===========
  Weighted average shares
   used in basic and
   diluted per share
   computation............    1,958,981    1,866,200    2,041,555    1,866,200
                            ===========  ===========  ===========  ===========
  The accompanying notes are an integral part of these financial statements.
  
                                        10
  PAYLINX CORPORATION
  
                              STATEMENTS OF CASH FLOWS
                                    (Unaudited)
  Six months ended June
                                                                 30,
                                                       -------------------------
                                                           2000         1999
                                                       ------------  -----------
  CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss.......................................... $ (6,501,103) $(2,623,903)
    Adjustments to reconcile net loss to cash used in
     operating activities:
      Depreciation and amortization...................      524,169       66,391
      Other long-term obligations.....................       21,645           --
      Compensation expense recorded on stock options..      492,982      271,333
    Changes in assets and liabilities--
      Accounts receivable.............................   (1,963,549)    (441,844)
      Accounts payable and accrued expenses...........   (4,777,671)      70,132
      Accrued compensation and related expenses.......      564,520        7,802
      Deferred revenue................................      572,714      129,358
      Other...........................................     (213,004)      18,537
                                                       ------------  -----------
        Net cash used in operating activities.........  (11,279,297)  (2,502,194)
                                                       ------------  -----------
  CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of property and equipment, net..........     (149,809)  (1,293,749)
                                                       ------------  -----------
        Net cash used in investing activities.........     (149,809)  (1,293,749)
                                                       ------------  -----------
  CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from issuance of common stock............      703,885           --
    Proceeds from issuance of preferred stock, net....   21,514,840           --
    Proceeds from borrowings, net.....................           --    4,033,000
                                                       ------------  -----------
        Net cash provided by financing activities.....   22,218,725    4,033,000
                                                       ------------  -----------
        Net increase in cash and cash equivalents.....   10,789,619      237,057
  CASH AND CASH EQUIVALENTS, beginning of year........      745,769    3,198,437
                                                       ------------  -----------
  CASH AND CASH EQUIVALENTS, end of year.............. $ 11,535,388  $ 3,435,494
                                                       ============  ===========
  The accompanying notes are an integral part of these financial statements.
  
                                        11
  PAYLINX CORPORATION
  
                           NOTES TO FINANCIAL STATEMENTS
  
  1. The Company:
  
     PaylinX Corporation (the Company) designs, develops, markets, licenses and
  supports point-of-sale software systems for the processing of electronic
  payments, including those arising from internet e-commerce. The Company's
  payment servers perform real-time authorization, settlement and management
  functions for conventional and corporate purchasing card transactions in
  consumer and business-to-business application environments.
  
  2. Summary of Significant Accounting Policies:
  
   Use of Estimates
  
     The preparation of financial statements in conformity with generally
  accepted accounting principles requires management to make estimates and
  assumptions that affect the reported amounts of assets and liabilities and
  disclosure of contingent assets and liabilities at the date of the financial
  statements and the reported amounts of revenues and expenses during the
  reporting period. Actual results may differ from those estimates.
  
   Cash and Cash Equivalents
  
     Cash and cash equivalents consist of cash on deposit with banks and money
  market instruments with original maturities of 90 days or less.
  
   Asset Impairment
  
     The Company periodically assesses the carrying value of its long-lived
  assets and recognizes impairment losses if it is determined the carrying values
  are not recoverable.
  
   Revenue Recognition
  
     Revenue is recognized when earned. The Company licenses software under
  perpetual license agreements direct to customers and to resellers and provides
  maintenance and support services. The Company's revenue recognition policies
  are in compliance with American Institute of Certified Public Accountants
  Statements of Position 97-2, 98-4 and 98-9, "Software Revenue Recognition."
  License fee revenues are generally recognized when a license agreement has been
  signed, the software product has been shipped, there are no uncertainties
  surrounding product acceptance, the fees are fixed and determinable, and
  collection is considered probable. For customer license agreements, which meet
  these recognition criteria, the portion of the fees related to software
  licenses will generally be recognized in the current period. The Company
  allocates a portion of contractual license fees to postcontract support
  activities covered under the contract including first year maintenance.
  Maintenance revenues are recognized ratably over the maintenance period, which
  generally is one year.
  
   Research and Development
  
     Research and development costs are expensed as incurred. Costs required to
  be capitalized in accordance with Statement of Financial Accounting Standards
  (SFAS) No. 86, "Accounting for the Costs of Computer Software to be Sold,
  Leased or Otherwise Marketed," are not material.
  
   Income Taxes
  
     The Company accounts for income taxes pursuant to SFAS No. 109, "Accounting
  for Income Taxes," which utilizes the liability method to calculate deferred
  income taxes. Under this method, deferred taxes are
  
                                        12
  PAYLINX CORPORATION
  
                     NOTES TO FINANCIAL STATEMENTS--(Continued)
  
  determined based on the estimated future tax effects of differences between
  financial statements and tax bases of assets and liabilities given the
  provisions of enacted tax laws.
  
     The significant deferred tax assets and liabilities are as follows:
  1999        1998
                                                           -----------  ---------
  Deferred tax assets:
       Start-up and organizational costs.................. $     8,649  $  14,263
       Stock options......................................     672,847     29,260
       Reserves and accruals..............................     843,637      6,166
     Deferred tax liabilities:
       Depreciation and amortization......................    (132,160)       --
     Net operating loss carryforward......................   5,092,215    333,582
     Valuation allowance..................................  (6,485,188)  (383,271)
                                                           -----------  ---------
     Net deferred tax asset............................... $       --   $     --
                                                           ===========  =========
  The Company has net operating loss carryforwards of approximately
  $13,401,000 at December 31, 1999, which expire through 2019 if not utilized by
  the Company in its tax return. As of December 31, 1999 and 1998, a valuation
  allowance has been established to fully offset the net deferred tax asset.
  
   Earnings Per Share
  
     Basic earnings (loss) per share is computed by dividing net loss applicable
  to common stockholders by the weighted average number of shares of common stock
  outstanding during the year. Diluted earnings (loss) per share is computed by
  dividing the net loss applicable to common stockholders by the weighted average
  number of common and common equivalent shares outstanding, unless the
  calculation is antidilutive. For 1999, the net loss applicable to common
  stockholders has been adjusted to reflect $429,000 of accretion related to the
  Series A convertible redeemable preferred stock.
  
     For all periods presented, the effect of dilutive securities is
  antidilutive. As such, the denominator used in determining earnings per share
  is the same for both basic and dilutive earnings per share.
  
  3. Property and Equipment:
  
     Property and equipment are depreciated using the straight-line method over
  the estimated useful lives of the assets ranging between three and seven years.
  Leasehold improvements are amortized using the straight-line method over their
  useful lives or lease terms, as appropriate.
  
     Property and equipment consist of the following at December 31:
  1999       1998
                                                             ----------  --------
  Computer equipment..................................... $1,844,909  $173,722
     Purchased software.....................................  1,214,584    15,144
     Furniture and fixtures.................................  1,116,065     5,932
     Leasehold improvements.................................    607,895    37,700
                                                             ----------  --------
                                                              4,783,453   232,498
     Less--Accumulated depreciation and amortization........   (456,023)  (79,460)
                                                             ----------  --------
       Property and equipment, net.......................... $4,327,430  $153,038
                                                             ==========  ========
  For the years ended December 31, 1999, 1998 and 1997, depreciation and
  amortization expense was $387,746, $65,000 and $13,100, respectively.
  
                                        13
  PAYLINX CORPORATION
  
                     NOTES TO FINANCIAL STATEMENTS--(Continued)
  
  4. Debt:
  
   Convertible Debt
  
     From June to September 1999, the Company issued $5,787,000 of Convertible
  Promissory Notes (Convertible Notes). The Convertible Notes are convertible to
  Series B Convertible Preferred Stock (Series B Preferred) at 110% of the
  original note value only upon completion of a subsequent funding round of at
  least $10,000,000. The Convertible Notes have an interest rate of 8% payable
  either in cash or additional Series B Preferred shares. The Convertible Notes
  expire either one year from the date of execution of the Convertible Notes,
  upon issuance of the Series B Preferred shares or upon any merger involving the
  Company. If the Convertible Notes become exercisable and are not exercised, the
  terms of the Convertible Notes are extended for one year. In January 2000, the
  Company issued Series B Preferred shares and all Convertible Notes and the
  associated interest were converted into Series B Preferred shares. See Note 8
  for more information.
  
   Accounts Receivable Purchase Agreement
  
     In October 1999, the Company executed an Accounts Receivable Purchase
  Agreement (the Agreement) which allowed the Company to sell up to $2,000,000 in
  qualified accounts receivable for a finance charge of 1.25% per month
  multiplied by the average outstanding accounts receivable plus 1% of all
  accounts receivable sold that month. The Company agreed to repurchase all
  accounts receivable over 90 days old, as well as any disputed accounts
  receivable. The Agreement gave the issuer a lien on the cash, receivables,
  property and other assets of the Company. The agreement expires in October
  2000, but automatically renews without cancellation by either the Company or
  the issuer. At December 31, 1999, there were no accounts receivable sold under
  the Agreement.
  
     In association with the Agreement, the Company issued warrants to purchase
  14,285 Series A Preferred Stock (Series A) at an initial exercise price of
  $10.50. These warrants expire October 13, 2004.
  
   Short-Term Bridge Notes
  
     In November and December 1999, the Company issued $4,000,000 in Short-Term
  Bridge Notes (Short-Term Notes). The Short-Term Notes pay interest of 9% and
  are due within 90 days of issuance. In January 2000, the Company issued Series
  B Preferred Shares and all Short-Term Notes and the associated interest were
  converted into Series B Preferred Shares. See Note 8 for more information.
  
   Letter of Credit
  
     In association with the Company's lease of office space, the Company was
  required to establish a letter of credit. The maximum amount available under
  the letter of credit was $325,000 and is payable to the lessor. The letter of
  credit is secured by certificates of deposit totaling $325,000 which are
  included in other assets in the accompanying balance sheet. The required letter
  of credit decreases over the term of the lease.
  
  5. Retirement Plan:
  
     In February 1999, the Company established an employee benefit plan qualified
  under Section 401(k) of the Internal Revenue Code through which eligible
  employees may defer a portion of their salaries. The Company's contributions to
  the plan are discretionary. The Company elected not to contribute to the Plan
  in 1999.
  
  6. Convertible Redeemable Preferred Stock and Stockholders' Equity (Deficit):
  
   Common Stock
  
     On July 1, 1999, the shareholders approved a two for one stock split. All
  per share information has been retroactively adjusted to reflect this split for
  all years presented.
  
                                        14
  PAYLINX CORPORATION
  
                     NOTES TO FINANCIAL STATEMENTS--(Continued)
  
   Series A Convertible Redeemable Preferred Stock
  
     During October and December 1998, the Company issued 400,800 shares of
  Series A Convertible Redeemable Preferred Stock (Series A Preferred) along with
  warrants to purchase up to 30,000 shares of common stock. Total proceeds from
  the issuance were $4,008,100 with $10 per share allocated to the Series A
  Preferred and $100 allocated to the warrants. Any excess of mandatory
  redemption value over original recorded value is accreted to the earliest
  possible redemption date. The periodic accretion is charged directly to
  retained earnings (deficit). The Series A Preferred Shares were exchanged for
  new shares of Series A preferred stock in conjunction with the subsequent event
  described in Note 8.
  
     The Series A Preferred stockholders have preemptive rights to purchase new
  issuances of securities.
  
     Each warrant issued allows the warrant holder to purchase one share of
  common stock for $5 per share, subject to adjustment as defined in the
  certificate of incorporation. The warrants expire in October 2003. The warrants
  vest and become exercisable through December 31, 1999, contingent on the
  occurrence of certain events as defined in the Preferred Stock Agreement.
  
   Stock Options
  
     In connection with the sale and issuance of preferred stock in October 1998,
  the Company issued stock options primarily to the founders and certain
  employees. Options continued to be granted to all new employees through
  December 31, 1999. The options vest over a four-year period. There is no
  vesting for the first six months, options are 6/48 vested at the end of the
  sixth month, then vesting is straight-line through the 48th month. In
  accordance with Accounting Principles Board Opinion No. 25, "Accounting for
  Stock Issued to Employees," compensation expense is recorded evenly over the
  period services are received (the vesting period) and measured based on the
  intrinsic value of the options at the date of grant. In 1999 and 1998,
  $1,693,651 and $77,000 was recorded as compensation expense related to stock
  options, respectively.
  
     A summary of the status of the Company's stock options for 1999 and 1998
  (restated for the 1999 stock split) is presented in the table below:
  1999                1998
                                          -------------------- -----------------
                                                      Weighted          Weighted
                                                      Average           Average
                                                      Exercise          Exercise
                                            Shares     Price    Shares   Price
                                          ----------  -------- -------- --------
  Outstanding--beginning of year......    424,400   $1.00        --   $ --
     Granted.............................    896,350    2.06    424,400   1.00
     Exercised...........................     (2,708)   1.00        --     --
     Canceled/forfeited..................   (210,256)   1.47        --     --
                                          ----------           --------
       Outstanding--end of year..........  1,107,786   $1.81    424,400  $1.00
                                          ==========           ========
     Exercisable--end of year............    356,008   $1.28        --   $ --
     Weighted average fair value for
      grants during year................. $     3.53           $   4.17
  The fair value of each option granted is estimated on the date of grant
  using the Black-Scholes option pricing model with the following assumptions
  used for grants in 1999 and 1998, respectively: risk-free interest rates
  ranging from 4.61% to 6.14% and 4.48% to 4.75%; expected dividend yield of
  0.0%; and expected lives of four years. The range of exercise prices for the
  options outstanding at December 31, 1999, was $1.00 to $7.50. The exercise
  price for all options outstanding at December 31, 1998, was $1.00. The
  weighted-average
  
                                        15
  PAYLINX CORPORATION
  
                     NOTES TO FINANCIAL STATEMENTS--(Continued)
  
  remaining contractual life was 3.3 and 3.8 years for options outstanding at
  December 31, 1999 and 1998, respectively.
  
     The Company's net loss and basic and diluted loss per share would not
  significantly differ for 1999 and 1998 had compensation expense for the
  Company's 1999 and 1998 grants of stock options been determined consistent with
  SFAS No. 123, "Accounting for Stock-Based Compensation." The effects of the
  application of SFAS 123 in this disclosure are not indicative of the pro forma
  effect on net income (loss) in future years.
  
  7. Commitments and Contingencies:
  
     The Company leases its St. Louis facility under an operating lease agreement
  expiring in 2004 with renewal options.
  
     In December 1999, the Company leased facilities in Reston, Virginia, and
  will move the headquarters there. The Company will vacate certain leased space
  in St. Louis, Missouri, and sublease the vacated space through March 31, 2001.
  A reserve for the amount of the lease payments in excess of the sublease has
  been established and constitutes the balance of other long-term obligations in
  the accompanying balance sheets. The sublease renews automatically for a period
  through October 31, 2004, unless canceled by either party. Additionally, the
  Company has recognized a loss on disposal of assets of $444,503 due to writing
  down leasehold improvements and furniture and fixtures to the net realizable
  value as of December 31, 1999.
  
     As of December 31, 1999, minimum future lease payments under leases are as
  follows:
  Less
                                                     Lease    Sublease  Net Lease
                                                  Commitments Revenue  Commitments
                                                  ----------- -------- -----------
  For the Year Ending December 31
     2000........................................  $931,808   $207,911  $723,897
     2001........................................   883,303     63,105   820,198
     2002........................................   907,697        --    907,697
     2003........................................   916,735        --    916,735
     2004........................................   652,338        --    652,338
  Rent expense for the years ended December 31, 1999, 1998 and 1997 was
   $485,411, $47,802 and $10,234, respectively.
  
     The Company at times is a party to various claims and legal proceedings
  arising in the ordinary course of business. Management does not believe that
  the ultimate disposition of any or all such proceedings will have a material
  adverse effect upon the financial condition or results of operations of the
  Company.
  
  8. Subsequent Events:
  
     In January 2000, the shareholders of the Company voted to merge PaylinX
  Corporation, a Missouri corporation, with PaylinX Corporation, a Delaware
  corporation. The new company adopted a certificate of incorporation which
  authorized 20,000,000 shares of common stock with a $0.01 per share par value.
  The certificate of incorporation also authorized 5,000,000 shares of preferred
  stock. In conjunction therewith, PaylinX Corporation, Delaware exchanges
  801,600 shares of Series A Convertible Redeemable Preferred Stock (New Series A
  Preferred) for the 400,800 shares of Series A Preferred from PaylinX
  Corporation, Missouri.
  
     Additionally, the Company issued 3,836,472.15 shares of Series B Convertible
  Redeemable Preferred Stock (Series B Preferred) with a par value of $0.01 for
  $7.824538 per share. The Convertible Notes (at 110%
  
                                        16
  PAYLINX CORPORATION
  
                     NOTES TO FINANCIAL STATEMENTS--(Continued)
  
  of the original note value) and Short-Term Bridge Notes plus the associated
  accrued interest were converted or exchanged for shares of the Series B
  Preferred.
  
     Under the certificate of incorporation, each share of New Series A Preferred
  and Series B Preferred may be voluntarily converted into one share of common
  stock, subject to certain conversion adjustments as defined in the certificate
  of incorporation at anytime. The New Series A Preferred and the Series B
  Preferred will automatically be converted into common stock upon an initial
  public offering valued at not less than $20 million.
  
     The New Series A Preferred and Series B Preferred are mandatorily redeemable
  by the Company as follows: half of the then outstanding shares of New Series A
  Preferred and Series B Preferred on the fifth anniversary of the original
  issuance date, half of the then outstanding shares of New Series A Preferred
  and Series B Preferred on the sixth anniversary of the original issuance date
  and the remaining outstanding shares of New Series A Preferred and Series B
  Preferred on the seventh anniversary of the original issuance date. The
  redemption price at each of the redemption dates will be the greater of $5 and
  $7.824538 per share or fair market value, plus any declared and unpaid
  dividends for the New Series A Preferred and Series B Preferred, respectively.
  The fair market value of the New Series A Preferred and Series B Preferred is
  to be determined by independent appraisers appointed by the Company and the New
  Series A Preferred and Series B Preferred stockholders.
  
     The New Series A Preferred and Series B Preferred stockholders have
  preemptive rights to purchase new issuances of securities. If this transaction
  had been completed at December 31, 1999, the effect of this transaction on the
  December 31, 1999, balance sheet would have been as follows:
  Actual      Pro Forma
                                                         1999          1999
                                                     ------------  ------------
                                                                   (Unaudited)
  CURRENT ASSETS:
       Cash and cash equivalents.................... $    745,769  $ 19,619,974
       Other current assets.........................      969,027       969,027
                                                     ------------  ------------
         Total current assets.......................    1,714,796    20,589,001
     LONG-TERM ASSETS...............................    4,704,064     4,704,064
                                                     ------------  ------------
         Total assets............................... $  6,418,860  $ 25,293,065
                                                     ============  ============
     CURRENT LIABILITIES:
       Notes payable................................ $  4,000,000  $        --
       Other current liabilities....................    6,685,806     6,423,867
                                                     ------------  ------------
         Total current liabilities..................   10,685,806     6,423,867
                                                     ------------  ------------
     OTHER LONG-TERM OBLIGATIONS....................      813,961       813,961
                                                     ------------  ------------
     LONG-TERM DEBT.................................    5,787,000           --
                                                     ------------  ------------
       Series A redeemable, convertible preferred
        stock.......................................    4,437,000     4,437,000
       Series B redeemable, convertible preferred
        stock.......................................          --     29,501,844
     STOCKHOLDERS' EQUITY (DEFICIT):
       Common stock.................................       18,689        18,689
       Additional paid-in capital...................    4,532,270     4,532,270
       Deferred compensation........................   (2,360,577)   (2,360,577)
       Retained deficit.............................  (17,495,289)  (18,073,989)
                                                     ------------  ------------
         Total stockholders' equity (deficit).......  (15,304,907)  (15,883,607)
                                                     ------------  ------------
         Total liabilities and stockholders' equity
          (deficit)................................. $  6,418,860  $ 25,293,065
                                                     ============  ============
  17
  PAYLINX CORPORATION
  
                      NOTES TO UNAUDITED FINANCIAL STATEMENTS
  
  1. The Company
  
     PaylinX Corporation (the Company) designs, develops, markets, licenses and
  supports point-of-sale software systems for the processing of electronic
  payments, including those arising from internet e-commerce. The Company's
  payment servers perform real-time authorization, settlement and management
  functions for conventional and corporate purchasing card transactions in
  consumer and business-to-business application environments.
  
  2. Basis of Presentation
  
     The accompanying unaudited, interim financial statements of PaylinX
  Corporation omit or condense certain footnotes and other information normally
  included in financial statements prepared in accordance with generally accepted
  accounting principles. This report should be read in conjunction with the
  audited financial statements and notes to the financial statements as of and
  for the year ended December 31, 1999. In the opinion of Management, all
  adjustments, consisting primarily of normal recurring adjustments, necessary
  for a fair presentation of interim period results have been made. The interim
  results reflected in the financial statements are not necessarily indicative of
  results expected for the full year, or future periods.
  
   Use of Estimates
  
     The preparation of financial statements in conformity with generally
  accepted accounting principles requires management to make estimates and
  assumptions that affect the reported amounts of assets and liabilities and
  disclosure of contingent assets and liabilities at the date of the financial
  statements and the reported amounts of revenues and expenses during the
  reporting period. Actual results may differ from those estimates.
  
   Revenue Recognition
  
     Revenue is recognized when earned. The Company licenses software under
  perpetual license agreements direct to customers and to resellers and provides
  maintenance and support services. The Company's revenue recognition policies
  are in compliance with American Institute of Certified Public Accountants
  Statements of Position 97-2, 98-4 and 98-9, "Software Revenue Recognition."
  License fee revenues are generally recognized when a license agreement has been
  signed, the software product has been shipped, there are no uncertainties
  surrounding product acceptance, the fees are fixed and determinable, and
  collection is considered probable. For customer license agreements, which meet
  these recognition criteria, the portion of the fees related to software
  licenses will generally be recognized in the current period. The Company
  allocates a portion of contractual license fees to postcontract support
  activities covered under the contract including first year maintenance.
  Maintenance revenues are recognized ratably over the maintenance period, which
  generally is one year.
  
   Earnings Per Share
  
     Basic earnings (loss) per share is computed by dividing net loss applicable
  to common stockholders by the weighted average number of shares of common stock
  outstanding during the year. Diluted earnings (loss) per share is computed by
  dividing the net loss applicable to common stockholders by the weighted average
  number of common and common equivalent shares outstanding, unless the
  calculation is antidilutive. For the six months and three months ended June 30,
  1999, the net loss applicable to common stockholders has been adjusted to
  reflect $177,736 and $88,868, respectively, of accretion related to the Series
  A convertible redeemable preferred stock. For all periods presented, the effect
  of dilutive securities is antidilutive. As such, the denominator used in
  determining earnings per share is the same for both basic and dilutive earnings
  per share.
  
                                        18
  PAYLINX CORPORATION
  
                     NOTES TO FINANCIAL STATEMENTS--(Continued)
  
  3. Debt
  
   Convertible Debt
  
     From June to September 1999, the Company issued $5,787,000 of Convertible
  Promissory Notes (Convertible Notes). The Convertible Notes are convertible to
  Series B Convertible Preferred Stock (Series B Preferred) at 110% of the
  original note value only upon completion of a subsequent funding round of at
  least $10,000,000. The Convertible Notes have an interest rate of 8% payable
  either in cash or additional Series B Preferred shares. In January 2000, the
  Company issued Series B Preferred shares and all Convertible Notes and the
  associated interest were converted into Series B Preferred shares. See Note 4
  for more information.
  
   Short-Term Bridge Notes
  
     In November and December 1999, the Company issued $4,000,000 in Short-Term
  Bridge Notes (Short-Term Notes). In January 2000, the Company issued Series B
  Preferred Shares and all Short-Term Notes and the associated interest were
  converted into Series B Preferred Shares. See Note 4 for more information.
  
  4. Convertible Redeemable Preferred Stock and Stockholders' Equity (Deficit)
  
   Common Stock
  
     On July 1, 1999, the shareholders approved a two for one stock split. All
  per share information has been retroactively adjusted to reflect this split for
  all years presented.
  
   Series A Convertible Redeemable Preferred Stock
  
     During October and December 1998, the Company issued 400,800 shares of
  Series A Convertible Redeemable Preferred Stock (Series A Preferred) along with
  warrants to purchase up to 30,000 shares of common stock. Total proceeds from
  the issuance were $4,008,100 with $10 per share allocated to the Series A
  Preferred and $100 allocated to the warrants. Any excess of mandatory
  redemption value over original recorded value is accreted to the earliest
  possible redemption date. The periodic accretion is charged directly to
  retained earnings (deficit). The Series A Preferred Shares were exchanged for
  new shares of Series A preferred stock in conjunction with the transaction
  described below.
  
     Each warrant issued allows the warrant holder to purchase one share of
  common stock for $5 per share, subject to adjustment as defined in the
  certificate of incorporation. The warrants expire in October 2003. The warrants
  vest and become exercisable through December 31, 1999, contingent on the
  occurrence of certain events as defined in the Preferred Stock Agreement.
  
     In January 2000, the shareholders of the Company voted to merge PaylinX
  Corporation, a Missouri corporation, with PaylinX Corporation, a Delaware
  corporation. The new company issued a certificate of incorporation which
  authorized 20,000,000 shares of common stock with a $0.01 per share par value.
  The certificate of incorporation also authorized 5,000,000 shares of preferred
  stock. In conjunction therewith, PaylinX Corporation, Delaware exchanged
  801,600 shares of Series A Convertible Redeemable Preferred Stock (New Series A
  Preferred) for the 400,800 shares of Series A Preferred from PaylinX
  Corporation, Missouri.
  
     Additionally, in February 2000, the Company issued 3,836,472.15 shares of
  Series B Convertible Redeemable Preferred Stock (Series B Preferred) with a par
  value of $0.01 for $7.824538 per share. The Convertible Notes (at 110% of the
  original note value) and Short-Term Bridge Notes plus the associated accrued
  interest were converted or exchanged for shares of the Series B Preferred.
  
                                        19
  PAYLINX CORPORATION
  
                    NOTES TO FINANCIAL STATEMENTS--(Continued)
  
     Under the certificate of incorporation, each share of New Series A
  Preferred and Series B Preferred may be voluntarily converted into one share
  of common stock, subject to certain conversion adjustments as defined in the
  certificate of incorporation at anytime. The New Series A Preferred and the
  Series B Preferred will automatically be converted into common stock upon an
  initial public offering or sale valued at not less than $20 million.
  
     The New Series A Preferred and Series B Preferred are mandatorily
  redeemable by the Company as follows: half of the then outstanding shares of
  New Series A Preferred and Series B Preferred on the fifth anniversary of the
  original issuance date, half of the then outstanding shares of New Series A
  Preferred and Series B Preferred on the sixth anniversary of the original
  issuance date and the remaining outstanding shares of New Series A Preferred
  and Series B Preferred on the seventh anniversary of the original issuance
  date. The redemption price at each of the redemption dates will be the greater
  of $5 and $7.824538 per share or fair market value, plus any declared and
  unpaid dividends for the New Series A Preferred and Series B Preferred,
  respectively.
  
     The New Series A Preferred and Series B Preferred stockholders have
  preemptive rights to purchase new issuances of securities.
  
  5. Commitments and Contingencies
  
     The Company at times is a party to various claims and legal proceedings
  arising in the ordinary course of business. Management does not believe that
  the ultimate disposition of any or all such proceedings will have a material
  adverse effect upon the financial condition or results of operations of the
  Company.
  
  6. Subsequent Event
  
     On July 9, 2000, the Company signed an agreement and plan of merger with
  Cybersource Corporation.
  
                                        20
  (b)  Unaudited Pro Forma Condensed Combined Financial Information and Notes
       ----------------------------------------------------------------------
       thereto.
       -------
  
            UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
  
     The unaudited pro forma condensed combined financial information for
  CyberSource set forth below gives effect to the acquisition of PaylinX. The
  historical financial information set forth below has been derived from, and is
  qualified by reference to, the supplemental consolidated financial statements
  of CyberSource and the consolidated financial statements of CyberSource and
  PaylinX, and should be read in conjunction with those financial statements and
  the notes thereto incorporated by reference or included elsewhere herein.
  
     On September 18, 2000, a wholly-owned subsidiary of CyberSource was merged
  with and into PaylinX, and PaylinX became a wholly-owned subsidiary of
  CyberSource. In connection with the merger, we issued approximately 8.8 million
  shares of our common stock to PaylinX stockholders in exchange for PaylinX
  outstanding common and preferred stock, and assumed options in connection with
  the PaylinX merger to purchase approximately 2,571,000 shares of our common
  stock. The unaudited pro forma condensed combined statement of operations data
  for the year ended December 31, 1999 and the six months ended June 30, 2000 set
  forth below give effect to the acquisition as if it occurred on January 1, 1999.
  The unaudited pro forma condensed combined balance sheet as of June 30, 2000 set
  forth below gives effect to the acquisition of PaylinX as if it occurred on June
  30, 2000.
  
    The PaylinX acquisition is being accounted for using the purchase method of
  accounting. The Pro Forma Financial Statements have been prepared on the basis
  of assumptions described herein.
  
     CyberSource expects to incur integration costs, the amount of which is
  uncertain at this time, subsequent to the consummation of the acquisition. The
  Pro Forma Condensed Combined Statements of Operations does not include the
  costs of integration, as these costs will affect future operations and do not
  qualify as liabilities in connection with a purchase business combination under
  EITF 95-3, "Recognition of Liabilities in Connection with a Purchase Business
  Combination."
  
     The unaudited pro forma condensed combined balance sheet set forth herein
  combines the balance sheets of CyberSource and PaylinX as of June 30, 2000. The
  unaudited pro forma condensed financial information set forth herein combines
  the supplemental statement of operations of CyberSource for the year ended
  December 31, 1999 and the PaylinX statement of operations for the year ended
  December 31, 1999. The unaudited pro forma condensed financial information set
  forth herein also combines the statement of operations of CyberSource for the
  six months ended June 30, 2000 and the PaylinX statement of operations for the
  six months ended June 30, 2000. This pro forma condensed financial information
  reflects certain adjustments, including among others, adjustments to reflect
  the amortization of intangible assets and goodwill acquired and deferred
  compensation related to assumed options. The information set forth below should
  be read in conjunction with "Management's Discussion and Analysis of Financial
  Condition and Results of Operations" and the financial statements and notes to
  the financial statements of CyberSource and PaylinX which are incorporated by
  reference or included in the Company's Proxy Statement filed on August 17, 2000,
  in relation to this purchase transaction. The unaudited pro forma condensed
  combined financial information set forth below does not purport to represent
  what the consolidated results of operations or financial condition of
  CyberSource would actually have been if the PaylinX acquisition and related
  transaction had in fact occurred on such date or to project the future
  consolidated results of operations or financial condition of CyberSource.
  
                                        21
  UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
  
                      For the Six Months Ended June 30, 2000
                     (In thousands, except per share amounts)
  Total       Pro Forma
                                                            CyberSource       PaylinX      Combined     Adjustments       Total
                                                            -----------       --------     --------     -----------     --------
  Net revenues..........................................      $ 13,838        $  5,852      $ 19,690     $       --      $ 19,690
  Cost of revenues......................................        10,747             652        11,399             --        11,399
                                                              --------        --------      --------     ----------      --------
  Gross profit..........................................         3,091           5,200         8,291             --         8,291
  Operating expenses
       Product development..............................         6,543           2,643         9,186             --         9,186
       Sales and marketing..............................        12,616           4,923        17,539             --        17,539
       General and administrative.......................         6,087           3,878         9,965             --         9,965
       Acquisition related costs........................           834              --           834             --           834
       Goodwill and deferred compensation
         amortization...................................           411              --           411         18,857 (7)    26,601
                                                                                                                584 (7)
                                                                                                              1,250 (7)
                                                                                                              1,300 (7)
                                                                                                              1,767 (8)
                                                                                                              2,432 (9)
                                                              --------        --------      --------     ----------      --------
  Total operating expenses..............................        26,491          11,444        37,395         26,190        64,125
  Loss from operations..................................       (23,400)         (6,244)      (29,644)       (26,190)      (55,884)
  Loss on investment in joint venture...................           (31)             --           (31)            --           (31)
  Interest income.......................................         3,879              --         3,879             --         3,879
  Interest and other expense............................           (55)           (257)         (312)            --          (312)
                                                              --------        --------      --------     ----------      --------
  Net loss..............................................      $(19,607)       $ (6,501)     $(26,108)    $  (26,190)     $(52,298)
                                                              ========        ========      ========     ==========      ========
  Basic and diluted net loss per share..................      $  (0.76)       $  (3.27)                                  $  (1.53)
                                                              --------        --------                                   --------
  Weighted average shares of common stock...............        25,801           2,042                                     34,252
                                                              ========        ========                                   ========
  See accompanying notes to Unaudited Pro Forma
                     Condensed Combined Financial Information
  
                                        22
  UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
  
                        For the Year Ended December 31, 1999
                      (In thousands, except per share amounts)
  Total     Pro Forma
                           CyberSource PaylinX   Combined  Adjustments    Total
                           ----------- --------  --------  -----------   --------
  Net revenues............  $ 12,931   $  3,160  $ 16,091   $    --      $ 16,091
  Cost of revenues........    10,948        606    11,554        --        11,554
                            --------   --------  --------   --------     --------
  Gross profit............     1,983      2,554     4,537        --         4,537
  Operating expenses
    Product development...     7,807      4,067    11,874        --        11,874
    Sales and marketing...    15,110      6,986    22,096        --        22,096
    General and
     administrative.......     6,023      6,894    12,917        --        12,917
    Goodwill, purchased
     intangibles and
     deferred
     compensation
     amortization.........     4,716        --      4,716    37,967 (7)    57,332
                                                              1,167 (7)
                                                              2,500 (7)
                                                              2,600 (7)
                                                              3,533 (8)
                                                              4,839 (9)
                            --------   --------  --------   --------     --------
  Total operating
   expenses...............    33,656     17,947    51,603     52,606      104,209
  Loss from operations....   (31,673)   (15,393)  (47,066)   (52,606)     (99,672)
  Interest income.........     2,123        --      2,123        --         2,123
  Interest and other
   expense................      (295)      (652)     (947)       --          (947)
                            --------   --------  --------   --------     --------
  Net loss................  $(29,845)  $(16,045) $(45,890)  $(52,606)    $(98,496)
                            ========   ========  ========   ========     ========
  Basic and diluted net
   loss per share.........  $  (1.95)  $  (8.82)                         $  (4.09)
                            --------   --------                          --------
  Weighted average shares
   of common stock........    15,267      1,867                            24,075
                            ========   ========                          ========
  See accompanying notes to Unaudited Pro Forma
                      Condensed Combined Financial Information
  
                                        23
  UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
  
                       For the Six Months Ended June 30, 2000
                      (In thousands, except per share amounts)
  Total     Pro Forma
                            CyberSource PaylinX  Combined  Adjustments    Total
                            ----------- -------  --------  -----------   --------
  Net revenues.............  $ 13,838   $ 5,852  $ 19,690   $    --      $ 19,690
  Cost of revenues.........    10,747       652    11,399        --        11,399
                             --------   -------  --------   --------     --------
  Gross profit.............     3,091     5,200     8,291        --         8,291
  Operating expenses
    Product development....     6,543     2,643     9,186        --         9,186
    Sales and marketing....    12,616     4,923    17,539        --        17,539
    General and
     administrative........     6,087     3,878     9,965        --         9,965
    Acquistion related
     costs.................       834       --        834        --           834
    Goodwill, purchased
     intangibles  and
     deferred compensation
     amortization..........       411       --        411    18,984 (7)    25,480
                                                                584 (7)
                                                              1,250 (7)
                                                              1,300 (7)
                                                              1,767 (8)
                                                              1,184 (9)
                             --------   -------  --------   --------     --------
  Total operating
   expenses................    26,491    11,444    37,935     25,069       63,004
  Loss from operations.....   (23,400)   (6,244)  (29,644)   (25,069)     (54,713)
  Loss on investment in
   joint venture...........       (31)      --        (31)       --           (31)
  Interest income..........     3,879       --      3,879        --         3,879
  Interest and other
   expense.................       (55)     (257)     (312)       --          (312)
                             --------   -------  --------   --------     --------
  Net loss.................  $(19,607)  $(6,501) $(26,108)  $(25,069)    $(51,177)
                             ========   =======  ========   ========     ========
  Basic and diluted net
   loss per share..........  $  (0.76)  $ (3.27)                         $  (1.50)
                             --------   -------                          --------
  Weighted average shares
   of common stock.........    25,801     2,042                            34,069
                             ========   =======                          ========
  See accompanying notes to Unaudited Pro Forma
                      Condensed Combined Financial Information
  
                                        24
  UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
  
                                As of June 30, 2000
                                   (In thousands)
  Pro Forma
                                        CyberSource PaylinX   Total    Adjustments     Total
                                        ----------- -------  --------  -----------    --------
                 ASSETS
                 ------
  Current Assets:
   Cash and cash equivalents..........   $ 41,076   $11,535  $ 52,611   $    --       $ 52,611
   Short-term investments.............     75,020       --     75,020        --         75,020
   Accounts receivable, net...........      4,583     2,815     7,398        --          7,398
   Prepaid expenses and other current
   assets.............................      1,333       224     1,557        --          1,557
                                         --------   -------  --------   --------      --------
  Total current assets................    122,012    14,574   136,586        --        136,586
   Property and equipment, net........     15,420     3,953    19,373        --         19,373
   Investment in joint venture........        730       --        730        --            730
   Other noncurrent assets............        495       404       899        --            899
   Goodwill and other intangible
    assets............................        --        --        --     146,000 (1)   146,000
                                         --------   -------  --------   --------      --------
     Total assets.....................   $138,657   $18,931  $157,588   $146,000      $303,588
                                         ========   =======  ========   ========      ========
  LIABILITIES AND STOCKHOLDERS' EQUITY
  ------------------------------------
  Current liabilities:
   Accounts payable...................      2,053       276     2,329        --          2,329
   Other accrued liabilities..........      5,344     1,329     6,673      4,000 (1)    12,173
                                                                           1,500 (3)
   Deferred revenue...................        793     1,360     2,153       (680)(2)     1,473
   Current obligations under capital
    leases............................        578       --        578        --            578
                                         --------   -------  --------   --------      --------
  Total current liabilities...........      8,768     2,965    11,733      4,820        16,553
  Non-current obligation under capital
   leases.............................        204       --        204        --            204
  Other long-term obligations.........        --        836       836        --            836
  Redeemable convertible preferred
   stock..............................        --     35,917    35,917    (35,917)(5)       --
  Stockholders' equity (net capital
   deficiency)
   Common stock and paid-in capital....   190,341     5,183   195,524    142,951 (5)   369,800
                                                                          27,859 (5)
                                                                          (5,183)(5)
                                                                           8,649 (1)
   Deferred compensation..............       (903)   (1,796)   (2,699)    (8,649)(1)    (9,552)
                                                                           1,796 (4)
   Accumulated other comprehensive
    loss..............................        (54)      --        (54)       --            (54)
   Accumulated deficit................    (59,699)  (24,174)  (83,873)    24,174 (6)   (74,199)
                                                                         (14,500)(6)
                                         --------   -------  --------   --------      --------
     Total stockholders' equity.......    129,685   (28,787)  108,848    177,097       285,995
                                         --------   -------  --------   --------      --------
     Total liabilities and
      stockholders' equity (net
      capital deficiency).............   $138,657   $18,931  $157,588   $146,000      $303,588
                                         ========   =======  ========   ========      ========
  See accompanying notes to Unaudited Pro Forma
                      Condensed Combined Financial Information
  
                                        25
  NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
                                FINANCIAL STATEMENTS
  
     For purposes of the pro forma operating data, CyberSource's consolidated
  financial statements as of June 30, 2000 and for the six months ended June 30,
  2000 have been combined with the PaylinX financial statements as of June 30,
  2000 and for the six months ended June 30, 2000. CyberSource's supplemental
  consolidated statement of operations for the year ended December 31, 1999 has
  been combined with the PaylinX statement of operations for the year ended
  December 31, 1999.
  
     The companies have had no significant inter-company activity which would
  require elimination in preparing the combined condensed financial statements.
  In addition, the companies have no significantly different accounting policies
  and procedures which would have required conforming adjustments.
  
     The accompanying pro forma information should be read in conjunction with
  the historical financial statements and supplemental financial statements and
  related notes for both CyberSource and PaylinX, which are either included or
  incorporated by reference in this Form 8-K or CyberSource's Proxy Statement
  filed on August 17, 2000 in relation to this purchase transaction.
  
     The pro forma financial statements give effect to CyberSource's acquisition
  of PaylinX through a merger and exchange of shares. The Unaudited Pro Forma
  Combined Condensed Statements of Operations for the year ended December 31,
  1999 and the six months ended June 30, 2000 reflect this transaction as if it
  had taken place at the beginning of the period presented. The Unaudited Pro
  Forma Combined Condensed Balance Sheet gives effect to this transaction as if
  it had taken place on June 30, 2000.
  
     The merger is being accounted for using the purchase method of accounting.
  The pro forma financial statements have been prepared on the basis of
  assumptions described in the following notes and include assumptions relating
  to the allocation of the consideration paid for the assets and liabilities of
  PaylinX based on estimated fair value. CyberSource does not expect that the
  final allocation of the purchase price will differ materially from the
  preliminary allocations. In the opinion of CyberSource's management, all
  adjustments necessary to present fairly such pro forma financial statements
  have been made on the proposed terms and structure of the PaylinX merger.
  
     In connection with the merger, CyberSource currently expects to incur write-
  offs related to in-process research and development, of approximately $14.5
  million. The Unaudited Pro Forma Combined Condensed Statements of Operations do
  not reflect these charges. The charge related to in-process research and
  development will be reflected in CyberSource's consolidated financial
  statements upon the effective time of the merger. The pro forma financial
  statements do not include the costs of integration, the amount of which is
  uncertain at this time as they will affect future operations.
  
     The pro forma financial statements are not necessarily indicative of what
  the actual financial results would have been had the transaction taken place on
  January 1, 1999 or June 30, 2000 and do not purport to indicate the results of
  future operations.
  
     The pro forma financial statements give effect to the following pro forma
  adjustments:
  
       (1) In accordance with the merger agreement, PaylinX will become a
    wholly owned subsidiary of CyberSource, and all outstanding shares of its
    common and preferred stock will be converted into shares of CyberSource
    common stock.
  
     The PaylinX merger is being accounted for using the purchase method of
  accounting. The purchase price of $16.23 per share was based on the closing
  price of CyberSource's stock on July 10, 2000 (the date of the announcement of
  the merger) and the three days prior and subsequent to the announcement date.
  
                                        26
  NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
                         FINANCIAL STATEMENTS--(Continued)
  
     The purchase price was determined as follows:
  PaylinX  CyberSource
                                               Shares     Shares      Fair Value
                                              --------- ----------- --------------
                                                                    (in thousands)
  Shares................................. 7,339,859  8,807,831     $142,951
      Stock options assumed.................. 2,142,575  2,571,090       36,508
      Totals................................. 9,482,434 11,378,921     $179,459
  The PaylinX shares were first converted to CyberSource equivalent shares by
  taking the number of PaylinX shares multiplied by the exchange ratio of
  approximately 1.2 per share.
  
     With respect to stock options assumed as part of the merger, all PaylinX
  options will be exchanged for CyberSource options and are included as part of
  the purchase price based on their fair value. Any unvested PaylinX options
  issued in exchange for unvested CyberSource options are also included as part
  of the purchase price based on their fair value, however, pursuant to Financial
  Accounting Standards Board Interpretation Number 44, the portion of the
  intrinsic value of unvested options that will be deemed to be earned over the
  remaining vesting period of those options has been deducted from the fair value
  of the unvested options and will be amortized as deferred compensation over
  that remaining vesting period. The fair value of the options assumed is based
  on the Black-Scholes model using the following assumptions:
  
    . Fair market value of the underlying shares is based on the average
      closing price of CyberSource's common stock on July 10, 2000 and the
      three days prior and subsequent to such date.
  
    . Expected life of 4.0 years
  
    . Expected volatility of 1.13
  
    . Risk free interest rate of 5.55%
  
    . Expected dividend rate of 0%
  
     Below is a table of the estimated acquisition cost, allocation of excess
  purchase cost over the fair value of net assets acquired to goodwill and other
  intangible assets acquired and annual amortization of the goodwill and
  intangible assets acquired (in thousands, except for asset life);
  Estimated                 Annual
                                          Acquisition Asset Life Amortization of
                                             Cost     (in years)   Intangibles
                                          ----------- ---------- ---------------
  Value of common stock and stock
     options issued......................  $179,459
    Transaction costs....................     4,000
                                           --------
      Total estimated acquisition cost...  $183,459
                                           ========
    Historical value of net assets
     acquired of PaylinX at June 30,
     2000................................  $ 15,130      N/A
    Adjustment to state net assets at
     fair market value...................      (820)     N/A
    Assembled workforce..................     3,500        3         $ 1,167
    Customer base........................    13,000        5         $ 2,600
    Developed technology.................    10,600        3         $ 3,533
    In-process technology................    14,500      N/A             N/A
    Covenants-not-to-compete.............     5,000        2         $ 2,500
    Goodwill.............................   113,900        3         $37,967
    Deferred compensation................     8,649      3.5         $ 4,839
                                           --------
      Total..............................  $183,459
                                           ========
  27
  NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
                         FINANCIAL STATEMENTS--(Continued)
  
     Tangible assets of PaylinX acquired in the merger principally include cash
  and cash equivalents, accounts receivables, and fixed assets. Liabilities of
  PaylinX assumed in the merger principally include accounts payable, deferred
  revenue and other liabilities.
  
     To determine the value of the developed technology the expected future cash
  flow attributable to all existing technology was discounted, taking into
  account risks related to the characteristics and applications of the
  technology, existing and future markets, and assessments of the life cycle
  stage of the technology. The analysis resulted in a valuation of approximately
  $10.6 million for developed technology which has reached technological
  feasibility and therefore was capitalizable. The developed technology is being
  amortized on a straight line basis over a 3 year period.
  
     The value of the assembled workforce was derived by estimating the costs to
  replace the existing employees, including recruiting and hiring costs and
  training costs for each category of employee. The analysis determined a
  valuation of approximately $3.5 million for the assembled workforce, and is
  being amortized on a straight line basis over a 3 year period.
  
     The value of the customer base of approximately $13.0 million was derived by
  considering, among other factors, the historical costs to develop customer
  relationships, the expected income, and the associated risks. Associated risks
  included the inherent difficulties and uncertainties in transitioning business
  relationships. The value of the customer base is being amortized over a 5 year
  period.
  
     The value of deferred compensation of approximately $8.6 million was derived
  using the guidance of Financial Accounting Standards Board Interpretation
  Number 44, the unvested options' intrinsic value, and a vesting ratio of 38%
  for the remaining vesting period of unvested options. The deferred compensation
  is being amortized on a graded basis over a 3.5 year period.
  
     The projects identified as in-process technology at PaylinX are those that
  will be underway at the time of the PaylinX merger and would, after
  consummation of the PaylinX merger, require additional effort to establish
  technological feasibility. These projects have identifiable technological risk
  factors which indicate that even though successful completion is expected, it
  is not assured. If an identified project is not successfully completed, there
  is no alternative future use for the project and the expected future income
  will not be realized. The estimated amount of the in-process research and
  development charge represents a preliminary estimate which could materially
  differ from the actual results that will be experienced by CyberSource as final
  values will not be established until after the closing of the PaylinX merger.
  
     The in-process technology acquired from PaylinX in the transaction consists
  primarily of technology related to replacement and enhancement of PaylinX's
  core technology, principally multi-channel enterprise payment software.
  
       (2) The pro forma adjustment to deferred revenue reflects the writedown
    of deferred revenue to the estimated amount of the cost to provide service
    under maintenance contracts as of June 30, 2000 plus a profit margin
    related to such services.
  
       (3) The pro forma adjustment to accrued liabilities reflects the
    payments under severance agreements to executives of PaylinX who will be
    terminated upon the closing of the merger.
  
       (4) The pro forma adjustment to "deferred compensation" reflects the
    elimination of PaylinX deferred compensation ($1.8 million).
  
       (5) The pro forma adjustment to "common stock and additional paid in
    capital" and "convertible preferred stock" reflects elimination of
    PaylinX's common and preferred stock ($41.1 million) and the impact of the
    issuance of CyberSource common stock ($179.5 million) in connection with
    the merger.
  
                                        28
  NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
                         FINANCIAL STATEMENTS--(Continued)
  
       (6) The pro forma adjustment to "Accumulated Deficit" reflects the
    elimination of PaylinX's accumulated deficit ($24.0 million) and the inclusion
    of in-process technology charge ($14.5 million).
  
       (7) The pro forma adjustment is for the amortization of goodwill,
    assembled workforce, covenants-not-to-compete and customer base.
  
       (8) The pro forma adjustment is for the amortization of developed
    technology.
  
       (9) The pro forma adjustment is for the amortization of deferred
    compensation.
  
                                        29
  (c)  Exhibits.
       --------
  
       The Exhibit Index immediately following the signature page is incorporated
       herein by reference.
  
                                    SIGNATURES
  
  Pursuant to the requirements of the Securities Exchange Act of 1934, the
  Registrant has duly caused this report to be signed on its behalf by the
  undersigned hereunto duly authorized.
  
                                      CYBERSOURCE CORPORATION
                                      (the Registrant)
  
                                      By:  /s/ Charles E. Noreen, Jr.
                                         -----------------------------
                                         Charles E. Noreen, Jr.
                                         Vice President of Finance and
                                         Administration, Chief Financial Officer
                                         (Principal Financial and
                                         Chief Accounting Officer)
  
  Dated:  October 3, 2000
  
                                         4
  EXHIBIT INDEX
  
       Exhibit
       Number           Description
       ------           -----------
  
         2              Agreement and Plan of Merger, dated as of July 9, 2000, by
                        and among CyberSource Corporation, Sapphire Merger, Inc.,
                        and PaylinX Corporation and Exhibit A thereto.
  
  Pursuant to Item 601(b)(2) of Regulation S-K, the following exhibits and
  schedules to the Agreement have been omitted. Such exhibits and schedules will
  be submitted to the Securities and Exchange Commission upon request.
  
            Exhibit/Schedule     Name
            ----------------     ----
  
            Exhibit B            Escrow Agreement
            Exhibit C            Company Financial Statements
            Exhibit D            Proprietary Information and Inventions Agreement
            Exhibit E            Form of Voting Agreement
            Exhibit F            Form of Lock-Up Agreement
            Exhibit G            Opinion from Company Counsel
            Exhibit H            Form of Noncompetition Agreement
            Exhibit I            Opinion from Acquiror's Counsel
            Schedule 6.7         Signatories to Voting Agreement
            Schedule 6.10        Signatories to Lock-Up Agreement
            Schedule 6.17        Parties to Executive Benefit Summaries