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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended March 31, 2003

Commission file number 333-101705

 

iPayment, Inc.
(Exact Name of Registrant as Specified in Its Charter)


Delaware
62-1847043
(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification No.)
     
40 Burton Hills Boulevard, Suite 415
 Nashville, Tennessee
  37215
(Address of Principal Executive Offices)
(Zip Code)
Registrant’s Telephone Number, Including Area Code:
(615) 665-1858
Former name, address and fiscal year, if changed since last report:
Not Applicable



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YES  o    NO  x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES o    NO x 

Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date.

Class
Outstanding at June 9, 2003
Common Stock, $0.01 par value
16,154,390


 
  Page 1 of 20  
 
 
INDEX

iPAYMENT, INC. and SUBSIDIARIES

  
Page
PART I. FINANCIAL INFORMATION
 
 
 
Item 1. Financial Statements
 
3
4
5
6
 
 
11
 
 
16
 
 
16
 
 
 
 
PART II. OTHER INFORMATION
 
 
 
16
 
 
16
 
 
17
 
 
 
 
17
 
 
18
 
 
20
 
 
  Page 2 of 20  
 

Part 1.

Item 1. Financial Statements

iPAYMENT, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
 
 
 
  

 March 31, 

 

December 31,

 

 

 

 2003

 

2002

 
   
 
 
 
  

 (Unaudited)

    
 
ASSETS
   
 
    
 
  
Current assets:
   
   
 
Cash and cash equivalents
 
$
1,136
 
$
1,831
 
Accounts receivable, net of allowance for doubtful accounts of $171 and $93 at
   
 
    
 
  
March 31, 2003 and December 31, 2002, respectively
   
7,020
   
6,687
 
Prepaid expenses and other current assets
   
1,396
   
1,287
 
   
 
 
Total current assets
   
9,552
   
9,805
 
 
    
 
    
 
  
Restricted cash
   
3,207
   
3,070
 
Property and equipment, net
   
1,705
   
1,610
 
Intangible assets, net
   
30,457
   
31,758
 
Goodwill, net
   
59,969
   
60,790
 
Other assets
   
11,096
   
9,948
 
   
 
 
    
 
    
 
  
Total assets
 
$
115,986
 
$
116,981
 
   
 
 
    
 
    
 
  
LIABILITIES, MANDATORILY REDEEMABLE CONVERTIBLE
   
   
 
PREFERRED STOCK and STOCKHOLDERS’ EQUITY
   
 
    
 
  
Current liabilities:
   
   
 
Reserve for merchant losses
 
$
3,507
 
$
4,411
 
Accounts payable and accrued liabilities
   
10,574
   
12,192
 
Current portion of long-term debt to related parties; net of discount
   
8,132
    
3,235
 
Current portion of long-term debt to unrelated parties, net of discount
   12,857   4,148  
   
 
 
Total current liabilities
   
35,070
   
23,986
 
 
    
 
    
 
  

Long-term liabilities

              
Long-term debt to related parties, net of current portion and discount
   
44,914
    
49,767
  
Long-term debt to unrelated parties, net of current portion and discount
    13,693     20,921  
Other long-term liabilities
   
1,149
   
2,118
 
   
 
 
Total liabilities
   
94,826
   
96,792
 
   
 
 
 
    
 
    
 
  
Commitments and contingencies
   
 
    
 
  
 
    
 
    
 
  
Series A mandatorily redeemable convertible preferred stock, no par value; 2,577,200 shares
   
 
    
 
  
authorized, issued and outstanding at March 31, 2003 and December 31, 2002, respectively
   
7,108
   
6,670
 
 
    
 
    
 
  
Stockholders’ equity:
   
 
    
 
  
Preferred stock, $0.01 par value; 17,422,800 shares authorized,
   
 
    
 
  
no shares issued and outstanding at March 31, 2003 and December 31, 2002
   
--
   
--
 
     Common stock, $0.01 par value; 130,000,000 shares authorized, 7,912,674 and 6,736,075
   
 
    
 
  
shares issued and outstanding at March 31, 2003 and December 31, 2002, respectively
   
29,804
   
29,736
 
Deferred compensation
   
(10
)
 
(25
)
Accumulated deficit
   
(15,742
)
 
(16,192
)
   
 
 
Total stockholders’ equity
   
14,052
   
13,519
 
   
 
 
    
 
    
 
  
Total liabilities and stockholders’ equity
 
$
115,986
 
$
116,981
 
   
 
 
 
See accompanying notes to consolidated financial statements.
 
 
  Page 3 of 20  
 
 
iPAYMENT, INC.
CONSOLIDATED STATEMENTS of OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
 
 
 
  
Three months ended
 
  
March 31,
   
 
    
2003

 

 
2002
 
   
 
 
Revenues 
 
$
46,675
 
$
16,479
 
 
    
 
    
 
Operating expenses:
   
 
    
 
Interchange
   
24,010
   
6,706
 
Other costs of services 
   
16,277
   
7,961
 
Selling, general and administrative
   
1,829
   
1,169
 
   
 
 
Total operating expenses
   
42,116
   
15,836
 
   
 
 
 
    
 
    
 
Income from operations
   
4,559
   
643
 
    
 
    
 
Interest expense, net 
   
3,290
   
1,206
 
   
 
 
 
    
 
    
 
  
Income (loss) before income taxes 
   
1,269
   
(563
)
 
    
 
    
 
  
Income tax provision 
   
381
   
155
 
   
 
 
    
   
 
Net income (loss) 
   
888
   
(718
)
 
    
 
    
 
Accretion of mandatorily redeemable convertible preferred stock 
   
(438
)
 
(339
)
   
 
 
    
 
    
 
Net income (loss) allocable to common stockholders 
 
$
450
 
$
(1,057
)
   
 
 
    
 
    
 
  
    
 
    
 
Basic and diluted earnings (loss) per share: