##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from

 to
 
 iPayment, Inc.
 (Exact name of registrant as specified in its charter)
 www.ipaymentinc.com
 DELAWARE
(State or other jurisdiction of 
incorporation or organization)
    
    62-1847043
(I.R.S. Employer
Identification No.)40 Burton Hills Boulevard, Suite 415
Nashville, Tennessee
(Address of principal executive offices)
    
    37215
(Zip Code)
 Registrants telephone number, including area code (615) 665-1858
 þ o
  o o þ
 o þ
  Title of each class
    
    Shares Outstanding at June 30, 2007(Common stock, $0.01 par value)
    
    100




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##### 



PagePART I  FINANCIAL INFORMATIONItem 1
    
    Financial StatementsConsolidated Balance Sheets as of June 30, 2007 (Successor, Unaudited) and December 31, 2006 (Successor)
    
    
    3Unaudited Consolidated Statements of Operations for the
three and six months ended June 30, 2007; May 11, 2006
through June 30, 2006 (Successor); April 1, 2006 through
May 10, 2006 (Predecessor); January 1, 2006 through May
10, 2006 (Predecessor)
    
    
    4Unaudited Consolidated Statements of Cash Flows for the
six months ended June 30, 2007; period from January 1,
2006 through May 10, 2006 (Predecessor); period from May
11, 2006 through June 30, 2006 (Successor)
    
    
    5Notes to Unaudited Consolidated Financial Statements
    
    
    6Item 2
    

Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A)
    
    
    12Item 3
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    21Item 4
    
    Controls and Procedures
    
    
    21PART II  OTHER INFORMATIONItem 1
    
    Legal Proceedings
    
    
    22Item 2
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    22Item 3
    
    Defaults Upon Senior Securities
    
    
    22Item 4
    
    Submission of Matters to a Vote of Security Holders
    
    
    22Item 5
    
    Other Information
    
    
    22Item 6
    
    Exhibits and Reports on Form 8-K
    
    
    22SIGNATURES
    
    
    23EXHIBITS
    
    
    24Ex-31.1 Section 302 Certification for CEOEx-31.2 Section 302 Certification for CFOEx-32.1 Section 906 Certification for CEOEx-32.2 Section 906 Certification for CFO
  2




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##### Table of Contents



Part 1.
 
 Item 1. Financial Statements
 iPAYMENT, INC.
 
 CONSOLIDATED BALANCE SHEETS
  June 30,
    
    
    December 31,2007
    
    
    2006(Unaudited)
    
    
    (Audited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    7
    
    
    $
    96Accounts receivable, net of allowance for doubtful accounts of $406 and $275 at
June 30, 2007 and December 31, 2006, respectively
    
    
    23,384
    
    
    
    23,050Prepaid expenses and other current assets
    
    
    3,342
    
    
    
    2,685Total current assets
    
    
    26,733
    
    
    
    25,831Restricted cash
    
    
    1,233
    
    
    
    1,036Property and equipment, net
    
    
    3,812
    
    
    
    3,925Intangible assets and other, net of accumulated amortization of $42,478 and $24,769
at June, 2007 and December 31, 2006, respectively
    
    
    210,104
    
    
    
    226,776Goodwill
    
    
    509,682
    
    
    
    506,078Other assets, net
    
    
    18,443
    
    
    
    19,780Total assets
    
    $
    770,007
    
    
    $
    783,426LIABILITIES and STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    3,089
    
    
    $
    5,933Income taxes payable
    
    
    1,225
    
    
    
    508Accrued liabilities and other
    
    
    19,080
    
    
    
    24,968Current portion of long-term debt
    
    
    5,244
    
    
    
    5,241Total current liabilities
    
    
    28,638
    
    
    
    36,650Minority interest in equity of consolidated subsidiaries
    
    
    
    
    
    
    155Deferred tax liabilities
    
    
    12,980
    
    
    
    14,331Long-term debt
    
    
    706,962
    
    
    
    709,415Other liabilities
    
    
    3,072
    
    
    
    5,985Total liabilities
    
    
    751,652
    
    
    
    766,536Commitments and contingencies (Note 8)Stockholders equityCommon stock, $0.01 par value; 1,000 shares authorized, 100 shares issued and
outstanding at June 30, 2007, and December 31, 2006
    
    
    20,055
    
    
    
    20,055Accumulated other comprehensive loss, net of tax benefits of $273 and $1,517 at
June 30, 2007, and December 31, 2006, respectively
    
    
    (410
    )
    
    
    (2,275
    )Accumulated deficit
    
    
    (1,290
    )
    
    
    (890
    )Total stockholders equity
    
    
    18,355
    
    
    
    16,890Total liabilities and stockholders equity
    
    $
    770,007
    
    
    $
    783,426
  3




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##### Table of Contents



iPAYMENT, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Three
    
    
    Period from
    
    
    Six
    
    
    Period fromMonths
    
    
    May 11
    
    
    April 1
    
    
    Months
    
    
    May 11
    
    
    January 1Ended
    
    
    through
    
    
    through
    
    
    Ended
    
    
    through
    
    
    throughJune 30,
    
    
    June 30,
    
    
    May 10,
    
    
    June 30,
    
    
    June 30,
    
    
    May 10,2007
    
    
    2006
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2006(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Successor
    
    
    Successor
    
    
    Predecessor
    
    
    Successor
    
    
    Successor
    
    
    PredecessorRevenues
    
    $
    192,674
    
    
    $
    107,549
    
    
    $
    81,613
    
    
    $
    370,414
    
    
    $
    107,549
    
    
    $
    252,514Operating expenses:Interchange
    
    
    112,440
    
    
    
    62,389
    
    
    
    47,346
    
    
    
    216,102
    
    
    
    62,389
    
    
    
    145,459Other costs of services
    
    
    57,743
    
    
    
    31,994
    
    
    
    24,344
    
    
    
    111,985
    
    
    
    31,994
    
    
    
    76,994Selling, general and administrative
    
    
    4,708
    
    
    
    2,752
    
    
    
    9,112
    
    
    
    11,257
    
    
    
    2,752
    
    
    
    14,432Total operating expenses
    
    
    174,891
    
    
    
    97,135
    
    
    
    80,802
    
    
    
    339,344
    
    
    
    97,135
    
    
    
    236,885Income from operations
    
    
    17,783
    
    
    
    10,414
    
    
    
    811
    
    
    
    31,070
    
    
    
    10,414
    
    
    
    15,629Other expense:Interest expense, net
    
    
    15,218
    
    
    
    8,602
    
    
    
    3,381
    
    
    
    30,486
    
    
    
    8,602
    
    
    
    5,229Other expense, net
    
    
    92
    
    
    
    1,955
    
    
    
    5,850
    
    
    
    110
    
    
    
    1,956
    
    
    
    6,729Income (loss)before income taxes and minority interest in earnings of consolidated subsidiary
    
    
    2,473
    
    
    
    (143
    )
    
    
    (8,420
    )
    
    
    474
    
    
    
    (144
    )
    
    
    3,671Income tax provision (benefit)
    
    
    1,133
    
    
    
    (75
    )
    
    
    (1,476
    )
    
    
    1,004
    
    
    
    (77
    )
    
    
    3,343Minority interest in losses of consolidated subsidiaries
    
    
    
    
    
    
    193
    
    
    
    173
    
    
    
    155
    
    
    
    193
    
    
    
    522Net income (loss)
    
    $
    1,340
    
    
    $
    125
    
    
    $
    (6,771
    )
    
    $
    (375
    )
    
    $
    126
    
    
    $
    850
  4




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##### Table of Contents



iPAYMENT, INC.
 
 CONSOLIDATED STATEMENTS of CASH FLOWS
  Period fromSix Months
    
    
    May 11
    
    
    January 1Ended
    
    
    through
    
    
    throughJune 30,
    
    
    June 30,
    
    
    May 10,2007
    
    
    2006
    
    
    2006(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Successor
    
    
    Successor
    
    
    PredecessorCash flows from operating activitiesNet income
    
    $
    (375
    )
    
    $
    126
    
    
    $
    850Adjustments to reconcile net income to net cash provided by operating activitiesDepreciation and amortization
    
    
    18,465
    
    
    
    5,631
    
    
    
    14,026Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    7,719Noncash interest expense
    
    
    1,290
    
    
    
    49
    
    
    
    2,958Changes in assets and liabilities, excluding effects of acquisitions:Accounts receivable
    
    
    (334
    )
    
    
    (11,548
    )
    
    
    13,488Prepaid expenses and other current assets
    
    
    (657
    )
    
    
    70
    
    
    
    (461
    )Other assets
    
    
    (3,014
    )
    
    
    7,584
    
    
    
    (6,017
    )Accounts payable and income taxes payable
    
    
    (2,127
    )
    
    
    2,612
    
    
    
    (4,444
    )Accrued liabilities and other
    
    
    (705
    )
    
    
    (16,679
    )
    
    
    20,322Net cash provided by (used in) operating activities
    
    
    12,543
    
    
    
    (12,155
    )
    
    
    48,441Cash flows from investing activitiesChange in restricted cash
    
    
    (197
    )
    
    
    946
    
    
    
    1,050Expenditures for property and equipment
    
    
    (557
    )
    
    
    (490
    )
    
    
    (587
    )Acquisitions of businesses, portfolios and other intangibles, net of cash acquired
    
    
    (483
    )
    
    
    (287
    )
    
    
    (524
    )Payments related to businesses previously acquired
    
    
    (8,772
    )
    
    
    (3,000
    )
    
    
    (11,500
    )Net cash used in investing activities
    
    
    (10,009
    )
    
    
    (2,831
    )
    
    
    (11,561
    )Cash flows from financing activitiesNet borrowings (repayments) on line of credit
    
    
    1,000
    
    
    
    7,500
    
    
    
    (100,000
    )Proceeds received in exchange for ownership interest in Successor company
    
    
    
    
    
    
    3,378
    
    
    
    Repayments of debt
    
    
    (3,623
    )
    
    
    (1,303
    )
    
    
    (28
    )Proceeds from issuance of debt, net of finance costs
    
    
    
    
    
    
    (120
    )
    
    
    701,165Repurchase of common stock
    
    
    
    
    
    
    (633,702
    )
    
    
    Proceeds from issuance of common stock
    
    
    
    
    
    
    
    
    
    
    382Net cash (used in) provided by financing activities
    
    
    (2,623
    )
    
    
    (624,247
    )
    
    
    601,519Net (decrease) increase in cash and cash equivalents
    
    
    (89
    )
    
    
    (639,233
    )
    
    
    638,399Cash and cash equivalents, beginning of period
    
    
    96
    
    
    
    639,422
    
    
    
    1,023Cash and cash equivalents, end of period
    
    $
    7
    
    
    $
    189
    
    
    $
    639,422Supplemental disclosure of cash flow information:Cash paid during the period for income taxes
    
    $
    2,904
    
    
    $
    107
    
    
    $
    4,866Cash paid during the period for interest
    
    $
    29,365
    
    
    $
    5,284
    
    
    $
    2,663Non-cash increases in assets (liabilities):Intangible assets
    
    $
    
    
    
    $
    72,419
    
    
    $
    Goodwill
    
    $
    
    
    
    $
    356,756
    
    
    $
    
  5




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##### Table of Contents



(1) Organization and Business and Basis of Presentation
 Organization and Business
    Basis of Presentation
   Use of Estimates
  Share-Based Compensation
 Share-Based Payment, Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees
  6




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##### Table of Contents



Derivative Financial Instruments
   Accounting for Derivative Instruments and Hedging Activities
 Amortization of Merchant Processing Portfolios
   7




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##### Table of Contents



Common Stock
  (2) Acquisitions
  Other Acquisitions
  (3) Long-Term Debt
  Accounting for Derivative Instruments and Hedging
Activities
 3 4
 Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities
 8




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##### Table of Contents



(4) Segment Information and Geographical Information
  (5) Income Taxes
 Accounting for Uncertainty in Income Taxes  an
Interpretation of FASB Statement No. 109
     6) Commitments and Contingencies
 Litigation
 Robert Aguilard, et al., on behalf of themselves and all persons similarly situated v.
E-Commerce Exchange, Inc ., A-1 Leasing LLC, and Duvera Billing Services Civil Action No.
05CC02794  State of California, Superior Court of Orange County.
   Bruns v. E-Commerce Exchange Inc., et al , Orange County Superior Court, State of
California, Case No. 00CC02450 (coordinated under the caption TCPA Cases, Los Angeles County
Superior Court, State of California, Case No. JCCO 43500)
     NPMG Acquistion Sub / American Arbitration Association Demand for Arbitration , Case Number:
Re: 76 489 Y 00188 07 WYGI
     9




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##### Table of Contents



Other
    (7) Restructuring
 Accounting for Costs Associated with Exit or Disposal Activities,
 One-Time Termination Benefits.
 Contract Termination Costs.
 Other Associated Costs.
  10




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##### Table of Contents



Charged toJanuary 1,
    
    
    Costs or
    
    
    
    
    
    
    June 30,2007
    
    
    Expenses
    
    
    Deductions
    
    
    2007One-time termination benefits
    
    $
    
    
    
    $
    392
    
    
    $
    392
    (1)
    
    $
    0Contract termination costs
    
    
    
    
    
    
    245
    
    
    
    70
    (2)
    
    
    175Other associated costs
    
    
    
    
    
    
    273
    
    
    
    259
    (3)
    
    
    14$
    
    
    
    $
    911
    
    
    $
    721
    
    
    $
    190
 
 (1)
    
    Payments of one-time termination benefits(2)
    
    Payments of contract termination costs (8) Significant Developments
    11




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Statements May Prove Inaccurate
  Executive Overview
        12




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##### Table of Contents



Critical Accounting Policies
  Accounting for Goodwill and Intangible Assets. Goodwill and Other Intangible Assets,
     Reserve for Merchant Losses
 13




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##### Table of Contents



Income Taxes. Accounting for Uncertainty in Income
Taxes  an Interpretation of FASB Statement No. 109
  Minority Interest.
 Consolidation of Variable Interest Entities
 Derivative Financial Instruments. Accounting for Derivative Instruments and Hedging Activities
 Merger Transaction. Business Combinations, Basis in Leveraged Buyout Transactions.
 Restructuring. Accounting for Costs Associated with Exit or Disposal
Activities
 Components of Revenues and Expenses
  14




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##### Table of Contents



Reporting Revenue Gross as a Principal Versus Net as
an Agent,
    Seasonality Trend
  Off-Balance Sheet Arrangements
  15




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##### Table of Contents



Results of Operations
 Three Months Ended June 30, 2007 (2007) Compared to Three Months Ended June 30, 2006 (2006)
 Three months ended
    
    
    % of Total
    
    
    Three months ended
    
    
    % of Total
    
    
    ChangeJune 30, 2007
    
    
    Revenue
    
    
    June 30, 2006 (1)
    
    
    Revenue
    
    
    Amount
    
    
    %Revenues
    
    $
    192,674
    
    
    
    100.0
    %
    
    $
    189,162
    
    
    
    100.0
    %
    
    $
    3,512
    
    
    
    1.9Operating ExpensesInterchange
    
    
    112,440
    
    
    
    58.4
    
    
    
    109,735
    
    
    
    58.0
    
    
    
    2,705
    
    
    
    2.5Other costs of services
    
    
    57,743
    
    
    
    30.0
    
    
    
    56,338
    
    
    
    29.8
    
    
    
    1,405
    
    
    
    2.5Selling, general and administrative
    
    
    4,708
    
    
    
    2.4
    
    
    
    11,864
    
    
    
    6.3
    
    
    
    (7,156
    )
    
    
    (60.3
    )Total operating expenses
    
    
    174,891
    
    
    
    90.8
    
    
    
    177,937
    
    
    
    94.1
    
    
    
    (3,046
    )
    
    
    (1.7
    )Income from operations
    
    
    17,783
    
    
    
    9.2
    
    
    
    11,225
    
    
    
    5.9
    
    
    
    6,558
    
    
    
    58.4Other expenseInterest expense, net
    
    
    15,218
    
    
    
    7.9
    
    
    
    11,983
    
    
    
    6.3
    
    
    
    3,235
    
    
    
    27.0Other expense, net
    
    
    92
    
    
    
    0.1
    
    
    
    7,806
    
    
    
    4.1
    
    
    
    (7,714
    )
    
    
    (98.8
    )Total other expense
    
    
    15,310
    
    
    
    7.9
    
    
    
    19,789
    
    
    
    10.5
    
    
    
    (4,479
    )
    
    
    (22.6
    )Income (loss) before income taxes
    
    
    2,473
    
    
    
    1.3
    
    
    
    (8,564
    )
    
    
    (4.5
    )
    
    
    11,037
    
    
    
    (128.9
    )Income tax provision (benefit)
    
    
    1,133
    
    
    
    0.6
    
    
    
    (1,551
    )
    
    
    (0.8
    )
    
    
    2,684
    
    
    
    (173.0
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    366
    
    
    
    0.2
    
    
    
    (366
    )
    
    
    (100.00
    )Net income (loss)
    
    $
    1,340
    
    
    
    0.7
    
    
    $
    (6,647
    )
    
    
    (3.5
    )
    
    $
    7,987
    
    
    
    (120.2
    )
 
 (1)
    
    Represents the Combined results of Predecessor for the period April 1 through May 10, 2006 and
Successor for the period May 11 through June 30, 2006. Revenues.
 Interchange Expenses
 Other Costs of Services.
 Selling, General and Administrative.
 Other Expense.
 Income Tax
 16




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##### Table of Contents



Minority Interest.
 Six Months Ended June 30, 2007 (2007) Compared to Six Months Ended June 30, 2006 (2006)
 Six months ended
    
    
    % of Total
    
    
    Six months ended
    
    
    % of Total
    
    
    ChangeJune 30, 2007
    
    
    Revenue
    
    
    June 30, 2006 (1)
    
    
    Revenue
    
    
    Amount
    
    
    %Revenues
    
    $
    370,414
    
    
    
    100.0
    %
    
    $
    360,063
    
    
    
    100.0
    %
    
    $
    10,351
    
    
    
    2.9Operating ExpensesInterchange
    
    
    216,102
    
    
    
    58.3
    
    
    
    207,848
    
    
    
    57.7
    
    
    
    8,254
    
    
    
    4.0Other costs of services
    
    
    111,985
    
    
    
    30.2
    
    
    
    108,988
    
    
    
    30.3
    
    
    
    2,997
    
    
    
    2.7Selling, general and administrative
    
    
    11,257
    
    
    
    3.0
    
    
    
    17,184
    
    
    
    4.8
    
    
    
    (5,927
    )
    
    
    (34.5
    )Total operating expenses
    
    
    339,344
    
    
    
    91.6
    
    
    
    334,020
    
    
    
    92.8
    
    
    
    5,324
    
    
    
    1.6Income from operations
    
    
    31,070
    
    
    
    8.4
    
    
    
    26,043
    
    
    
    7.2
    
    
    
    5,027
    
    
    
    19.3Other expenseInterest expense, net
    
    
    30,486
    
    
    
    8.2
    
    
    
    13,831
    
    
    
    3.8
    
    
    
    16,655
    
    
    
    120.4Other expense, net
    
    
    110
    
    
    
    0.1
    
    
    
    8,685
    
    
    
    2.4
    
    
    
    (8,575
    )
    
    
    (98.7
    )Total other expense
    
    
    30,596
    
    
    
    8.3
    
    
    
    22,516
    
    
    
    6.3
    
    
    
    8,080
    
    
    
    35.9Income (loss) before income taxes
    
    
    474
    
    
    
    0.1
    
    
    
    3,527
    
    
    
    1.0
    
    
    
    (3,053
    )
    
    
    (86.6
    )Income tax provision (benefit)
    
    
    1,004
    
    
    
    0.3
    
    
    
    3,266
    
    
    
    0.9
    
    
    
    (2,262
    )
    
    
    (69.3
    )Minority interest
    
    
    155
    
    
    
    0.0
    
    
    
    715
    
    
    
    0.2
    
    
    
    (560
    )
    
    
    (78.32
    )Net income (loss)
    
    $
    (375
    )
    
    
    (0.1
    )
    
    $
    976
    
    
    
    0.3
    
    
    $
    (1,351
    )
    
    
    (138.4
    )
 
 (1)
    
    Represents the Combined results of Predecessor for the period January
1 through May 10, 2006 and Successor for the period May 11 through
June 30, 2006. Revenues.
 Interchange Expenses
 Other Costs of Services.
 Selling, General and Administrative.
 Other Expense.
 Income Tax
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##### Table of Contents



Minority Interest.
 18




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##### Table of Contents



Liquidity and Capital Resources
  Operating activities
   Investing activities
   Financing activities
     19




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##### Table of Contents



Accounting for Derivative
Instruments and Hedging Activities
 3 4
  Contractual Obligations
  Payments due by periodLess than
    
    
    
    
    
    
    
    
    
    
    More thanContractual Obligations
    
    Total
    
    
    1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 yearsCredit facility
    
    
    508,563
    
    
    
    5,150
    
    
    
    10,300
    
    
    
    10,300
    
    
    
    482,813Senior Notes
    
    
    204,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    204,000Interest (1)
    
    
    315,030
    
    
    
    57,314
    
    
    
    113,490
    
    
    
    106,953
    
    
    
    37,273Capital lease obligations
    
    
    146
    
    
    
    95
    
    
    
    47
    
    
    
    4
    
    
    
    Operating lease obligations
    
    
    2,922
    
    
    
    904
    
    
    
    1,764
    
    
    
    254
    
    
    
    Purchase obligations (2)(3)(4)
    
    
    33,209
    
    
    
    13,358
    
    
    
    13,818
    
    
    
    6,033
    
    
    
    Total contractual obligations
    
    
    1,063,870
    
    
    
    76,821
    
    
    
    139,419
    
    
    
    123,544
    
    
    
    724,086
 
 (1)
    
    Future interest obligations are calculated using current interest
rates on existing debt balances as of June 30, 2007, and assume no
principal reduction other than mandatory principal repayments in
accordance with the terms of the debt instruments as described in
Note 3 in our Consolidated Financial Statements.(2)
    
    Purchase obligations represent costs of contractually guaranteed
minimum processing volumes with certain of our third-party
transaction processors.(3)
    
    We are required to pay FDMS an annual processing fee related to
the FDMS Merchant Portfolio and the FDMS Agent Bank Portfolio of
at least $10.3 million in fiscal 2007, and for each subsequent
year through 2011 of at least 70% of the amount of the processing
fee paid during the immediately preceding year. The minimum
commitments for years after 2007, included in the table above are
based on the preceding year minimum amounts. The actual minimum
commitments for such years may vary based on actual results in
preceding years.(4)
    
    We have agreed to utilize FDMS to process at least 75% of our
consolidated transaction sales volume in any calendar year through
2011. The minimum commitments for such years are not calculable as
of June 30, 2007, and are excluded from this table.  20




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##### Table of Contents



Effects of Inflation
  
 Item 3.
    
    Quantitative and Qualitative Disclosure about Market Risk
    
 Item 4.
    
    Controls and Procedures
 Evaluation of disclosure controls and procedures
 Changes in internal control over financial reporting
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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
  Item 1A.
    
    Risk Factors
  
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3.
    
    Defaults Upon Senior Securities
  
 Item 4.
    
    Submission of Matters to a Vote of Security Holders
  
 Item 5.
    
    Other Information
  
 Item 6.
    
    Exhibits
  22




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##### Table of Contents



SIGNATURES
  iPayment, Inc.Date: August 13, 2007
    
    By: /s/ Gregrory S. Daily

Gregory S. DailyChief Executive Officer(Principal Executive Officer)Date: August 13, 2007
    
    By: /s/ Clay M. WhitsonClay M. WhitsonChief Financial Officer(Principal Financial and Accounting Officer)
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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description31.1
    
    Certification of Chief Executive Officer pursuant to Securities Exchange Act
Rule 13a  14(a) (as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002), filed herewith.31.2
    
    Certification of Chief Financial Officer pursuant to Securities Exchange Act
Rule 13a  14(a) (as adopted Section 302 of the Sarbanes-Oxley Act of 2002), filed
herewith.32.1
    
    Certification of Chief Executive Officer pursuant to Securities Exchange Act
Rule 13a  14(a) and 18 U.S.C. 1350 (as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002), filed herewith.32.2
    
    Certification of Chief Financial Officer pursuant to Securities Exchange Act
Rule 13a  14(a) and 18 U.S.C. 1350 (as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002), filed herewith.
 24