1140184--3/26/2010--IPAYMENT

related topics

{system, service, information}

{debt, indebtedness, cash}

{customer, product, revenue}

{tax, income, asset}

{regulation, change, law}

{cost, operation, labor}

{regulation, government, change}

{competitive, industry, competition}

{investment, property, distribution}

{cost, contract, operation}

{financial, litigation, operation}

{stock, price, share}

{operation, natural, condition}

{loss, insurance, financial}

{acquisition, growth, future}

{product, market, service}

Substantially all of our operations are conducted at the subsidiary level, which may materially adversely affect our ability to service our indebtedness. Our senior subordinated notes and the related guarantees are subordinated in right of payment to all of our and the subsidiary guarantors existing and future senior debt, and are effectively subordinated to all of our and the subsidiary guarantors existing and future secured debt. Fraudulent conveyance laws could void the guarantees of our senior subordinated notes. The interests of our stockholders may not be aligned with the interests of the holders of our senior subordinated notes. In the event of a change of control, we may not be able to repurchase our senior subordinated notes as required by the indenture, which would result in a default under our indenture. A change of control under our senior secured credit facility could cause a material adverse effect on our liquidity, financial condition or results of operations. A change of control under the indenture governing our senior subordinated notes could cause a material adverse effect on our liquidity, financial condition or results of operations. Changes in the financial and credit markets or in our credit ratings could adversely affect the market prices of our senior secured credit facility and our senior subordinated notes. We cannot be sure that an active trading market will be maintained for our senior subordinated notes. Risks Relating to Our Business We have faced, and may face in the future, significant chargeback liability if our merchants refuse or cannot reimburse chargebacks resolved in favor of their customers, and we face potential liability for merchant or customer fraud; we may not accurately anticipate these liabilities. We rely on bank sponsors, which have substantial discretion with respect to certain elements of our business practices, in order to process bankcard transactions; if these sponsorships are terminated and we are not able to secure or successfully migrate merchant portfolios to new bank sponsors, we will not be able to conduct our business. If we or our bank sponsors fail to adhere to the standards of the Visa and MasterCard payment card associations, our registrations with these associations could be terminated and we could be required to stop providing payment processing services for Visa and MasterCard. We rely on card payment processors and service providers; if they fail or no longer agree to provide their services, our merchant relationships could be adversely affected and we could lose business. To acquire and retain merchant accounts, we depend on independent sales groups that do not serve us exclusively. On occasion, we experience increases in interchange costs; if we cannot pass these increases along to our merchants, our profit margins will be reduced. Unauthorized disclosure of merchant and cardholder data, whether through breach of our computer systems or otherwise, could expose us to protracted and costly litigation. The loss of key personnel or damage to their reputations could adversely affect our relationships with independent sales groups, card associations, bank sponsors and our other service providers, which would adversely affect our business. The payment processing industry is highly competitive and such competition is likely to increase, which may further adversely influence our prices to merchants, and as a result, our profit margins. Increased attrition in merchant charge volume due to an increase in closed merchant accounts that we cannot anticipate or offset with new accounts may reduce our revenues. Our operating results are subject to seasonality, and, if our revenues are below our seasonal norms during our historically stronger second, third, and fourth quarters, our net income and cash flow could be lower than expected. Our systems may fail due to factors beyond our control, which could interrupt our business or cause us to lose business and would likely increase our costs. Material breaches in security of our systems may have a significant effect on our business. If our merchants experience adverse business conditions, they may generate fewer transactions for us to process or become insolvent, increasing our exposure to chargeback liabilities. If our merchant advance customers stop processing or become insolvent, our merchant advance loss exposure could increase. New and potential governmental regulations designed to protect or limit access to consumer information could adversely affect our ability to provide the services we provide our merchants. If we are required to pay state taxes on transaction processing, it could negatively impact our profitability. The markets for the services that we offer may fail to expand or may contract and this could negatively impact our growth and profitability. The effect of climate changes on the Company cannot be predicted with certainty. Revenues generated by acquired businesses or account portfolios may be less than anticipated, resulting in losses or a decline in profits, as well as potential impairment charges. We may fail to uncover all liabilities of acquisition targets through the due diligence process prior to an acquisition, exposing us to potentially large, unanticipated costs. We may encounter delays and operational difficulties in completing the necessary transfer of data processing functions and connecting systems links required by an acquisition, resulting in increased costs for, and a delay in the realization of revenues from, that acquisition. Special non-recurring and integration costs associated with acquisitions could adversely affect our operating results in the periods following these acquisitions. Our facilities, personnel and financial and management systems may not be adequate to effectively manage the future expansion we believe necessary to increase our revenues and remain competitive.

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1140184--3/26/2010--IPAYMENT_INC