plpm-Current Folio

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-35699

PLANET PAYMENT, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware		13-4084693
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)


670 Long Beach Boulevard Long Beach, New York		11561
(Address of Principal Executive Offices)		(Zip Code)

(516) 670-3200

(Registrant’s Telephone Number, Including Area Code)

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large Accelerated Filer ☐		Accelerated Filer ☒

Non-Accelerated Filer ☐		Smaller Reporting Company ☐
(Do not check if smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of July 31, 2016, there were 50,376,325 shares of the registrant’s common stock outstanding.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Planet Payment, Inc.

Condensed Consolidated Balance Sheets


	As of		As of
	June 30,		December 31,
	2016		2015
		(unaudited)
Current assets:
Cash and cash equivalents	$	10,486,645	$	14,675,515
Restricted cash		4,561,278		5,050,147
Accounts receivable, net of allowances of $0.1 million as of June 30, 2016 and December 31, 2015		5,762,559		6,406,496
Prepaid expenses and other assets		2,026,928		1,800,566
Total current assets		22,837,410		27,932,724
Other assets:
Restricted cash		551,862		551,917
Property and equipment, net		1,602,882		1,811,619
Software development costs, net		4,104,959		3,964,454
Intangible assets, net		1,117,235		1,378,264
Goodwill		292,041		286,852
Deferred tax asset and other long-term assets		8,293,159		8,581,082
Total other assets		15,962,138		16,574,188
Total assets	$	38,799,548	$	44,506,912
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	317,308	$	306,520
Accrued expenses		3,824,694		6,438,600
Due to merchants		4,812,012		5,240,427
Current portion of capital leases		244,223		290,911
Total current liabilities		9,198,237		12,276,458
Long-term liabilities:
Long-term debt		9,916,000		—
Other long-term liabilities		1,424,243		1,666,938
Total long-term liabilities		11,340,243		1,666,938
Total liabilities		20,538,480		13,943,396
Commitments and contingencies (Note 8)
Stockholders’ equity:
Convertible preferred stock—10,000,000 shares authorized as of June 30, 2016 and December 31, 2015, $0.01 par value: Series A—2,243,750 issued and 1,535,398 outstanding as of June 30, 2016 and 2,243,750 issued and outstanding as of December 31, 2015; $6,141,592 and $8,975,000 aggregate liquidation preference as of June 30, 2016 and December 31, 2015, respectively		15,354		22,438
Common stock—250,000,000 shares authorized as of June 30, 2016 and December 31, 2015, $0.01 par value, and 59,087,147 issued and 50,330,051 shares outstanding as of June 30, 2016, and 56,191,389 issued and 52,585,503 shares outstanding as of December 31, 2015		590,871		561,914
Treasury stock, at cost, 8,757,096 shares and 3,605,886 shares as of June 30, 2016 and December 31, 2015, respectively		(25,726,459)		(7,883,012)
Additional paid-in capital		109,224,346		106,741,026
Accumulated other comprehensive loss		(517,667)		(510,445)
Accumulated deficit		(65,325,377)		(68,368,405)
Total stockholders’ equity		18,261,068		30,563,516
Total liabilities and stockholders’ equity	$	38,799,548	$	44,506,912

The accompanying notes are an integral part of these financial statements.

Planet Payment, Inc.

Condensed Consolidated Statements of Income (unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Revenue:
Net revenue	$	13,103,376	$	12,683,359	$	26,787,889	$	24,816,129
Operating expenses:
Cost of revenue:
Payment processing service fees		2,734,689		2,590,885		5,425,913		5,179,089
Processing and service costs		3,524,123		3,385,658		7,024,791		6,623,598
Total cost of revenue		6,258,812		5,976,543		12,450,704		11,802,687
Selling, general and administrative expenses		5,204,892		4,712,704		10,685,606		9,183,104
Restructuring charges		125,268		-		125,268		-
Total operating expenses		11,588,972		10,689,247		23,261,578		20,985,791
Income from operations		1,514,404		1,994,112		3,526,311		3,830,338
Other (expense) income:
Interest expense		(83,021)		(13,830)		(97,697)		(28,443)
Interest income		398		365		822		791
Total other expense, net		(82,623)		(13,465)		(96,875)		(27,652)
Income from operations before provision for income taxes		1,431,781		1,980,647		3,429,436		3,802,686
Provision for income taxes		(149,058)		(105,319)		(386,408)		(215,732)
Net income	$	1,282,723	$	1,875,328	$	3,043,028	$	3,586,954
Basic net income per share applicable to common stockholders	$	0.02	$	0.03	$	0.06	$	0.06
Diluted net income per share applicable to common stockholders	$	0.02	$	0.03	$	0.05	$	0.06
Weighted-average common stock outstanding (basic)		49,602,206		53,082,296		50,186,828		53,439,467
Weighted-average common stock outstanding (diluted)		51,987,695		53,830,534		52,401,790		54,090,469

The accompanying notes are an integral part of these financial statements.

Planet Payment, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)


	Six Months Ended
	June 30,
	2016		2015
Cash flows from operating activities:
Net income	$	3,043,028	$	3,586,954
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense		1,180,899		461,590
Depreciation and amortization expense		1,330,238		1,439,778
Provision (recovery) for doubtful accounts		58,595		(193)
Disposal of property and equipment		500		—
Gain on insurance settlement		—		(517,930)
Changes in operating assets and liabilities:
Decrease (increase) in settlement assets		498,553		(244,451)
Decrease in accounts receivables, prepaid expenses and other current assets		358,980		1,529,933
Decrease (increase) in other long-term assets		287,923		(181,213)
(Decrease) increase in accounts payable and accrued expenses		(3,540,524)		239,331
(Decrease) increase in due to merchants		(438,099)		240,034
Other		(26,219)		(53,259)
Net cash provided by operating activities		2,753,874		6,500,574
Cash flows from investing activities:
(Increase) decrease in restricted cash		(9,629)		11,506
Increase (decrease) in merchant reserves		9,684		(131,599)
Purchase of property and equipment		(109,555)		(168,282)
Capitalized software development		(677,822)		(593,946)
Purchase of intangible assets		(353)		(13,454)
Net cash used for investing activities		(787,675)		(895,775)
Cash flows from financing activities:
Proceeds from issuance of common stock		1,965,380		22,949
Principal payments on capital lease obligations		(193,002)		(287,168)
Borrowings under credit facility		13,916,000		—
Repayments under credit facility		(4,000,000)		—
Purchase of treasury stock		(17,843,447)		(1,647,211)
Net cash used for financing activities		(6,155,069)		(1,911,430)
Effect of exchange rate changes on cash and cash equivalents(*)		—		—
Net (decrease) increase in cash and cash equivalents		(4,188,870)		3,693,369
Cash and cash equivalents at beginning of period		14,675,515		9,837,791
Cash and cash equivalents at end of period	$	10,486,645	$	13,531,160
Supplemental disclosure:
Cash paid for:
Interest	$	14,718	$	30,785
Income taxes		504,398		395,294
Non-cash investing and financing activities:
Common stock issued for preferred stock conversion		21,629		—
Common stock issued for stock options exercised		98		—
Assets acquired under capital leases		122,630		79,291
Accrued capitalized hardware, software and fixed assets		63,291		12,071
Capitalized stock-based compensation		14,018		20,015

(*)For the six months ended June 30, 2016 and 2015, the effect of exchange rate changes on cash and cash equivalents was immaterial.

The accompanying notes are an integral part of these financial statements.

2. Recent accounting pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The new guidance includes a cohesive set of disclosure requirements intended to provide users of financial statements with comprehensive information about the nature, amount, timing and uncertainty of revenue and cash flows arising from a company’s contracts with customers. The original effective date of ASU 2014-09 of January 1, 2017 has been delayed until January 1, 2018. Early adoption is not permitted before the original effective date. The standard allows for either retrospective application to each reporting period presented or retrospective application with the cumulative effect of initially applying this update recognized at the date of initial application. The Company is currently evaluating the effect ASU 2014-09 will have on the Company’s condensed consolidated financial statements and disclosures.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (“ASU No. 2016-02”). The new standard establishes a right-of-use (ROU) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the amendments in ASU No. 2016-02 is permitted for all entities. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the effect ASU 2016-02 will have on the Company’s condensed consolidated financial statements and disclosures.

In March 2016, the FASB issued Accounting Standards Update No. 2016-08, Revenue from Contracts with Customers (Topic 606) (“ASU 2016-08”). The amendments in ASU 2016-08 do not change the core principle of the guidance. The amendments clarify the implementation guidance on principal versus agent considerations. The update suggests that entities recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The effective date and transition requirements for the amendments in ASU 2016-08 are the same as the effective date and transition requirements of ASU 2014-09. The Company is currently evaluating the effect ASU 2016-08 will have on the Company’s condensed consolidated financial statements and disclosures.

In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation—Stock Compensation (Topic 718) (“ASU No. 2016-09”). This update is part of the FASB’s Simplification Initiative, which simplifies the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The new standard is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any entity in any interim or annual period. We do not expect a material impact on our financial condition, results of operations or cash flows from the adoption of this guidance.

In April 2016, the FASB issued Accounting Standards Update No. 2016-10, Revenue from Contracts with Customers (Topic 606) (“ASU 2016-10”). The amendments in this update do not change the core principle of the guidance. The amendments in this update clarify the identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. The amendments in this update clarify that contractual provisions that, explicitly or implicitly, require an entity to transfer control of additional goods or services to a customer should be distinguished from contractual provisions that, explicitly or implicitly, define the attributes of a single promised license. The effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements of update ASU 2014-09. The Company is currently evaluating the effect ASU 2016-10 will have on the Company’s condensed consolidated financial statements and disclosures.

In May 2016, the FASB issued Accounting Standards Update No. 2016-12, Revenue from Contracts with Customers (Topic 606) (“ASU 2016-12”), in which the FASB finalized the guidance in the new revenue standard on collectibility, noncash consideration, presentation of sales tax, and transition. The amendments are intended to address implementation issues that were raised by stakeholders and discussed by the Revenue Recognition Transition Resource Group (TRG), and provide additional practical expedients. The effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements of update ASU 2014-09. The Company is currently

evaluating the effect ASU 2016-12 will have on the Company’s condensed consolidated financial statements and disclosures.

3. Concentration of credit risk

The Company’s assets that are exposed to concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash and receivables from clients. The Company places some of its cash, cash equivalents, and restricted cash with financial banking institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. The Company also maintains cash balances at foreign banking institutions, which are not insured by the FDIC.

The Company maintains an allowance for uncollectible accounts receivable based on expected collectability and performs ongoing credit evaluations of customers’ financial condition.

The Company’s accounts receivable concentrations of 10% and greater are as follows:


	As of		As of
	June 30,		December 31,
	2016		2015
Customer A	16	%	15	%
Customer B	17		*
Customer D	10		*
Customer H	*		11

* Less than 10% accounts receivable concentration.

The Company’s revenue concentrations of 10% and greater are as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Customer A	15	%	19	%	16	%	20	%
Customer C	*		*		10		10
Customer G	12		*		11		*

* Less than 10% revenue concentration.

4. Net income per share

The Company computes net income per share in accordance with ASC 260, Earnings per Share (“ASC topic 260”). Under ASC topic 260, securities that contain rights to receive non-forfeitable dividends (whether paid or unpaid) are participating securities and should be included in the two-class method of computing earnings per share. The Company’s preferred stockholders are entitled to participate in dividends and earnings when, and if, dividends are declared on the common stock. As such, the Company calculates net income per share using the two-class method. The two-class method is an earnings formula that treats a participating security as having rights to dividends that otherwise would have been available to common and preferred stockholders based on their respective rights to receive dividends. Losses are not allocated to the preferred stockholders for computing net loss per share under the two-class method because the preferred stockholders do not have contractual obligations to share in the losses of the Company.

Basic earnings per share is calculated by dividing net income, adjusted for amounts allocated to participating securities under the two-class method, if applicable, by the weighted average number of common stock outstanding during the period.

Diluted earnings per share is calculated by dividing net income by the weighted average number of shares of the Company’s common stock outstanding, assuming dilution, during the period. The diluted earnings per share calculation assumes (i) all stock options and warrants which are in the money are exercised at the beginning of the period and (ii) each issue or series of issues of potential common stock are considered in sequence from the most dilutive to the least

dilutive. That is, dilutive potential common stock with the lowest “earnings add-back per incremental share” shall be included in dilutive earnings per share before those shares with higher earnings add back per incremental share.

The following table sets forth the computation of basic and diluted net income per share:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Numerator:
Net income	$	1,282,723	$	1,875,328	$	3,043,028	$	3,586,954
Amounts allocated to participating preferred stockholders under the two-class method		(110,402)		(214,905)		(261,909)		(411,051)
Net income applicable to common stockholders (basic and dilutive)	$	1,172,321	$	1,660,423	$	2,781,119	$	3,175,903
Denominator:
Weighted-average common stock outstanding (basic)		49,602,206		53,082,296		50,186,828		53,439,467
Common equivalent shares from options and warrants to purchase common stock		2,385,489		748,238		2,214,962		651,002
Weighted-average common stock outstanding (diluted)(1)		51,987,695		53,830,534		52,401,790		54,090,469
Basic net income per share applicable to common stockholders	$	0.02	$	0.03	$	0.06	$	0.06
Diluted net income per share applicable to common stockholders(1)	$	0.02	$	0.03	$	0.05	$	0.06

(1)

In accordance with ASC 260-10-45-48, for the three and six months ended June 30, 2016 and 2015, the Company excluded 396,500 and 718,407, respectively, of contingently-issued restricted shares from diluted weighted average common stock outstanding as the contingencies were neither (a) satisfied at the reporting date nor (b) would have been satisfied if the reporting date was at the end of the contingency period.

The following table sets forth the weighted average securities outstanding that have been excluded from the diluted net income per share calculation because the effect would have been anti-dilutive:


	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2016	2015	2016	2015
Stock options	11,071	4,762,323	592,170	5,979,516
Restricted stock awards	—	60,000	30,004	60,000
Convertible preferred stock(1)	4,949,687	6,851,144	6,015,339	6,851,144
Total anti-dilutive securities	4,960,758	11,673,467	6,637,513	12,890,660

(1)

Diluted net income per share increases when convertible preferred stock is included in the required sequence in the diluted earnings per share computation. As such, convertible preferred stock is excluded from the computation of diluted earnings per share for the three and six months ended June 30, 2016 and 2015.

5. Stock-based compensation expense

Stock-based compensation expense is measured at the grant date based on fair value, and recognized as an expense over the requisite service period, net of an estimated forfeiture rate.

During the first quarter of 2016, 0.8 million stock options were granted to certain employees of the Company, with a grant fair value of $0.7 million. The actual number of shares that will be issued upon exercise of the options is subject to the achievement of service-based vesting conditions. Stock-based compensation expense is recorded on a straight line basis from the date of the grant over the requisite service period of 36 months.

During the second quarter of 2016, 0.1 million restricted stock awards with a grant fair value of $0.2 million were granted to certain members of the Company’s Board of Directors. The final number of vested shares is subject to

service-based vesting conditions. Stock-based compensation expense is recorded on a straight line basis from the date of the grant over the requisite service period of 12 months.

During the second quarter of 2016, 0.5 million shares of the 2015 restricted stock awards granted to certain officers of the Company vested. The market condition was achieved as the Company’s volume weighted average price on NASDAQ was greater than or equal to $3.50 per share for seven consecutive trading days, or any ten trading days over a consecutive thirty-five day period. The market condition was valued at $0.7 million, of which $0.5 million was expensed as of March 31, 2016 and an additional $0.2 million was expensed during the three months ended June 30, 2016.

The following summarizes stock-based compensation expense recognized by income statement classification:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Processing and service costs	$	50,255	$	50,084	$	99,061	$	100,581
Selling, general and administrative expenses		526,676		178,044		1,081,838		361,009
Total stock-based compensation expense	$	576,931	$	228,128	$	1,180,899	$	461,590

The following summarizes stock-based compensation expense recognized by type:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Stock options	$	267,833	$	124,433	$	549,229	$	255,705
Restricted stock awards		309,098		103,695		631,670		205,885
Total stock-based compensation expense	$	576,931	$	228,128	$	1,180,899	$	461,590

6. Property and equipment

Property and equipment, net consist of the following:


	Estimated			As of		As of
	useful life			June 30,		December 31,
	(in years)			2016		2015
Equipment	2	-	7	$	1,006,334	$	958,175
Computer hardware	3	-	5		3,405,534		3,266,233
Furniture and fixtures	5	-	7		202,859		192,565
Leasehold improvements	3	-	10		778,104		746,336
Total property and equipment					5,392,831		5,163,309
Less: Accumulated depreciation and amortization					(3,789,949)		(3,351,690)
Property and equipment, net				$	1,602,882	$	1,811,619

Property and equipment depreciation and amortization expense is as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Depreciation and amortization expense	$	277,433	$	153,243	$	440,559	$	324,472

Included in depreciation and amortization expense for the three and six months ended June 30, 2016 is $0.1 million of expense related to the acceleration of amortization on certain assets due to exiting a floor in the Company’s corporate location before the end of the lease term. The cease use date is September 30, 2016. For additional information on the Company’s restructuring charges disclosure, refer to Note 14.

7. Goodwill and intangible assets

The change in carrying amount of goodwill for the six months ended June 30, 2016 is as follows:


Goodwill, gross, as of December 31, 2015	$	286,852
Impact of change in Euro exchange rate		5,189
Accumulated impairment losses as of June 30, 2016		—
Goodwill, net, as of June 30, 2016	$	292,041

The entire goodwill balance is assigned to the payment processing services segment.

Intangible assets are recorded at estimated fair value and are amortized ratably over their estimated useful lives to processing and service costs, which are included in cost of revenue.

The gross book value, accumulated amortization and amortization periods of intangible assets are as follows:


	As of June 30, 2016						As of December 31, 2015						Amortization
	Gross book		Accumulated		Net book		Gross book		Accumulated		Net book		period
	value		amortization		value		value		amortization		value		(in years)
Trademarks and patents	$	1,198,419	$	(516,602)	$	681,817	$	1,184,612	$	(472,914)	$	711,698	15	-	21
Technology		2,432,061		(1,996,643)		435,418		2,388,852		(1,722,286)		666,566	5
Intangible assets, net	$	3,630,480	$	(2,513,245)	$	1,117,235	$	3,573,464	$	(2,195,200)	$	1,378,264

Amortization expense related to intangible assets is as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Amortization expense	$	145,880	$	142,789	$	288,018	$	287,789

8. Commitments and contingencies

Employment agreements

Pursuant to employment agreements with certain employees, the Company had a commitment to pay severance of approximately $1.2 million as of June 30, 2016 and $0.9 million as of December 31, 2015, in the event of an involuntary termination, as defined in the employment agreements. Additionally, in the event of termination upon a change of control, as defined in the agreements, the Company had a commitment to pay severance of approximately $1.2 million as of June 30, 2016 and $1.1 million as of December 31, 2015.

Contingent liabilities

In instances where the Company is acting as the merchant acquirer, the Company bears a risk that a merchant may engage in fraud by submitting for payment certain credit card transactions that may have been manipulated, are fictitious, or are otherwise not bona fide. Similarly, the Company bears the risk that a merchant becomes insolvent, owing money to cardholders. To the extent that such fraud or insolvency occurs in circumstances where the Company is liable to make good on any resultant losses, this could affect the Company’s operating results and cash flows. The Company has required certain merchants to post cash reserves of approximately $1.0 million with the sponsoring bank against such liabilities and has itself paid the acquirer a reserve of $0.3 million in connection therewith, which is included in long-term “Restricted cash” on the condensed consolidated balance sheets. In addition, the Company holds merchant reserves of approximately $2.2 million. This reserve amount is included in “Restricted cash” with an offset in “Due to merchants.” Under FASB ASC 460, Guarantees, the Company evaluates its ultimate risk and records an estimate of potential loss for chargeback’s related to merchant fraud and processing errors based upon an assessment of actual historical fraud rates and errors in processing compared to recent bank card processing volume levels. No contingent liability has been recorded as of June 30, 2016 and December 31, 2015, as the risk of material loss is considered remote.

10. Convertible preferred stock

On April 11, 2016, 708,352 shares of Series A Preferred Stock were converted into 2,162,907 shares of common stock at a conversion ratio of approximately 3.05 shares of common stock per share of Series A Preferred Stock. As of June 30, 2016, the remaining preferred stock consists of 1,535,398 shares designated (and issued) as Series A Preferred Stock, and 1,756,250 shares which are undesignated (and unissued). Each issued share of Series A Preferred Stock is convertible into approximately 3.05 shares of common stock, for a total of 4,688,237 shares of common stock.

For additional information on the Company’s convertible preferred stock disclosure, refer to Note 9 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

11. Accrued expenses

The following are the components of accrued expenses:


	As of		As of
	June 30,		December 31,
	2016		2015
Bonus	$	159,432	$	710,739
Deferred revenue(*)		719,726		688,418
Deferred incentive(**)		700,000		950,000
Other(***)		2,245,536		4,089,443
Total accrued expenses	$	3,824,694	$	6,438,600

(*)Current deferred revenue will be recognized as revenue ratably over the next 12 months. As of June 30, 2016, included in the balance sheet classification “Other long-term liabilities,” is the non-current portion of deferred revenue in the amount of $0.7 million. The long-term portion of deferred revenue balance as of December 31, 2015 was approximately $0.6 million.

(**)As of June 30, 2016, the Company recorded approximately $0.7 million in short-term incentives in relation to future obligations under a contract. As of June 30, 2016 and December 31, 2015, included in the balance sheet classification “Other long-term liabilities” is the non‑current portion of these incentives of approximately $0.3 million and $0.7 million, respectively.

(***)As of June 30, 2016 and December 31, 2015, included in “other” were third party referral commissions of approximately $0.2 million and $1.6 million, respectively. No other amount included in “Other” exceeded 10% of total current liabilities.

12. Segment information

General information

The segment and geographic information provided in the table below is being reported consistent with the Company’s method of internal reporting. Operating segments are defined as components of an enterprise for which separate financial information is available and which is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. The CODM reviews net revenue and gross profit by service by geographical region. The Company operates in two reportable segments: multi-currency processing services and payment processing services.

Information about revenue, profit and assets

The CODM evaluates performance and allocates resources based on net revenue and gross profit of each segment. For purposes of analyzing segments, gross profit of the multi-currency processing services segment is equal to net revenue less multi-currency cost of sales of $0.6 million and $0.7 million, which is included in “processing and services costs” for the three months ended June 30, 2016 and 2015, respectively, and $1.4 million and $1.3 million for the six months ended June 30, 2016 and 2015, respectively. The gross profit for the payment processing services segment includes net revenue of the segment less the cost of revenue component “payment processing services fees,” which includes interchange and card network fees and assessments. Net revenue and gross profit by geographical region is based upon where the transaction originated. Lastly, the Company does not evaluate performance or allocate resources using segment asset data. Long-lived assets are primarily located in the Americas and Europe and as of June 30, 2016 and December 31, 2015, long-lived asset amounts are $7.1 million and $7.4 million, respectively.

The Company conducts its business primarily in three geographical regions: Asia-Pacific (“APAC”); the Americas; and Europe, Middle East and Africa (“EMEA”). The following table provides revenue concentration by geographic region. Analysis of revenue by segment and geographical region and reconciliations to consolidated revenue, gross profit, and income before the provision for income taxes are as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Net Revenue:
APAC	$	3,761,918	$	4,226,769	$	7,578,982	$	8,263,045
The Americas		2,444,187		1,750,920		4,629,561		3,244,050
EMEA		1,752,501		2,084,000		4,384,295		4,236,359
Total multi-currency processing services revenue		7,958,606		8,061,689		16,592,838		15,743,454
Payment processing services revenue		5,144,770		4,621,670		10,195,051		9,072,675
Net revenue	$	13,103,376	$	12,683,359	$	26,787,889	$	24,816,129
Gross Profit:
APAC	$	3,731,646	$	4,187,113	$	7,525,150	$	8,193,825
The Americas		2,261,907		1,641,963		4,296,595		3,038,241
EMEA		1,341,917		1,545,619		3,407,535		3,211,623
Total multi-currency processing services gross profit		7,335,470		7,374,695		15,229,280		14,443,689
Payment processing services gross profit		2,410,081		2,030,784		4,769,138		3,893,585
Total reportable segment gross profit		9,745,551		9,405,479		19,998,418		18,337,274
Corporate allocated cost of sales		2,900,987		2,698,663		5,661,233		5,323,832
Total gross profit	$	6,844,564	$	6,706,816	$	14,337,185	$	13,013,442

Income from operations before provision for income taxes:
Total gross profit	$	6,844,564	$	6,706,816	$	14,337,185	$	13,013,442
Selling, general and administrative expenses		5,204,892		4,712,704		10,685,606		9,183,104
Restructuring charges		125,268		—		125,268		—
Income from operations		1,514,404		1,994,112		3,526,311		3,830,338
Interest expense		(83,021)		(13,830)		(97,697)		(28,443)
Interest income		398		365		822		791
Total other expense, net		(82,623)		(13,465)		(96,875)		(27,652)
Income from operations before provision for income taxes	$	1,431,781	$	1,980,647	$	3,429,436	$	3,802,686

Payment processing services revenue and gross profit are the result of transactions that primarily originated in the Americas. For the three months ended June 30, 2016, Customer B and Customer G had revenue concentration of 16% and 29%, respectively, and for the six months ended June 30, 2016, Customer B and Customer G had revenue concentration of 15% and 28%, respectively. For the three months ended June 30, 2015, Customer B and Customer G had revenue concentration of 14% and 24%, respectively and for the six months ended June 30, 2015, Customer B and Customer G had revenue concentration of 15% and 22%, respectively.

“Corporate allocated cost of sales” includes expenses of running its platform infrastructure including: Internet connectivity, hosting and data storage expenses, amortization expenses of capitalized software development costs, compensation and related benefits of its technology personnel and a portion of general overhead expenses.

Concentration of revenue by customer by geographical region:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Multi-currency processing services revenue:
APAC:
Customer A	52	%	57	%	56	%	59	%
The Americas:
Customer D	19		*		23		12
Customer E	*		16		*		15
Customer F	*		19		*		19
Customer I	13		*		10		*
Customer J	11		*		*		*
EMEA:
Customer C	60		55		62		59
Customer H	39		45		37		41

(*)Less than 10% revenue concentration.

13. Stock Repurchases

Stock repurchase program

In October 2014, the Company announced that its Board of Directors authorized the repurchase of up to $6.0 million of the Company’s outstanding shares of common stock. As of December 31, 2015, the Board expanded its share repurchase authorization by an aggregate of $7.5 million.

From January 1, 2016 to March 9, 2016, prior to the tender offer discussed below, the Company repurchased approximately 1.3 million shares of common stock for an aggregate price of $3.6 million. As of March 9, 2016, the total amount of common stock repurchased under the program was 4.9 million shares for an aggregate price of $11.5 million and $2.0 million remained available for repurchase under the program. As of March 10, 2016, the stock repurchase program was suspended in connection with the tender offer. On August 2, 2016, the Board of Directors reinstated the Company’s share repurchase program and expanded the authorization by an incremental $4.0 million, bringing its total current authorization to $6.0 million.

Tender offer

On March 10, 2016, the Board of Directors authorized the Company to commence a modified “Dutch auction” tender offer to repurchase up to $15.0 million of its outstanding shares of common stock at a tender price of not less than $3.20 per share or greater than $3.60 per share. The tender offer commenced on March 14, 2016 and expired on April 11, 2016. On April 12, 2016, the Company paid $14.2 million, including transaction costs, to repurchase approximately 3.9 million shares at a tender price of $3.60 per share. The repurchased shares of common stock became treasury shares of the Company.

14. Restructuring charges

For the three months ended June 30, 2016, the Company incurred total restructuring charges of approximately $125,000, of which, approximately $100,000 represents the accelerated amortization of certain assets due to exiting a floor in its corporate location before the end of the lease term. The cease use date is September 30, 2016. The remaining amount represents the cash components of severance and benefits paid during the period.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q contains “forward-looking statements” that involve substantial risks and uncertainties. The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, but not limited to, statements regarding our expectations, beliefs, intentions, strategies, future operations, future financial position, future revenue, projected expenses and plans and objectives of management. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “will,” “would,” “should,” “could,” “can,” “predict,” “potential,” “continue,” “objective,” or the negative of these terms, and similar expressions intended to identify forward-looking statements. However, not all forward-looking statements contain these identifying words. These forward-looking statements reflect our current views about future events and involve known risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievement to be materially different from those expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section entitled “Item 1A - Risk Factors” included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. We refer to Planet Payment, Inc. together with its wholly-owned subsidiaries as “Planet Payment,” the “Company,” “we,” or “our.”

Business overview

Planet Payment is a provider of international payment and transaction processing and multi-currency processing services. We provide our services to approximately 178,000 active merchant locations in 22 countries and territories across the Asia-Pacific region, the Americas, the Middle East, Africa and Europe, primarily through our acquiring bank and processor customers, as well as through our own direct sales force. We provide banks and their merchants with innovative services to accept, process and reconcile electronic payments. Our point-of-sale multi-currency payment processing services are designed for merchants in the retail, restaurant, and hospitality environments. We also provide payment services for e-commerce and mail and telephone order merchants. Our point-of-sale and e-commerce services help merchants sell more goods and services to consumers, and are integrated within the payment card transaction process, enabling our acquiring customers to process and reconcile payment transactions in multiple currencies, geographies and channels. Our ATM services provide our domestic and international acquirers with additional processing capabilities to help them increase revenue and improve customer satisfaction. We also offer non-financial transaction processing services that allow merchants to offer a range of commercial services including pre-paid mobile phone top-up and bill payments using the same point-of-sale devices deployed to accept payment cards. We are a registered third-party processor with the major card associations and operate in accordance with industry standards, including the Payment Card Industry, or PCI, Security Council’s Data Security Standards.

To ensure our long-term success and the success of our customers:

we invest in new services and in enhancing our processing platform to facilitate more convenient and innovative payment methods, mobile payments and e-commerce; as well as the processing of non-financial transactions such as mobile phone top-up.

we continually work to improve the speed, efficiency, security and performance of our platform and our payments and transaction processing services to enhance the reliability of our global processing infrastructure and protect the security of cardholder information.

Key trends

Our financial results have been and we believe will continue to be impacted by trends in the international payment processing industry, including the global shift toward electronic-based methods of payments and away from paper-based methods of payment, the increasing levels of international travel and commerce and the rapid adoption of e-commerce on a global scale. Our results are impacted by the changes in levels of international spending using electronic methods, and as a result, negative trends in the global economy and other factors which negatively impact international travel may negatively impact the growth in total transaction volume processed using our platform. The global economy has been

undergoing a period of economic uncertainty and stock markets are experiencing high levels of volatility, and it is difficult to predict how long this uncertainty and volatility will continue.

We plan to grow our business by increasing the use of our services by the merchants of our existing and future acquiring bank and processor customers. If we are successful in increasing our share of this currently addressable market, as well as by adding new acquiring bank and processor customers and expanding into new geographies and business sectors, we would expect our revenue to continue to grow. In addition, based on the positive trends in the international payment processing industry noted above, we anticipate that as and when more payments are made using electronic methods, such as those that we offer, our revenue would also increase.

Key metrics

Our management relies on certain performance indicators to manage and assess our business. The key performance indicators set forth below help us evaluate growth trends, establish budgets, measure the effectiveness of our sales and marketing efforts and assess operational efficiencies. We believe that improvements in these metrics will result in improvements in our financial performance over time. We monitor our non-GAAP financial measures and other business statistics as a measure of operating performance in addition to net income and the other measures included in our consolidated financial statements.

The following is a table consisting of non-GAAP financial measures and certain other business statistics that management monitors:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
KEY METRICS:
Consolidated gross billings(1)	$	36,791,417		$	33,884,508		$	76,902,616		$	67,131,157
Total settled dollar volume processed(2)	$	1,962,972,987		$	1,994,928,717		$	4,026,255,657		$	4,004,670,449
Adjusted EBITDA (non-GAAP)(3)	$	2,834,706		$	2,936,845		$	6,059,571		$	5,731,706
Capitalized expenditures	$	479,098		$	341,520		$	865,039		$	807,768
Total active merchant locations (at period end)(4)		178,198			103,049			178,198			103,049
Total settled transactions processed(5)		45,680,275			57,195,139			99,071,948			100,896,820
Multi-currency processing services key metrics:
Active merchant locations (at period end)(4)		105,987			35,398			105,987			35,398
Settled transactions processed(6)		3,888,083			3,587,580			8,162,182			7,075,453
Gross foreign currency mark-up(7)	$	31,646,647		$	29,262,838		$	66,707,565		$	58,058,482
Settled dollar volume processed(8)	$	662,524,562		$	639,029,484		$	1,388,799,284		$	1,299,306,228
Average net mark-up percentage on settled dollar volume processed(9)		1.20	%		1.23	%		1.19	%		1.18	%
Payment processing services key metrics:
Active merchant locations (at period end)(4)		73,728			68,763			73,728			68,763
Payment processing services revenue(10)	$	5,144,770		$	4,621,670		$	10,195,051		$	9,072,675
Settled transactions processed(11)		41,969,598			53,717,345			91,231,000			94,039,972
Settled dollar volume processed(12)	$	1,333,260,862		$	1,367,839,326		$	2,697,846,395		$	2,727,299,244

(1)

Represents gross foreign currency mark-up (see footnote 7) plus payment processing services revenue (see footnote 10).

(2)

Represents total settled dollar volume processed through both our multi-currency and payment processing services.

(3)

We define Adjusted EBITDA as GAAP net income adjusted to exclude (1) interest expense, (2) interest income, (3) provision for income taxes, (4) depreciation and amortization, (5) stock-based compensation expense and (6) certain other items management believes affect the comparability of operating results. Please see “—Adjusted EBITDA” below for more information and for a reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP.

(4)

We consider a merchant location to be active as of a date if the merchant completed at least one revenue-generating transaction at the location during the 90-day period ending on such date. The total number of active merchant locations exceeds the total number of merchants, as merchants may have multiple locations. As of June 30, 2016 and 2015, there were 1,517 and 1,112 active merchant locations, respectively, included in both multi-currency and payment processing active merchant locations but are not included in total active merchant locations, in order to eliminate counting these locations twice.

(5)

Represents total settled transactions (excluding other transaction types such as authorizations and rate look-ups).

(6)

Represents settled transactions processed using our multi-currency processing services (excluding other transaction types such as authorizations and rate look-ups).

(7)

Represents the gross foreign currency mark-up amount on settled dollar volume processed using our multi-currency processing services. Gross foreign currency mark-up represents multi-currency processing services net revenue plus amounts paid to acquiring banks and their merchants associated with such multi-currency processing transactions. Management believes this metric is relevant because it provides the reader an indication of the gross mark-up derived from multi-currency transactions processed through our platform during a given period. Refer to the segment disclosure in Note 12 of our condensed consolidated financial statements for information on our net revenue from multi-currency processing services.

(8)

Represents the total settled dollar volume processed using our multi-currency processing services.

(9)

Represents the average net foreign currency mark-up percentage earned on settled dollar volume processed using our multi-currency processing services. The average net mark-up percentage on settled dollar volume processed is calculated by taking total multi-currency processing services net revenue ($8.0 million and $7.9 million for the three months ended June 30, 2016 and 2015, respectively, and $16.6 million and $15.3 million for the six months ended June 30, 2016 and 2015, respectively) and dividing by settled dollar volume processed (see footnote 8 above). For purposes of calculating “Average net mark-up percentage on settled dollar volume processed,” multi-currency processing services revenue includes revenue related to multi-currency transactions only.

(10)

Represents revenue earned and reported on payment processing services.

(11)

Represents settled transactions processed using our payment processing services (excluding other transaction types such as authorizations and rate look-ups).

(12)

Represents the total settled dollar volume processed using our payment processing services.

Adjusted EBITDA

This discussion includes information about Adjusted EBITDA that is not prepared in accordance with GAAP. Adjusted EBITDA is not based on any standardized methodology prescribed by GAAP and is not necessarily comparable to similar measures presented by other companies. A reconciliation of this non-GAAP measure is included below.

Adjusted EBITDA is a non-GAAP financial measure that represents GAAP net income (loss) adjusted to exclude (1) interest expense, (2) interest income, (3) provision for income taxes, (4) depreciation and amortization, (5) stock-based compensation expense and (6) certain other items management believes affect the comparability of operating results.

Management believes that Adjusted EBITDA, when viewed with our results under GAAP and the accompanying reconciliations, provides useful information about our period-over-period results. Adjusted EBITDA is presented

because management believes it provides additional information with respect to the performance of our fundamental business activities and is also frequently used by securities analysts, investors and other interested parties in the evaluation of comparable companies. We also rely on Adjusted EBITDA as a primary measure to review and assess the operating performance of our company and our management team in connection with our executive compensation.

Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation from, or as a substitute for, analysis of our results as reported under GAAP. Some of these limitations are:

Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements;

non-cash compensation is and will remain a key element of our long-term incentive compensation for our employees, although we exclude it from Adjusted EBITDA when evaluating our ongoing performance for a particular period; and

Adjusted EBITDA does not include the impact of certain charges or gains resulting from matters we consider not to be indicative of our ongoing operations.

Because of these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only as a supplement to our GAAP results.

The following table sets forth the reconciliation of Adjusted EBITDA to net income, our most directly comparable financial measure in accordance with GAAP:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
ADJUSTED EBITDA:
Net income	$	1,282,723	$	1,875,328	$	3,043,028	$	3,586,954
Interest expense		83,021		13,830		97,697		28,443
Interest income		(398)		(365)		(822)		(791)
Provision for income taxes		149,058		105,319		386,408		215,732
Depreciation and amortization		618,103		714,605		1,227,093		1,439,778
Stock-based compensation expense		576,931		228,128		1,180,899		461,590
Restructuring charges		125,268		—		125,268		—
Adjusted EBITDA (non-GAAP)	$	2,834,706	$	2,936,845	$	6,059,571	$	5,731,706

Components of operating results

Sources of revenue

We derive our revenue principally through transaction fees earned under fixed contractual arrangements with customers who use our international payment and multi-currency processing services. We operate the business in two reportable segments:

Multi-currency processing services revenue. Revenue derived from foreign currency transaction fees earned on processing and converting a credit or debit card transaction from one currency into another currency. Foreign currency transaction fees earned under our agreements with our multi-currency processing services customers have traditionally been based on a fixed percentage applied to the net foreign currency margin earned, after

deducting any merchant revenue and other contractual costs. Also included are fees for non-transactional services.

Payment processing services revenue. Revenue derived from transaction fees earned on processing services provided in facilitating the sale of goods and services by means of credit and debit cards and other electronic payments, the processing of certain non-financial transactions and professional services fees related to the payment processing business.

Geographic and customer concentration

We conduct our business primarily in three geographical regions: Asia-Pacific, or APAC; the Americas; and Europe, Middle East and Africa, or EMEA. The following table provides multi-currency processing services revenue concentration by geographical region. Revenue by region is based upon where the transaction originated. We conduct our payment processing services primarily in North America.

Analysis of revenue by segment and geographical region:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Revenue:
APAC	$	3,761,918	$	4,226,769	$	7,578,982	$	8,263,045
The Americas		2,444,187		1,750,920		4,629,561		3,244,050
EMEA		1,752,501		2,084,000		4,384,295		4,236,359
Total multi-currency processing services revenue		7,958,606		8,061,689		16,592,838		15,743,454
Payment processing services revenue		5,144,770		4,621,670		10,195,051		9,072,675
Net revenue	$	13,103,376	$	12,683,359	$	26,787,889	$	24,816,129

A significant portion of our revenue is derived from agreements with a limited number of customers. Specifically, for the three months ended June 30, 2016, subsidiaries of Customer A and Customer G represented approximately 15% and 12% of our revenue, respectively. For the six months ended June 30, 2016, subsidiaries of Customer A and Customer G represented approximately 16% and 11% of our revenue, respectively.

Operating expenses

Cost of revenue. Cost of revenue primarily consists of two categories: (1) payment processing services fees, which includes payment processing transactions fees such as sponsorship fees, interchange and card association fees and assessments; and (2) processing and service costs, which include certain expenses related to the multi-currency processing segment, expenses of running our platform infrastructure, including: internet connectivity, hosting and data storage expenses, amortization expense on acquired intangibles and capitalized software development costs, compensation and related benefits and a portion of general overhead expenses.

Selling, general and administrative expenses. Selling, general and administrative expenses consist primarily of compensation and related benefits, facility costs, public company costs and professional service fees for our sales, marketing, customer service, administrative functions, and a portion of general overhead expenses.

We allocate overhead such as occupancy, telecommunication charges and depreciation expense based on headcount, as we believe this to be the most accurate measure. As a result, a portion of general overhead expenses is reflected in both our cost of revenue and selling, general and administrative expenses.

Other (expense) income, net. Other (expense) income, net, primarily consists of non-operating income as well as interest expense related to our credit facility and capital leases.

Critical accounting policies and estimates

The discussion and analysis of our financial condition and results of our operations is based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP. GAAP requires us to make

certain estimates and judgments that affect the reported amounts and the disclosure in our financial statements. We base our estimates on historical experience, future trends and other assumptions we believe to be reasonable under the circumstances. Because these accounting policies require significant judgment, our actual results may differ materially from our estimates.

Our critical accounting policies are those that we believe are both important to the portrayal of our financial condition and results of operations and that involve difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. The estimates are based on historical experience and on various assumptions about the ultimate outcome of future events. Our actual results may differ from these estimates if unforeseen events occur or should the assumptions used in the estimation process differ from actual results. Management believes there have been no material changes to the critical accounting policies discussed in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2015.

Results of operations

The following tables set forth our condensed consolidated results of operations for the periods presented and as a percentage of our net revenue for those periods. The period-to-period comparison of financial results is not necessarily indicative of financial results to be achieved in future periods.


	Three Months Ended								Six Months Ended
	June 30,								June 30,
	2016				2015				2016				2015
			% of				% of				% of				% of
	$ amount		revenue		$ amount		revenue		$ amount		revenue		$ amount		revenue
Revenue:
APAC	$	3,761,918	28.6	%	$	4,226,769	33.4	%	$	7,578,982	28.2	%	$	8,263,045	33.3	%
The Americas		2,444,187	18.7			1,750,920	13.8			4,629,561	17.3			3,244,050	13.1
EMEA		1,752,501	13.4			2,084,000	16.4			4,384,295	16.4			4,236,359	17.1
Total multi-currency processing services revenue		7,958,606	60.7			8,061,689	63.6			16,592,838	61.9			15,743,454	63.5
Payment processing services revenue		5,144,770	39.3			4,621,670	36.4			10,195,051	38.1			9,072,675	36.5
Net revenue		13,103,376	100.0			12,683,359	100.0			26,787,889	100.0			24,816,129	100.0
Operating expenses:
Cost of revenue:
Payment processing services fees		2,734,689	20.9			2,590,885	20.4			5,425,913	20.3			5,179,089	20.9
Processing and service costs		3,524,123	26.9			3,385,658	26.7			7,024,791	26.2			6,623,598	26.7
Total cost of revenue		6,258,812	47.8			5,976,543	47.1			12,450,704	46.5			11,802,687	47.6
Selling, general and administrative expenses		5,204,892	39.7			4,712,704	37.2			10,685,606	39.9			9,183,104	37.0
Restructuring charges		125,268	1.0			—	—			125,268	0.5			—	—
Total operating expenses		11,588,972	88.5			10,689,247	84.3			23,261,578	86.9			20,985,791	84.6
Income from operations		1,514,404	11.5			1,994,112	15.7			3,526,311	13.1			3,830,338	15.4
Other (expense) income:
Interest expense		(83,021)	(0.6)			(13,830)	(0.1)			(97,697)	(0.4)			(28,443)	(0.1)
Interest income		398	0.0			365	0.0			822	0.0			791	0.0
Total other expense, net		(82,623)	(0.6)			(13,465)	(0.1)			(96,875)	(0.4)			(27,652)	(0.1)
Income from operations before provision for income taxes		1,431,781	10.9			1,980,647	15.6			3,429,436	12.7			3,802,686	15.3
Provision for income taxes		(149,058)	(1.1)			(105,319)	(0.8)			(386,408)	(1.4)			(215,732)	(0.9)
Net income	$	1,282,723	9.8	%	$	1,875,328	14.8	%	$	3,043,028	11.3	%	$	3,586,954	14.4	%

Comparison of the three months ended June 30, 2016 and 2015

Revenue


	Three Months Ended
	June 30,				Variance
	2016		2015		Amount		Percent
APAC	$	3,761,918	$	4,226,769	$	(464,851)	(11)	%
The Americas		2,444,187		1,750,920		693,267	40
EMEA		1,752,501		2,084,000		(331,499)	(16)
Total multi-currency processing services revenue		7,958,606		8,061,689		(103,083)	(1)
Payment processing services revenue		5,144,770		4,621,670		523,100	11
Net revenue	$	13,103,376	$	12,683,359	$	420,017	3	%

Net revenue increased $0.4 million, or 3%, to $13.1 million for the three months ended June 30, 2016 from $12.7 million for the three months ended June 30, 2015. These changes are described below.

Multi-currency processing services revenue

APAC multi-currency processing services revenue. APAC multi-currency processing services revenue decreased $0.5 million, or 11%, to $3.7 million for the three months ended June 30, 2016 from $4.2 million for the three months ended June 30, 2015. The decrease in APAC multi-currency processing services revenue was driven by changes in the following key business metrics:


	Three Months Ended
	June 30,						Variance
	2016			2015			Amount			Percent
APAC multi-currency processing active merchant locations (at period end)		17,743			14,311			3,432		24	%
APAC multi-currency processing settled transactions processed		1,680,161			1,563,578			116,583		7
APAC multi-currency processing gross foreign currency mark-up	$	16,545,534		$	16,218,167		$	327,367		2
APAC multi-currency processing settled dollar volume processed	$	353,077,286		$	355,149,882		$	(2,072,596)		(1)
APAC average net mark-up % on settled dollar volume processed		1.07	%		1.19	%		(0.12)	%	(10)

The 10% decrease in average net mark-up percentage on settled dollar volume processed resulted in a $0.5 million decrease to revenue. The decrease in average net mark-up percentage was primarily due to our five year contract extension with Global Payments announced in May of 2015.

The Americas multi-currency processing services revenue. The Americas multi-currency processing services revenue increased $0.7 million, or 40%, to $2.4 million for the three months ended June 30, 2016 from $1.7 million for the three months ended June 30, 2015. The increase in the Americas multi-currency processing services revenue was driven by changes in the following key business metrics:


	Three Months Ended
	June 30,						Variance
	2016			2015			Amount			Percent
The Americas multi-currency processing active merchant locations (at period end)		74,408			9,674			64,734		669	%
The Americas multi-currency processing settled transactions processed		1,022,961			773,757			249,204		32
The Americas multi-currency processing gross foreign currency mark-up	$	5,880,792		$	3,672,809		$	2,207,983		60
The Americas multi-currency processing settled dollar volume processed	$	116,698,542		$	83,467,338		$	33,231,204		40
The Americas average net mark-up % on settled dollar volume processed		2.09	%*		1.88	%*		0.21	%	11	%

(*)For purposes of calculating “Average net mark-up percentage on settled dollar volume processed,” multi-currency processing services revenue includes revenue related to multi-currency transactions only.

The 40% increase in settled dollar volume processed resulted in a $0.7 million increase to revenue and an 11% increase in average net mark-up percentage on settled dollar volume processed resulted in a $0.2 million increase to revenue. These increases were offset by a decrease in revenues earned on non-transactional services of $0.2 million. The increase in settled dollar volume processed and average net mark-up percentage is primarily due to the growth in our e-commerce and ATM offerings.

EMEA multi-currency processing services revenue. EMEA multi-currency processing services revenue decreased $0.3 million, or 16%, to $1.8 million for the three months ended June 30, 2016 from $2.1 million for the three months ended June 30, 2015. The decrease in EMEA multi-currency processing services revenue was driven by changes in the following key business metrics:


	Three Months Ended
	June 30,						Variance
	2016			2015			Amount			Percent
EMEA multi-currency processing active merchant locations (at period end)		13,836			11,413			2,423		21	%
EMEA multi-currency processing settled transactions processed		1,184,961			1,250,245			(65,284)		(5)
EMEA multi-currency processing gross foreign currency mark-up	$	9,220,321		$	9,371,861		$	(151,540)		(2)
EMEA multi-currency processing settled dollar volume processed	$	192,748,734		$	200,412,264		$	(7,663,530)		(4)
EMEA average net mark-up % on settled dollar volume processed		0.91	%		1.04	%		(0.13)	%	(13)	%

The 13% decrease in average net mark-up percentage on settled dollar volume processed resulted in a $0.2 million decrease to revenue and a 4% decrease in settled dollar volume processed resulted in a $0.1 million decrease to revenue. These decreases were primarily due to customer and pricing mix as well as reduced travel specifically as it relates to the strong dollar and timing of Ramadan.

Payment processing services revenue

Payment processing services revenue is primarily earned from transaction processing services for customers in the Americas. Payment processing services revenue increased $0.5 million, or 11%, to $5.1 million for the three months ended June 30, 2016 from $4.6 million for the three months ended June 30, 2015. The increase was primarily due to transaction processing fees, arising from the continuous roll-out of merchants from existing and new payment processing customers.

Cost of revenue


	Three Months Ended
	June 30,				Variance
	2016		2015		Amount		Percent
Payment processing services fees	$	2,734,689	$	2,590,885	$	143,804	6	%
Processing and service costs		3,524,123		3,385,658		138,465	4
Total cost of revenue	$	6,258,812	$	5,976,543	$	282,269	5	%

Payment processing service fees

The increase in payment processing service fees of $0.1 million, or 6%, to $2.7 million for the three months ended June 30, 2016 from $2.6 million for the three months ended June 30, 2015 is a direct result of the mix of business within the payment processing service revenue.

Processing and service costs

The increase in processing and service costs of $0.1 million, or 4%, to $3.5 million for the three months ended June 30, 2016 from $3.4 million for the three months ended June 30, 2015 is primarily due to a $0.3 million increase in salary compensation, offset by a $0.1 million decrease in software amortization.

Selling, general and administrative expenses


	Three Months Ended
	June 30,				Variance
	2016		2015		Amount		Percent
Selling, general and administrative expenses	$	5,204,892	$	4,712,704	$	492,188	10	%

Selling, general and administrative expenses increased $0.5 million, or 10%, to $5.2 million for the three months ended June 30, 2016 from $4.7 million for the three months ended June 30, 2015. The increase in selling, general and administrative expenses was primarily due to a $0.4 million increase in stock-based compensation expense.

Comparison of the six months ended June 30, 2016 and 2015

Revenue


	Six Months Ended
	June 30,				Variance
	2016		2015		Amount		Percent
APAC	$	7,578,982	$	8,263,045	$	(684,063)	(8)	%
The Americas		4,629,561		3,244,050		1,385,511	43
EMEA		4,384,295		4,236,359		147,936	3
Total multi-currency processing services revenue		16,592,838		15,743,454		849,384	5
Payment processing services revenue		10,195,051		9,072,675		1,122,376	12
Net revenue	$	26,787,889	$	24,816,129	$	1,971,760	8	%

Net revenue increased $2.0 million, or 8%, to $26.8 million for the six months ended June 30, 2016 from $24.8 million for the six months ended June 30, 2015. These changes are described below.

Multi-currency processing services revenue

APAC multi-currency processing services revenue. APAC multi-currency processing services revenue decreased $0.7 million, or 8%, to $7.6 million for the six months ended June 30, 2016 from $8.3 million for the six months ended June 30, 2015. The decrease in APAC multi-currency processing services revenue was driven by changes in the following key business metrics:


	Six Months Ended
	June 30,						Variance
	2016			2015			Amount			Percent
APAC multi-currency processing active merchant locations (at period end)		17,743			14,311			3,432		24	%
APAC multi-currency processing settled transactions processed		3,247,806			3,028,357			219,449		7
APAC multi-currency processing gross foreign currency mark-up	$	32,960,520		$	32,059,180		$	901,340		3
APAC multi-currency processing settled dollar volume processed	$	684,499,493		$	705,826,274		$	(21,326,781)		(3)
APAC average net mark-up % on settled dollar volume processed		1.11	%		1.16	%		(0.05)	%	(5)	%

The 5% decrease in average net mark-up percentage on settled dollar volume processed resulted in a $0.4 million decrease to revenue and a 3% decrease in settled dollar volume processed resulted in a $0.3 million decrease to revenue. The decrease in average net mark-up percentage was primarily due to our five year contract extension with Global Payments announced in May of 2015.

The Americas multi-currency processing services revenue. The Americas multi-currency processing services revenue increased $1.4 million, or 43%, to $4.6 million for the six months ended June 30, 2016 from $3.2 million for the six months ended June 30, 2015. The increase in the Americas multi-currency processing services revenue was driven by changes in the following key business metrics:


	Six Months Ended
	June 30,						Variance
	2016			2015			Amount			Percent
The Americas multi-currency processing active merchant locations (at period end)		74,408			9,674			64,734		669	%
The Americas multi-currency processing settled transactions processed		2,149,395			1,418,712			730,683		52
The Americas multi-currency processing gross foreign currency mark-up	$	11,321,428		$	6,651,207		$	4,670,221		70
The Americas multi-currency processing settled dollar volume processed	$	234,076,074		$	149,541,578		$	84,534,496		57
The Americas average net mark-up % on settled dollar volume processed		1.97	%*		1.86	%*		0.12	%	6	%

The 57% increase in settled dollar volume processed resulted in a $1.7 million increase to revenue and a 6% increase in average net mark-up percentage on settled dollar volume processed resulted in a $0.2 million increase to revenue. This increase was offset by a decrease in revenues earned on non-transactional services of $0.5 million. The increase in settled dollar volume processed and average net mark-up percentage is primarily due to the growth in our e-commerce and ATM offerings.

EMEA multi-currency processing services revenue. EMEA multi-currency processing services revenue increased $0.1 million, or 3%, to $4.4 million for the six months ended June 30, 2016 from $4.2 million for the six months ended June 30, 2015. The increase in EMEA multi-currency processing services revenue was driven by changes in the following key business metrics:


	Six Months Ended
	June 30,						Variance
	2016			2015			Amount			Percent
EMEA multi-currency processing active merchant locations (at period end)		13,836			11,413			2,423		21	%
EMEA multi-currency processing settled transactions processed		2,764,981			2,628,384			136,597		5
EMEA multi-currency processing gross foreign currency mark-up	$	22,425,617		$	19,348,094		$	3,077,523		16
EMEA multi-currency processing settled dollar volume processed	$	470,223,717		$	443,938,376		$	26,285,341		6
EMEA average net mark-up % on settled dollar volume processed		0.93	%		0.95	%		(0.02)	%	(2)	%

The 6% increase in settled dollar volume processed resulted in a $0.2 million increase to revenue and a 2% decrease in our average net mark-up percentage on settled dollar volume processed resulted in a $0.1 million decrease to revenue.

Payment processing services revenue

Payment processing services revenue is primarily earned from transaction processing services for customers in the Americas. Payment processing services revenue increased $1.1 million, or 12%, to $10.2 million for the six months ended June 30, 2016 from $9.1 million for the six months ended June 30, 2015. The increase was primarily due to transaction processing fees, arising from the continuous roll-out of merchants from existing and new payment processing customers.

Cost of revenue


	Six Months Ended
	June 30,				Variance
	2016		2015		Amount		Percent
Payment processing services fees	$	5,425,913	$	5,179,089	$	246,824	5	%
Processing and service costs		7,024,791		6,623,598		401,193	6
Total cost of revenue	$	12,450,704	$	11,802,687	$	648,017	5	%

Payment processing service fees

The increase in payment processing service fees of $0.2 million, or 5%, to $5.4 million for the six months ended June 30, 2016 from $5.2 million for the six months ended June 30, 2015 is a direct result of the mix of business within the payment processing service revenue.

Processing and service costs

The increase in processing and service costs of $0.4 million, or 6%, to $7.0 million for the six months ended June 30, 2016 from $6.6 million for the six months ended June 30, 2015 is primarily due to a $0.4 million increase in salary compensation expense.

Selling, general and administrative expenses


	Six Months Ended
	June 30,				Variance
	2016		2015		Amount		Percent
Selling, general and administrative expenses	$	10,685,606	$	9,183,104	$	1,502,502	16	%

Selling, general and administrative expenses increased $1.5 million, or 16%, to $10.7 million for the six months ended June 30, 2016 from $9.2 million for the six months ended June 30, 2015. The increase in selling, general and administrative expenses was primarily due to a $0.7 million increase in stock-based compensation expense, a $0.3 million increase in salary compensation, and a $0.3 million increase in general and administrative expense driven primarily by a $0.5 million gain related to an insurance reimbursement in the first quarter of 2015.

Liquidity and capital resources

We currently anticipate that our available cash balances will be sufficient to meet our presently anticipated working capital and capital expenditure requirements for at least the next twelve months. However, we may be required to raise additional funds through public or private debt or equity financing to meet additional working capital requirements. There can be no assurance that this additional financing will be available, or if available, will be on reasonable terms and not dilutive to our stockholders. If adequate funds are not available on acceptable terms, our business and operating results could be adversely affected.

Sources of liquidity

As of June 30, 2016, we had approximately $10.5 million in cash and cash equivalents of which $6.1 million in cash was held by foreign subsidiaries. Currently, if we were to repatriate cash held by our foreign subsidiaries, to the extent that such repatriation was a taxable event, we could utilize a portion of our $61.2 million net operating loss carry forward to offset the tax obligation, so that no U.S. tax liability would arise. However, our intent is to permanently reinvest these funds outside of the United States and our current plans do not demonstrate a need to repatriate them to fund our U.S. operations.

On June 10, 2015, we entered into a $10.0 million secured revolving credit facility (the “Credit Facility”) with Citizens Bank, N.A. (“Citizens”) pursuant to a Credit and Security Agreement by and among our Company, certain affiliates thereof as borrowers or guarantors, and Citizens (the “Credit Agreement”).

On January 28, 2016, we entered into a Second Amendment to Credit and Security Agreement with Citizens and certain subsidiary affiliates of our Company as borrowers and/or guarantors (the “Amendment”). The Amendment amends the Credit Agreement and provides for an increase in our line of credit (the “Line of Credit”) with Citizens from $10.0 million to $20.0 million. The Line of Credit is secured by substantially all of our personal property, including our intellectual property and that of our subsidiaries that are borrowers or guarantors. The interest rate applicable to committed borrowings is tied to LIBOR plus a margin of 2.5%. The Credit Agreement also provides for a letter of credit sub-facility of up to $2.0 million. The Credit Agreement contains customary affirmative and negative covenants, including, among others, financial covenants based on our leverage and fixed charge coverage ratios, as well as an obligation to maintain a minimum availability requirement of at least $5.0 million in the aggregate of cash and availability under the line of credit. The Credit Facility will provide funds for general corporate purposes and repurchases of issued and outstanding capital stock of our Company. The Credit Facility matures on December 31, 2020 and is payable in full upon maturity.

On April 12, 2016, we borrowed approximately $13.9 million under the Credit Facility. Subsequently, on April 26, 2016, we repaid $4.0 million on the Credit Facility. As of June 30, 2016, we had $9.9 million outstanding under the Credit Facility and were in compliance with all financial covenants contained in the Credit Agreement.

Capital expenditures

Our capital expenditures related to property and equipment, software development costs, and intangible assets were approximately $0.9 million in the first six months of 2016. The 2016 capital expenditures were primarily attributable to our investment in the business primarily through capital expenditures for network infrastructure and investments in software development and equipment.

Cash flows


	Six Months Ended
	June 30,
	2016		2015
Cash provided by operating activities	$	2,753,874	$	6,500,574
Cash used for investing activities		(787,675)		(895,775)
Cash used for financing activities		(6,155,069)		(1,911,430)

Operating activities

Cash provided by operating activities during the six months ended June 30, 2016 was $2.8 million, comprised of $5.6 million of cash generated by operations and a net decrease in our operating assets and liabilities of $2.8 million. This net decrease in our operating assets and liabilities of $2.8 million primarily consisted of a $3.6 million decrease in accounts payable and accrued expenses, coupled with a $0.4 million decrease in due to merchants. These decreases were partially offset by a $0.4 million decrease in receivables, prepaid expenses and other assets, a $0.5 million decrease in settlement assets and a $0.3 million decrease in other long-term assets. Cash generated by operations of $5.6 million was inclusive of net income of $3.0 million and total non-cash charges of $2.6 million. Significant non-cash adjustments to net income primarily include depreciation and amortization expense of $1.3 million, stock-based compensation expense of $1.2 million and provision for doubtful accounts of $0.1 million.

Cash provided by operating activities during the six months ended June 30, 2015 was $6.5 million, comprised of $5.0 million of cash generated by operations and a net increase in our operating assets and liabilities of $1.5 million. This net increase in our operating assets and liabilities of $1.5 million primarily consisted of a $1.5 million decrease in receivables, prepaid expenses and other assets coupled with a $0.2 million increase in accounts payable and accrued expenses and a $0.2 million increase in due to merchants. These increases were partially offset by a $0.2 million increase in other long-term assets and a $0.2 million increase in settlement assets. Cash generated by operations of $5.0 million was inclusive of net income of $3.6 million and total non-cash charges of $1.4 million. Significant non-cash adjustments to net income primarily include depreciation and amortization expense of $1.4 million and stock option expense of $0.5 million which is offset by a gain on insurance proceeds of $0.5 million.

Investing activities

Cash used for investing activities for the six months ended June 30, 2016 was $0.8 million, which was primarily attributable to a $0.7 million investment in software development and a $0.1 million purchase of property and equipment.

Cash used for investing activities for the six months ended June 30, 2015 was $0.9 million, which was attributable to a $0.6 million investment in software development, a $0.2 million purchase of property and equipment and a $0.1 million increase in merchant reserves.

Financing activities

Cash used for financing activities for the six months ended June 30, 2016 was $6.2 million, comprised of $17.8 million of treasury stock repurchases, $13.9 million of credit facility borrowings, $4.0 million of credit facility repayments, $0.2 million in payments for capital lease obligations and $1.9 million in proceeds from the issuance of common stock.

Cash used for financing activities for the six months ended June 30, 2015 was $1.9 million, comprised of $1.6 million of treasury stock repurchases and $0.3 million in payments for capital lease obligations.

Stock repurchase program

In October 2014, we announced that our Board of Directors authorized the repurchase of up to $6.0 million of our outstanding shares of common stock. As of December 31, 2015, the Board expanded its share repurchase authorization by an aggregate of $7.5 million.

From January 1, 2016 to March 9, 2016, prior to the tender offer discussed below, we repurchased approximately 1.3 million shares of common stock for an aggregate price of $3.6 million. As of March 9, 2016, the total amount of common stock repurchased under the program was 4.9 million shares for an aggregate price of $11.5 million and $2.0 million remained available for repurchase under the program. As of March 10, 2016, the stock repurchase program was suspended in connection with the tender offer. On August 2, 2016, the Board of Directors reinstated the Company’s share repurchase program and expanded the authorization by an incremental $4.0 million, bringing its total current authorization to $6.0 million.

Tender offer

On March 10, 2016, the Board of Directors authorized our Company to commence a modified “Dutch auction” tender offer to repurchase up to $15.0 million of our outstanding shares of common stock at a tender price of not less than $3.20 per share or greater than $3.60 per share. The tender offer commenced on March 14, 2016 and expired on April 11, 2016. On April 12, 2016, we paid $14.2 million, including transaction costs, to repurchase approximately 3.9 million shares at a tender price of $3.60 per share. The repurchased shares of common stock became treasury shares of our Company.

Contractual obligations and commitments

As of June 30, 2016, there were no material changes in our contractual obligations and commitments as disclosed in our financial statements for the year ended December 31, 2015, except for the following agreements:

Amendment to Credit and Security Agreement with Citizens Bank, N.A. entered into in January 2016;

Employment Agreement with Carl J. Williams, entered into in February 2016; and

Borrowing under revolving credit facility with Citizens Bank, N.A. in April 2016.

Off-balance sheet arrangements

We do not have any off-balance sheet arrangements or relationships with unconsolidated entities or financial partnerships, such entities often referred to as structured finance or variable interest entities, which are typically established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purpose.

Effects of inflation

Our monetary assets consist primarily of cash and cash equivalents and receivables, and our non-monetary assets consist primarily of property and equipment, software development and intangible assets, which are not affected significantly by inflation. We believe the replacement costs of property and equipment will not materially affect our operations. However, the rate of inflation affects our expenses, which may not be readily recoverable in the prices of services we offer.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest rate risk

We had cash and cash equivalents totaling $10.5 million and $14.7 million as of June 30, 2016 and December 31, 2015, respectively. The cash and cash equivalents are held for working capital purposes. We did not have any derivative financial instruments as of June 30, 2016 and December 31, 2015. We are not exposed, nor do we anticipate being exposed, to material risks due to changes in market interest rates given the historic low levels of interest being earned on the short-term fixed-rate cash operating accounts. In addition, the interest rate on our Credit Facility borrowings are

Item 1A. Risk Factors

Other than below, there were no material changes to the Company's risk factors as disclosed in Item 1A - Risk Factors in the Company's Annual Report on Form 10-K for the year ended December 31, 2015.

The United Kingdom’s departure from the Eurpean Union could adversely affect us.

The United Kingdom (U.K.) held a referendum on June 23, 2016 in which a majority of voters approved an exit from the European Union (EU) (“Brexit”). Negotiations are expected to commence to determine the future terms of the U.K.’s relationship with the EU, including, among other things, the terms of trade between the U.K. and the EU. The effects of Brexit will depend on any agreements the U.K. reaches to retain access to EU markets either during a transitional period or more permanently. The outcome of this referendum caused volatility in global stock markets and foreign currency exchange rate fluctuations, including the strengthening of the U.S. dollar against the British pound and euro. While it is difficult to predict the future effects of Brexit, increased uncertainty and a strong U.S. dollar may negatively impact the level of foreign travel and spending in markets where we do business, such as the UAE and Hong Kong, which could adversely affect our business, results of operations, financial condition and cash flows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Sales of Unregistered Securities

Issuer Purchase of Equity Securities


					Maximum Number
				Total Number of	(or approximate
				Shares Purchased	dollar value) of
				as Part of Publicly	Shares that May Yet
	Total Number of		Average Price	Announced Plans	be Purchased Under
Period	Shares Purchased		Paid per Share	or Programs(1)	the Plan or Programs
April 1-30, 2016	3,865,657	$	3.60	8,757,096	—
May 1-31, 2016	—	$	—	—	—
June 1-30, 2016	—	$	—	—	—

(1)

Item 3. Defaults Upon Senior Securities

Not Applicable.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

Not Applicable.

Item 6. Exhibits

(a) Exhibits

Exhibit

Incorporated by Reference

Filing

Filed/Furnished

Number

Exhibit Description

Form

File No.

Exhibit

Date

Herewith

10.1

Amendment to Lease Agreement dated May 18, 2016 by and between Planet Payment, Inc. and BDP Realty Associates, LLC.

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*

Certification of Chief Executive Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*

Certification of Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101

The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, formatted in XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements.

*This exhibit is being furnished and is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Report), irrespective of any general incorporation language contained in such filing.

EXHIBIT INDEX

Exhibit

Incorporated by Reference

Filing

Filed/Furnished

Number

Exhibit Description

Form

File No.

Exhibit

Date

Herewith

10.1

Amendment to Lease Agreement dated May 18, 2016 by and between Planet Payment, Inc. and BDP Realty Associates, LLC.

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*

Certification of Chief Executive Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*

Certification of Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101


		PLANET PAYMENT, INC.
		(Registrant)

Dated: August 3, 2016	By:	/S/ CARL J. WILLIAMS
		Carl J. Williams
		Chairman of the Board of Directors and Chief Executive Officer
		(Principal Executive Officer)

Dated: August 3, 2016	By:	/S/ RAYMOND D’APONTE
		Raymond D’Aponte
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)


		Page

Part I.	Financial Information	3

Item 1.	Financial Statements	3

	Condensed Consolidated Balance Sheets as of June 30, 2016 (unaudited) and December 31, 2015	3

	Condensed Consolidated Statements of Income for the three and six months ended June 30, 2016 and 2015 (unaudited)	4

	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2016 and 2015 (unaudited)	5

	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and 2015 (unaudited)	6

	Notes to Condensed Consolidated Financial Statements (unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4.	Controls and Procedures	31

Part II.	Other Information	31

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 3.	Defaults Upon Senior Securities	32

Item 4.	Mine Safety Disclosures	33

Item 5.	Other Information	33

Item 6.	Exhibits	33

Signatures		34