S-1 Filing
October 27, 1999
OFFICIAL PAYMENTS CORP (US AUDIOTEX CORP) (OPAY)
S-1 Filing (SEC form S1)
We believe we are the leading provider of electronic payment options to government entities enabling consumers to use their credit cards to pay, by telephone or through the Internet, personal federal and state income taxes, sales and use taxes, property taxes and fines for traffic violations and parking citations. Our government clients include the IRS, the States of California and New Jersey, the District of Columbia and approximately 425 municipalities. Our pilot program for personal federal income taxes processed approximately 45,000 tax payments totaling more than $174 million in payments to the IRS from January 15, 1999 to April 15, 1999. According to IRS data, we had a 95% market share, based on dollar volume, for credit card payments of personal federal income taxes due April 15, 1999. We also processed over 293,000 payments for our state and municipal government clients totaling $82.7 million in the first nine months of 1999.
Our interactive toll-free telephone number, 1-888-2PAY-TAX SM, allows consumers to make payments and receive certain customer service information. We began offering payment services through the Internet in August 1999. Our 8882paytax.com Web site currently allows consumers to make payments of property taxes, business license fees, parking citations and utility bills for two municipalities. Pursuant to agreements with two states and eight additional municipalities, we expect to provide the ability to make similar payments and state income tax payments to those government entities through the Internet by the end of 1999. We are working with our other government clients, including the Internal Revenue Service (IRS), to enable consumers to make additional tax and other payments through the Internet. We are also enhancing our Web site so that consumers will be able to print receipts, save their personal data to facilitate future payments, obtain information regarding our services and access additional tax and other information.
We combine expertise in facilitating credit card transactions, an Internet focus and targeted marketing techniques to attract both government clients and consumers to our services. Our services allow our government clients to provide their constituents with user-friendly electronic payment options at no charge to the government entity. Consumers who use our payment services pay us a convenience fee that is added to their payment. We believe that consumers use our services for the convenience, the payment flexibility and the perquisites associated with paying by credit card.
We had revenues of $2.4 million in 1998 and $7.2 million in the first nine months of 1999. We incurred net losses of $325,000 in 1998 and $1.3 million in the first nine months of 1999. Our accumulated deficit was $994,000 at December 31, 1998 and $2.3 million at September 30, 1999.
Our Market Opportunity and Solution
In addition to payments made automatically on a taxpayer's behalf, such as payroll withholding taxes, individuals and small businesses make a variety of payments to government entities at the federal, state and local levels. Based on government data and our estimates, federal and state personal income taxes, state sales and use taxes, local real estate taxes and fines for traffic violations and parking citations total $670 billion annually.
We believe our electronic payment solutions are attractive to government entities because they provide an added service to consumers while reducing paperwork and encouraging the electronic filing of tax forms. Our services address the IRS' publicly-stated goal to substantially increase taxpayer access to electronic filing, payment, and communication products and services. Many government entities lack the expertise, technical personnel and economies of scale to cost-effectively implement and maintain the hardware and software necessary to accept credit card payments from consumers by telephone or through the Internet. Our services are designed to work with their existing information systems, require minimal implementation and are provided at no cost to government entities.
Individuals and small businesses who utilize a particular payment service can be grouped into user communities, distinguished by specific demographics and psychographics, that may utilize related products and services. For example, we may be able to facilitate the sale of consulting or other related services to small businesses that use our services to pay sales taxes, or the sale of automobile insurance or online driving school services to consumers paying fines for traffic violations.
Our Strategy
Our goal is to continue to be the leading provider of, and further develop the market for, electronic payment services using credit cards to pay government obligations. The following are key elements of our strategy:
. Expand and enhance our service offerings for personal federal income tax payments. For the 1998 tax year, we processed only balance-due personal federal income tax payments. By early 2000, we expect to also process personal estimated and extension tax payments.
. Obtain additional state and municipal clients. We currently provide our credit card payment services to the States of California and New Jersey, the District of Columbia and approximately 425 municipal government clients. We are focusing on establishing relationships with additional states and municipalities by leveraging our existing relationships with the IRS and other clients.
. Continue the roll-out of our Internet services. Within the next 6 to 12 months, we expect to offer our existing government clients the option to add Internet payments services while new clients will have the option to sign up for both Internet and interactive telephone payment services.
. Broaden our payment service offerings. We expect to expand our services to include solutions for personal state estimated and extension income tax payments, corporate taxes and fees, public university tuition and building permit fees.
. Cross-sell related services to small business and individual users. By grouping consumers according to the type of payments they make, we intend to target distinct groups of users to cross-sell related products and services.
. Increase brand awareness and consumer usage. We have relied on our government clients and credit card issuers, and will continue to work with them, to publicize our services through government publications and credit card billing and promotional inserts. In addition, we intend to advertise directly in order to publicize our services.
. Pursue strategic relationships and acquisitions to reach additional consumers and provide related services.
General Information
We changed our name from U.S. Audiotex Corporation on October 20, 1999. |
