Payment Data Systems Closes 2009 with Positive Changes

SAN ANTONIO–Payment Data Systems (OTCBB:PYDS), an integrated electronic payments solutions provider, today announced the financial results for year ended December 31, 2009. 

Revenues for the year ended December 31, 2009 increased 7% to $3,218,674 from $3,001,487 in 2008. The increase of $217,187 was primarily due to increased card-based processing revenue from increased transaction volume. Operating loss improved by 46% to $941,670 for 2009 from $1,690,300 in 2008. Net loss for the year ended December 31, 2009 decreased to $803,526 from $944,617 in 2008, but the net loss for 2009 was $267,326 after adding back noncash stock-based compensation expenses of $536,200.

Highlights for the year ended December 31, 2009:

• We processed 29% more credit card transactions in 2009 as compared to 2008.
• We processed 11% more credit card dollar volume in 2009 as compared to 2008.
• Total assets increased 91% from $607,991 at December 31, 2008 to $1,162,869 at December 31, 2009.
• Cash and cash equivalents increased 447% from $103,428 at December 31, 2008 to $565,597 at December 31, 2009.
• We reported net income of $22,565 for Q3 of 2009 and a net loss of $53,712 for Q4 of 2009.

Michael Long, Chief Executive Officer of Payment Data Systems said, “Based on trends we are seeing for 2010, we anticipate that our business is approaching a cash flow positive situation. We plan to accomplish this goal through strict controls on expenses and growth of higher margin sales.”

Long continued, “As we move forward into 2010, we will continue to execute these tight expense controls until some of our new programs are implemented and take us to our goals of sustained positive cash flow and profitability. The greatest potential for achievement of positive cash flow and profitability are supported by our announced Redpack Mi Promesa card program which should be in general market availability around the first of June of this year, and implementation of our new Corporate Incentive Card programs which we are implementing now and will continue to do so for the next several quarters. We have several unannounced and contracted customers for merchant processing, prepaid card programs, and bill payment services that should generate revenues in the second quarter of 2010. If we assume these contracts produce revenue to the degree the companies have projected and our pipeline of new customers create the anticipated revenue opportunities, we believe 2010 should exceed the expectations we set for ourselves in the final quarters of 2009. We will continue to look at strategic opportunities to leverage our merchant processing, card programs, and bill payment into new market-leading technologies that we believe will be very attractive to today’s highly underserved unbanked and underbanked communities. Lastly, we encourage each of you to review our 10-K filed today in order to understand the challenges we face as we continue to strive towards profitability. We remain excited about our future.”

About Payment Data Systems, Inc.
Payment Data Systems is an integrated payment solutions provider to merchants and billers. The organization provides an extensive set of products to deliver world-class payment acceptance. Payment Data has solutions for merchants, billers, banks, service bureaus and card issuers. The strength of the company is its ability to offer specifically tailored solutions for card issuance, payment acceptance and bill payments.

For additional information, visit www.paymentdata.com. Contact Michael Long for Investor Relations information at 210-249-4040 or email at ir@paymentdata.com.