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PYDS Reports Third Quarter 2010 Results

Payment Data Systems, Inc. (NASDAQ OTCBB:PYDS) an integrated electronic payments solutions provider, today announced financial results for the quarter ended September 30, 2010.

Revenues decreased to $648,927 for the third quarter of 2010 from $841,278 for the third quarter of 2009 due primarily to the loss of a significant customer as previously reported in November 2009. The operating loss for the quarter ended September 30, 2010 was $134,626 compared to operating income of $25,565 for the third quarter of 2009. Excluding the effect of non-cash expenses associated with stock-based compensation of $133,650 and depreciation expenses of $4,685, operating income for the third quarter of 2010 was $3,709. Net loss for the quarter ended September 30, 2010 was $142,116 from a net income of $22,565 for the third quarter of 2009. Excluding the effect of non-cash expenses associated with stock-based compensation of $133,650 and depreciation expenses of $4,685, net loss for the third quarter of 2010 was $3,781.

Commenting on the results for the quarter, Michael R. Long, Chairman and Chief Executive Officer of Payment Data Systems, said, “In the first quarter of 2010, we implemented a plan to cut over half of our selling, general and administrative expenses, not including our non-cash expenses associated with stock-based compensation. The continued tight controls we implemented combined with our highest quarterly revenues of 2010 resulted in operating income of $3,709. Our transaction volume for the third quarter was the highest volume we have experienced for any quarter for this year. The momentum in transaction growth resulted in September being our best processing month of the year. With our strong and continued commitment to control SG&A expenses and our anticipated growth in transaction volume, the fourth quarter of 2010 should be our best quarter of 2010 for revenue and income generation from operations. The merchant acquiring segment of PDS continues to grow and we are now processing payments for nearly 300 churches and church organizations. Our prepaid card operation, FiCentive, is continuing to earn new corporate clients for its printed on-demand corporate card incentive programs and has implemented two general purpose card programs recently, the Redpack Mi Promesa card program and the Elite Life card program. We are excited about the revenue opportunities that both of these programs create for Payment Data Systems. The new programs and print on-demand feature are also opening up new vertical markets for us.”

PAYMENT DATA SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)
     
Three Months Ended September 30, Nine Months Ended September 30,

2010

2009

2010

2009
 
Revenues $ 648,927 $ 841,278 $ 1,855,599 $ 2,495,087
 
Operating expenses:
Cost of services 496,249 476,651 1,442,038 1,850,312
Selling, general and administrative:
Non Cash, Stock-based compensation 133,650 133,650 400,950 400,950
Other expenses 148,969 196,721 475,604 956,576
Depreciation   4,685     8,691   18,316     28,063  
Total operating expenses   783,553     815,713   2,336,908     3,235,901  
 
Operating loss (134,626 ) 25,565 (481,309 ) (740,814 )
 
Other income (expense):
Interest income - - - -
Interest expense - - - -
Other income (expense)   (4,990 )   -   155,010     -  
Total other income (expense), net   (4,990 )   -   155,010     -  
 
Loss before income taxes (139,616 ) 25,565 (326,299 ) (740,814 )
Income taxes   2,500     3,000   11,045     9,000  
 
Net loss $ (142,116 ) $ 22,565 $ (337,344 ) $ (749,814 )
 
 
Basic and diluted net loss per common share:

$

0.00

$

0.00

$

0.00

$

(0.01

)

Weighted average common shares outstanding
125,308,808 111,385,965 119,803,030 111,846,944

For further information regarding our financial results for the quarter ended September 30, 2010, please read our 10-Q that was filed on November 15, 2010.

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