PYDS Reports Second Quarter 2011 Results

Payment Data Systems, Inc. (OTCBB: PYDS), an integrated electronic payments solutions provider, today announced financial results for the quarter ended June 30, 2011.

Revenues increased to $768,359 for the second quarter of 2011 from $604,184 for the second quarter of 2010 due to higher transaction growth. The operating loss for the quarter ended June 30, 2011 was $169,084 compared to operating loss of $152,338 for the second quarter of 2010. Excluding the effect of non-cash expenses associated with stock-based compensation of $134,980 and depreciation expenses of $1,072, operating loss for the second quarter of 2011 was only $33,032, the majority of which was one-time consulting fees. Net loss for the quarter ended June 30, 2011 was $238,481 from a net income of $55,174 for the second quarter of 2010 with the majority of the difference being a unrealized loss in marketable securities. Excluding the effect of non-cash expenses associated with stock-based compensation of $134,980 and depreciation expenses of $1,072 and the unrealized loss in marketable securities of $91,738, net loss for the second quarter of 2011 was $10,691.

Commenting on the results for the quarter, Michael R. Long, Chairman and Chief Executive Officer of Payment Data Systems, said, “Second quarter earnings were no surprise as they followed historical trends."

Long continued, “The real excitement for us is the upcoming quarter. Our previously announced guidance of exceeding $1,000,000 in sales and achieving profitability for the quarter remains firmly in place. The second quarter was focused on implementing a number of new merchants. The merchant acquiring segment of PDS continues to grow and we are now processing payments for over 450 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 with the conversion to our new bank virtually complete, and our ACH business is contributing greatly to our new trends.”

PAYMENT DATA SYSTEMS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
		Three Months Ended June 30,											Six Months Ended June 30,
		2011					2010						2011						2010
Revenues		$	768,359				$	604,184					$	1,553,620					$	1,206,672
Operating expenses:
Cost of services			598,542					459,213						1,209,502						945,789
Selling, general and administrative:
Stock-based compensation			134,980					133,650						268,630						267,300
Other expenses			202,849					157,867						386,244						326,635
Depreciation			1,072					5,792						2,345						13,631
Total operating expenses			937,443					756,522						1,866,721						1,553,355
Operating loss			(169,084		)			(152,338			)			(313,101			)			(346,683	)
Other income (expense):
Unrealized (loss) on marketable securities			(91,738		)			-						(91,738			)			-
Other income (expense)			22,341					100,000						22,341						160,000
Total other income (expense), net			(69,397		)			100,000						(69,397			)			160,000
Loss before income taxes			(238,481		)			(52,338			)			(382,498			)			(186,683	)
Income taxes			-					2,836						-						8,545
Net loss		$	(238,481		)		$	(55,174			)		$	(382,498			)		$	(195,228	)
Basic and diluted net loss per common share:		$	0.00				$	0.00					$	0.00					$	0.00
Weighted average common shares
outstanding			136,851,933					123,162,063						136,569,700						117,000,514

For further information regarding our financial results for the quarter ended September 30, 2010, please read our 10-Q that was filed on August 15, 2011.

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