Press Release Source: Payment Data Systems, Inc.

 

Payment Data Systems, Inc. Settles Shareholder Suit

 
San Antonio, TX Nov. 14, 2005 Payment Data Systems, Inc. (NASDAQ OTCBB: PYDS) an integrated electronic payments solutions provider, today announced that on November 9, 2005, we entered into a settlement agreement with all the plaintiffs in the shareholder suit that was originally filed in July 2003. Under the terms of the settlement, the plaintiffs will dismiss the pending litigation, with prejudice, and release all claims against the Company, its current and former officers and directors, and our former auditors, Ernst & Young LLP.

Additionally, we will reset the exercise price of 1,912,400 warrants to purchase our common stock held by the plaintiffs from $1.80 per share to a new exercise price of $0.20 per share. We will also extend the expiration date of the warrants from November 27, 2006, to November 27, 2007. We recorded a non-cash expense of $151,309 in the third quarter of 2005 as a result of the modification of the warrant terms. We are not paying any other economic consideration to fund this settlement. On balance, we believe the terms of this settlement to be fair and equitable to the Company and its shareholders. We will no longer incur significant expenses associated with defense of the litigation and the uncertainly inherent in any litigation is now resolved at a reasonable cost.

Michael Long, Chairman and CEO said, “We are pleased that we were able to reach a mutually agreeable solution to this long pending litigation. We are now able to better manage our expenses by the elimination of legal fees and focus on our very promising future.”

About Payment Data Systems, Inc.

Payment Data Systems, Inc., is an Integrated Payments Solution Provider delivering comprehensive, cost-effective solutions to billers and retailers for the processing and management of electronic payments via the Internet, point of sale, or payments taken by Customer Service Representatives or an Interactive Voice Response (IVR).

Additional products available from PDS include services and products that can be implemented more quickly and less expensively than the alternative of adding multiple payments companies as these solutions offer a full range of payment processing capabilities. These service offerings include: one time and recurring ACH debits and credits, electronic lockbox and returned check services, Web pay acceptance of credit cards and checks, telephone pay to Customer Service Representatives for acceptance of credit cards and checks, Interactive Voice Response systems which completely automate the payment receiving process, and data warehousing that enable the storage and retrieval of all payment history from one location.

These are all managed within a single comprehensive storage and retrieval system thereby providing the customer consolidated tracking and reporting of all payment types regardless of source or channel.

Payment Data is the owner of the electronic bill payment portal, http://www.billx.com. billx.com has the ability to transmit payments to thousands of national billers. Payment Data is also the exclusive license holder of the rights to market the Carmen Electra gift and prepaid cards. Sign-up at www.carmencard.com to receive updates on the Carmen Electra card program.

 

Payment Data Systems, Inc.
Michael Long
Chairman and CEO
phone: 210-249-4040
 

FORWARD-LOOKING STATEMENTS DISCLAIMER Except for the historical information contained herein, the matters discussed in this release include certain forward-looking statements, which are intended to be covered by safe harbors. Those statements include, but may not be limited to, all statements regarding our and management's intent, belief and expectations, such as statements concerning our future and our operating and growth strategy. Investors are cautioned that all forward-looking statements involve risks and uncertainties including, without limitation, the factors detailed from time to time in our filings with the Securities and Exchange Commission. One or more of these factors have affected, and in the future could affect, our businesses and financial results in the future and could cause actual results to differ materially from plans and projections. We believe that the assumptions underlying the forward-looking statements included in this release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. All forward-looking statements made in this release are based on information presently available to our management. We assume no obligation to update any forward-looking statements, except as required by law.