SOURCE: Payment Data Systems, Inc.

November 15, 2005 05:00 ET

Payment Data Systems, Inc. Intends to Sell Bills.com Domain Name

Deal Enables Strategic Opportunities Including New Recurring Revenue Stream

SAN ANTONIO, TX -- (MARKET WIRE) -- November 15, 2005 -- Payment Data Systems, Inc. (OTC BB: PYDS), an integrated electronic payments solutions provider, today announced that it signed a Letter of Intent to sell the domain and trademark of bills.com to Alivio Holdings, LLC (Alivio), parent of Freedom Financial Network, LLC (FFN), Freedom Debt Relief, LLC (FDR) and Freedom Tax Relief, LLC (FTR) of San Mateo, California.

The intended asset sale has a number of key and important strategic elements to it:

--  PDS will sell the assets (domain and trademarks) of bills.com and
    related services to Alivio for $964,500 dollars.
--  PDS will retain all assets of bills.com exclusive of the bills.com
    domain and bills.com trademark and gain new revenue.
--  PDS and FFN will agree that PDS build and run a private labeled bill
    payment site for FFN.
--  FFN will pay to PDS, a recurring fee for each subscriber they acquire
    into the new bills.com program, and guarantee $72,000 in minimum subscriber
    fees to PDS.
--  FTR, a wholly owned affiliate of Alivio Holdings, LLC, will engage PDS
    for additional services not directly related to the bills.com transaction.
    This includes ACH processing, Returned Check processing, and credit card
    processing.
--  FFN will commit a minimum of $180,000 to be applied to marketing bill
    payment services for the new bills.com website.
--  FFN is projecting that the FFN bills.com website, powered by
    billx.com, could have over 5,000 subscribers within the next twelve months.
    This projected growth will generate over $25,000 a month in additional
    subscriber revenue for PDS.
    
Additional and important aspects of the transaction:
--  PDS will rename our subsidiary Bills.com, Inc. to Billx.com, Inc. or
    similar name.
--  All existing customers of the current bills.com service will be ported
    to the new billx.com domain without service interruption.
--  PDS, through billx.com, will not lose any existing revenue as a result
    of this transaction.  In fact, servicing the new FFN bills.com website will
    bring in new revenue.
    
The anticipated effects of the agreement and the associated follow on transactions are:
--  The transaction and related agreements should be accretive
    to earnings for PDS over the term of the agreements.
--  Positions us for positive EBITDA (earnings before interest,
    taxes, depreciation and amortization) and net income in the
    fourth quarter of 2005 and eliminates our debt.
--  Positions billx.com to accomplish a number of existing and new
    initiatives:
    -- Expands and enhances our ability to acquire and deliver
       private labeled sites for banks, debit card issuers, and
       credit unions quickly and efficiently. A differentiating
       and valuable component of our solution allows these private
       labels sites to be operated as payment consolidators for all
       bills not just their own bills.
    -- Enhances our ability to expand delivery of bill payment,
       account transfers, and debit card loading and bill payment
       into new PDS clients that have customer-facing needs in the
       debt management industry.
Michael Long, Chairman and CEO of PDS, said, "We are very pleased with this event. Clearly the agreements when fully executed validate the viability of our strategy of private labeling and create a cash position that significantly changes our financial profile and opens up new opportunities for PDS." Long added, "We expect these agreements to be completed within the current week."

Andrew Housser, Co-CEO of Alivio and Freedom Financial Network, said, "We are very excited about the acquisition of bills.com and see this as a key step in enhancing our brand and profile in the consumer debt management industry. In addition we look forward to entering the fast growing bill payment space by partnering with one of the leading players in the industry."

There will be a conference call on Wednesday, November 16, at 10:00 a.m. Central Standard Time. Participants will dial 866-200-5830 or (International) 732-694-1588 and enter the PIN code followed by the # key: 106020#. During this call we will review our Q3 filings and answer your questions regarding this transaction.

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 payment 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.bills.com. Bills.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.

Website: http://www.paymentdata.com

About Freedom Financial Network, LLC.

Freedom Financial Network, LLC (www.freedomfinancialnetwork.com) provides consumer debt resolution services through its Freedom Debt Relief and Freedom Tax Relief divisions. The company works for the consumer, negotiating with creditors to lower principal balances due that routinely result in savings of half the amount owed. Based in San Mateo, Calif., Freedom Financial Network serves more than 4,000 clients nationwide and manages more than $120 million in consumer debt, offering an alternative to bankruptcy, credit counseling, and debt consolidation.

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.

Contact Information

  • Contact:
    Michael Long
    210-249-4040