Payment Data Systems Announces $2.0 Million Registered Direct Offering of its Common Stock

SAN ANTONIO–(BUSINESS WIRE)–Payment Data Systems, Inc. (Nasdaq: PYDS), a tech enabled payment
solutions provider, today announced it has agreed to the sale and
issuance of 769,230 shares of common stock to an institutional investor
in a registered direct offering with gross proceeds of approximately
$2.0 million. The offering price per share of common stock is $2.60.

The gross proceeds to Payment Data Systems from the registered direct
offering is expected to be approximately $2.0 million before deducting
the placement agents’ fees and other estimated offering expenses.
Payment Data Systems intends to use the net proceeds of the offering for
general corporate purposes, working capital, and potential strategic
acquisitions. The offering is expected to close on or about February 14,
2019, subject to the satisfaction of customary closing conditions.

Maxim Group LLC is acting as the exclusive placement agent for this
offering.

The securities described above are being offered and sold in the
offering by Payment Data Systems pursuant to a “shelf” registration
statement on Form S-3 (Registration No. 333-221178), including a base
prospectus, previously filed with and declared effective by the
Securities and Exchange Commission (SEC) on December 6, 2017. A
prospectus supplement and an accompanying base prospectus relating to
the offering will be filed with the SEC and will be available on the
SEC’s website located at http://www.sec.gov.
Electronic copies of the prospectus supplement and accompanying base
prospectus may also be obtained from Maxim Group LLC, 405 Lexington
Avenue, 2nd Floor, New York, NY 10174, at 212-895-3745.

This press release shall not constitute an offer to sell or the
solicitation of an offer to buy these securities, nor shall there be any
sale of these securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such jurisdiction. Any
offering will be made only by means of a prospectus, including a
prospectus supplement, forming a part of the effective registration
statement.

About Payment Data Systems, Inc.

Payment Data Systems, Inc. (PYDS), a leading integrated payment
solutions provider, offers a wide range of payment solutions to
merchants, billers, banks, service bureaus, and card issuers. The
Company operates credit, debit/prepaid, and ACH payment processing
platforms to deliver convenient, world-class payment solutions and
services to their clients. The strength of the Company lies in its
ability to provide tailored solutions for card issuance, payment
acceptance, and bill payments as well as its unique technology in the
prepaid sector. Payment Data Systems is headquartered in San Antonio,
Texas, and has offices in Franklin, Tennessee, just outside of Nashville.

Websites: www.paymentdata.com,
www.singularpayments.com,
www.payfacinabox.com,
www.akimbocard.com,
and www.ficentive.com.
Find us on Facebook® and Twitter.

Forward-Looking Statements Disclaimer

Except for the historical information contained herein, the matters
discussed in this release include forward-looking statements which are
covered by safe harbors. Those statements include, but may not be
limited to, all statements regarding management’s intent, belief and
expectations, such as statements concerning our future and our operating
and growth strategy. These forward-looking statements are identified by
the use of words such as “believe,” “intend,” “look forward,”
“anticipate,” “schedule,” and “expect” among others. Forward-looking
statements in this press release are subject to certain risks and
uncertainties inherent in the Company’s business that could cause actual
results to vary, including such risks related to the realization of the
anticipated opportunities from the Singular acquisition, the management
of the Company’s growth, the loss of key resellers, the relationships
with the Automated Clearinghouse network, bank sponsors, third-party
card processing providers and merchants, the security of our software,
hardware and information, the volatility of our stock price, the need to
obtain additional financing, risks associated with new tax legislation,
and compliance with complex federal, state and local laws and
regulations, and other risks detailed from time to time in the Company’s
filings with the Securities and Exchange Commission including its annual
report on Form 10-K for the fiscal year ended December 31, 2017. 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.

Contacts

Investor Relations:
Joe Hassett
Gregory FCA
joeh@gregoryfca.com
484-686-6600

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