Revenues increased 82% to $633,196 for the quarter ended March 31, 2007 from $348,010 for the first quarter of 2006. The increase from the prior year quarter was primarily attributable to the increase in revenues generated from card-based processing services due to increased transaction volume.

Net loss increased to $611,555, or $0.01 per share, for the quarter ended March 31, 2007 from $425,957, or $0.01 per share, for the prior year quarter. The increase from the prior year quarter was primarily due to $152,000 in debt related expenses related to our note payable that we paid off early during March 2007. We do not expect to have any debt related expenses in the second quarter and as a result, we believe that net loss will decrease.

Commenting on the results for the quarter, Michael R. Long, Chairman and Chief Executive Officer of Payment Data Systems, said, "We are pleased to see the continuing growth in revenue on a comparable basis. As announced previously, we are now debt-free and poised to continue the progress we have been making."

Long continued, "As we look forward to the second quarter of 2007, we anticipate that transaction volumes will likely reach new record levels due to new clients starting to process in May. Accordingly, revenues are expected to increase and our operating loss is expected to be lower. We also anticipate bringing the Natalie Gulbis Gift MasterCard to market in early July."

For further information regarding our financial results for the first quarter of 2007, please read our 10-QSB, which was filed today.