UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported): September 30, 2004
Payment Data Systems, Inc.
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(Exact name of registrant as specified in its charter)
Nevada 000-30152 98-0190072
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(State or other jurisdiction (Commission (IRS Employer
of incorporation ) File Number) Identification No.)
12500 San Pedro, Suite 120 San Antonio, TX 78216
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(Address of principal executive offices) (Zip Code)
(210) 249-4100
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(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On September 30, 2004, we entered into a Warrant Agreement with Kubra Data
Transfer, LTD. as consideration for Kubra entering into a Referral Agent
Agreement with us. Kubra shall be entitled to receive warrants to acquire shares
of our common stock, pursuant to the terms and conditions provided in the
Warrant Agreement. On September 30, 2004, we issued to Kubra an initial warrant
representing the right to acquire 250,000 shares at a strike price of $0.24 per
share. In consideration of future business activities that Kubra shall provide
to us, as provided in the Referral Agent Agreement, we may also issue to Kubra,
in accordance with the provisions of the Warrant Agreement, incentive warrants
to purchase up to 1.85 million shares of our common stock at strike prices no
greater than 120% of the market price of our common stock when the warrants are
earned based on the level of revenues referred to us by Kubra. We agreed to
grant piggyback registration rights for the common stock issued to Kubra
pursuant to the Warrant Agreement upon issuance of at least fifty percent of the
warrants issuable under the Warrant Agreement.
The Warrant Agreement is attached hereto as Exhibit 10.1. The foregoing
description of the terms and conditions of the Warrant Agreement is qualified in
its entirety by, and made subject to, the more complete information set forth
in the Warrant Agreement.
Item 9.01 Financial Statements and Exhibits.
Exhibit Description
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10.1 Warrant Agreement among Kubra Data Transfer LTD. and Payment Data Systems,
Inc., dated as of September 30, 2004.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Payment Data Systems, Inc.
By: /s/ Michael R. Long
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Michael R. Long, Chief Executive Officer and
Chief Financial Officer
Date: October 6, 2004