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) January 18, 2007 PAYMENT DATA SYSTEMS, INC. (Exact name of registrant as specified in its charter) NEVADA 000-30152 98-0190072 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 12500 SAN PEDRO, SUITE 120, SAN ANTONIO, TEXAS 78216 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (210) 249-4100 -------------------------------------------------------------------------------- (Former name or former address, if changed since last report.) 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 3.02 Unregistered Sales of Equity Securities. On January 18, 2007, we sold 3,000,000 shares of restricted common stock to Robert D. Evans, an individual investor, for a total offering price of $255,000 under a Stock Purchase Agreement. Mr. Evans is an existing stockholder and also invested in our common stock through a private placement in November 2001. The shares were sold in accordance with Rule 506 of Regulation D under the Securities Act of 1933 (as amended) in that: - the sales were made to an accredited investor, as defined in Rule 501; - we gave the purchaser the opportunity to ask questions and receive answers concerning the terms and conditions of the offering and to obtain any additional information which we possessed or could acquire without unreasonable effort or expense that is necessary to verify the accuracy of information furnished; - at a reasonable time prior to the sale of securities, we advised the purchaser of the limitations on resale in the manner contained in Rule 502(d)2; - neither we nor any person acting on our behalf sold the securities by any form of general solicitation or general advertising; and - we exercised reasonable care to assure that the purchaser of the securities is not an underwriter within the meaning of Section 2(a)(11) of the Securities Act of 1933 in compliance with Rule 502(d). This report contains forward-looking statements that involve risks and uncertainties. We generally use words such as "believe," "may," "could," "will," "intend," "expect," "anticipate," "plan," and similar expressions to identify forward-looking statements. You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons including our ability to implement our business plan, our ability to raise additional funds and manage our substantial debts, consumer acceptance of our products, our ability to broaden our customer base, and other risks described in our reports filed with the Securities and Exchange Commission from time to time. Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made, and our future results, levels of activity, performance or achievements may not meet these expectations. We do not intend to update any of the forward-looking statements after the date of this document to conform these statements to actual results or to changes in our expectations, except as required by law. ITEM 9.01 Financial Statements and Exhibits. EXHIBIT NO. DOCUMENT DESCRIPTION ------------ --------------------- 10.1 Stock Purchase Agreement between the Company and Robert D. Evans, dated January 18, 2007. 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. (Registrant) Date January 23, 2007 /s/ Michael R. Long --------------------- (Signature) Michael R. Long Chief Executive Officer and Chief Financial Officer