US Dataworks, Inc. Announces Fiscal Second Quarter Financial Results

HOUSTON, Nov. 14  /PRNewswire-FirstCall/ -- US Dataworks, Inc. (AMEX:UDW), a leading developer of payment processing solutions, announced today financial results for its fiscal 2006 second quarter and six months results ended September 30, 2006.

Revenues for the second quarter ended September 30, 2006 were $1,821,673 compared with revenues of $2,732,293 for the same period a year ago.  Loss from operations for the second quarter was $479,186 compared to operating income of $885,734 for the second quarter ended September 30, 2005.  Net loss for the second quarter was $75,793 or $0.00 per share, compared to a net income of $808,934 or $0.03 per share, for the corresponding period in the prior year.

Revenues for the six months ended September 30, 2006 were $3,036,762 compared with the revenues of $3,812,632 for the same period a year ago.  Loss from operations for the six months ended was $1,582,405 compared to an operating loss of $54,228 for the six months ended September 30, 2005.  Net loss for the six months ended was $1,676,163 or $(0.06) per share, compared to a net income of $30,435 or $0.00 per share, for the corresponding period in the prior year.

Charles E. Ramey, Chairman and CEO of US Dataworks said, "Despite the difference in total revenues from last year, software transactional revenues grew 26% in the second quarter as a result of both new and past customers increasing their utilization of our software solutions. In addition, professional service revenues climbed 41% to $1.3 million as a direct result of two agreements signed with major financial services companies, one in June 2006 and the other in September 2006. Given the signing of the latter agreement, additional revenues should continue into the third quarter."

"Although we reported a loss for the quarter, we continue to believe that our leveraged business model will return the Company to profitability in the near term. Firstly, the Company recently entered into a month-to-month professional services contract with a major financial services company which is anticipated to significantly reduce negative cash flow for the remainder of fiscal 2007. Secondly, the Company's strategic alliance with one of the largest merchant service providers (MSPs) to sell Clearingworks(TM) as part of its Account Receivable Check (ARC), back office conversion, and Check 21 services, which should also contribute towards the Company's profitability. Additionally, the landscape for our services continues to look robust as more and more financial institutions adopt new payment processing solutions. Combined, we believe these relationships will continue the Company's growth into the balance of fiscal 2007."

A conference call is scheduled for today, at 9:30 AM EST.  Interested parties may participate in the call by dialing [phone]; international callers dial [phone] about 5-10 minutes prior to 9:30 AM EST.  The conference call will also be available on replay starting at 12:00 noon EST on November 14, 2006, and ending on December 14, 2006.  For the replay, please dial [phone] (replay account # 269, replay conference # 220251).  The access number for the replay for international callers is [phone] (replay account # 269, replay conference # 220251).

About US Dataworks, Inc.

US Dataworks is a developer of payment processing solutions, focused on the Financial Services market, Federal, State and local governments, billers and retailers.  Software developed by US Dataworks is designed to enable organizations to transition from traditional paper-based payment and billing processes to electronic solutions that automate end-to-end processes for accepting and clearing checks.

Except for the historical information contained herein, the matters set forth in this press release, including, but not limited to the Company's belief that it will be "well positioned" for 2007 are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including, but not limited to, the Company's position in the marketplace, our ability to develop and timely introduce products that address market demand, the impact of alternative technological advances and competitive products, market fluctuations and other risks detailed from time to time in the SEC reports of US Dataworks, including its annual report on Form 10-K for the period ended March 31, 2006 and its quarterly report on Form 10-Q for the period ended June 30, 2006.  These forward-looking statements speak only as of the date hereof.  US Dataworks disclaims any obligation to update these forward-looking statements.

  CONTACTS:

  John Figone, SVP of Business Development
  US Dataworks, Inc.
  [phone]

  Donald C. Weinberger/Alisa Steinberg (media)
  Wolfe Axelrod Weinberger Assoc. LLC
  Tel. [phone]  Fax [phone]


                            US DATAWORKS, INC.
                     QUARTERLY INCOME STATEMENT DATA

                             Three Months Ended        Six months ending
                           9/30/06       9/30/05      9/30/06      9/30/05
  Revenues                             as restated               as restated
    Software licensing
     revenues              135,728     1,451,800      514,983    1,750,920
    Software transactional
     revenues              291,724       231,361      605,720      412,604
    Software maintenance
     revenues              102,783       134,566      206,549      226,892
    Software service
     revenues            1,291,439       914,566    1,709,510    1,422,216
                        $1,821,673    $2,732,293   $3,036,762   $3,812,632

  Cost of sales            497,428       405,355    1,019,728      782,856
    Gross profit         1,324,245     2,326,938    2,017,034    3,029,776

  Operating Expenses
    General and
     administrative      1,768,850     1,351,247    3,531,798    2,905,522
    Depreciation and
     amortization           34,581        89,957       67,641      178,482

                         1,803,431     1,441,204    3,599,439    3,084,004

  Income (loss) from
   operations             (479,186)      885,734   (1,582,405)     (54,228)

  Other income (expense)
    Interest expense       (78,606)      (91,046)    (170,778)    (144,651)
    Loss on extinguishment
     of debt                     -      (206,000)           -     (206,000)
    Gain/Loss on
     Derivatives           257,383       210,827     (156,071)     419,096
    Contingent liabilities
     loss                  222,600             -      222,600            -
    Other income (expense)   2,016         9,419       10,491       16,218

                           403,393       (76,800)     (93,758)      84,663

  Income (loss) before
   provision for income
   taxes                   (75,793)      808,934   (1,676,163)      30,435
  Provision for income
   taxes                         -             -            -            -
  Net income (loss)        (75,793)      808,934   (1,676,163)      30,435

  Basic and diluted
   income (loss) per
   share                     $0.00         $0.03       $(0.06)       $0.00

  Basic weighted average
   shares outstanding   30,560,591    30,037,020   30,415,806   29,369,865

  Diluted weighted
   average shares
   outstanding          30,560,591    30,076,243   30,415,806   29,409,088



                            US DATAWORKS, INC.
                     Quarterly Balance Sheet Analysis
                 For the quarter ended September 30, 2006
                               (UNAUDITED)

    ASSETS                                           9/30/06
  Current assets
    Cash and cash equivalents                        134,646
    Accounts receivable, trade                     2,100,519
    Accounts receivable, factored                    244,280
    Costs and estimated earnings in excess
     of billings on uncompleted contracts
    Prepaid expenses and other current assets        197,558

      Total current assets                         2,677,003

  Property and equipment                           2,098,149
  Accumulated Amortization and depreciation       (1,641,043)
  Goodwill, net                                   14,133,629
  Other assets                                        30,334

      Total assets                               $17,298,072

    LIABILITIES AND SHAREHOLDERS EQUITY
  Current liabilities
    Notes payable
    Notes payable - related parties                  539,000
    Current portion of capital lease
     obligations
    Current portion of convertible
     promissory notes                                666,733
    Current portion of convertible promissory
     notes unamortized discount                     (203,031)
    Derivative Liability - Compound embed             68,453
    Derivative Liability - Warrants                   77,464
    Deferred revenue                                 744,383
    Accounts payable                                 461,637
    Accrued expenses                                 216,534
    Interest payable                                   1,128

      Total current liabilities                    2,572,302

        Total liabilities                         $2,572,302

  Shareholders' equity
    Convertible series A preferred stock, 0001 par
    Convertible series B preferred stock, 0001 par        55
    Common Stock. 0001 par                             3,073
    Common Stock subscription
    Additional paid in capital                    63,509,143
    Deferred Compensation
    Accumulated deficit                          (48,786,501)

        Total shareholders' equity               $14,725,770
      Total liabilities and shareholders'
       equity                                    $17,298,072


DATASOURCE: US Dataworks, Inc.



CONTACT:  John Figone, SVP of Business Development of US Dataworks, Inc.,

[phone]; or Donald C. Weinberger, or Alisa Steinberg (media), both of

Wolfe Axelrod Weinberger Assoc. LLC, Tel. [phone],  Fax [phone]-

4505



Web site:  http://www.usdataworks.com/ 

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