US Dataworks, Inc. Announces Fiscal Third Quarter Financial Results

HOUSTON, Feb. 16  /PRNewswire-FirstCall/ -- US Dataworks, Inc. , a leading developer of payment processing solutions, announced today financial results for its fiscal 2010 third quarter and nine months results ended December 31, 2009.
Revenues for the third quarter ended December 31, 2009 were $2,266,858, representing a 13.3% increase over revenues of $2,000,011 for the same period a year ago.  Income from operations for the third quarter was $309,076, compared to $360,026 for the same period a year ago. Net income for the third quarter was $74,060, or $0.00 per share, compared to $133,850, or $0.00 per share, for the same period a year ago.
Revenues for the nine months ended December 31, 2009 were $6,362,508, representing a 4.3% increase over revenues of $6,099,797 for the same period a year ago.  Income from operations for the nine months ended December 31, 2009 was $680,454, compared to $629,877 for the same period a year ago.  Net loss for the nine months ended December 31, 2009 was $104,600, or $(0.00) per share, compared to a net loss of $1,817,326, or $(0.06) per share, for the same period a year ago.
Charles E. Ramey, Chairman and CEO of US Dataworks, said, "The third quarter posted solid results, whereby total revenues rose in excess of 13%, stemming from a strong 26% increase in professional service revenues due to our contract with a branch of the federal government. While our second largest revenue generator, software transactional revenues, saw a slight decline in the quarter, we believe those revenues will slowly increase in the coming quarters as our clients' customers begin to increase spending as well as the integration of new customers into our system. I am also pleased with the profits recorded during the quarter despite higher expenses in infrastructure and sales and marketing. These expenditures are important steps for US Dataworks to grow the business."
Mr. Ramey added, "I'm also pleased to report that we recently took positive steps in restructuring the Company's capital situation. Specifically, we've secured a revolving line of credit and a term loan both originating from Silicon Valley Bank, with the proceeds from the term loan being used to pay down a portion of our pre-existing debt, which is now subordinated to the bank debt. In addition, the remaining portion of this subordinated debt has also been restructured and these loans, which were coming due on July 1, 2010, have been extended to January 1, 2014. I am thankful to be working with Silicon Valley Bank and believe their interest in providing us with this financing is a good indicator of the fiscal strength of US Dataworks, especially during the current economic conditions."
"I am pleased with the progress we have made fiscal year to date. While we still have a lot to accomplish, I think the capital restructuring will yield financial flexibility to the Company. In addition, the Company has initiated new relationships that bode well for the future, including the most recently signed contract with The Bankers Bank in Oklahoma City, OK, which now uses US Dataworks' Clearingworks ® software platform to drive the image check clearing network it conducts on behalf of the 275 community banks. We value this new relationship and anticipate it to be a reference contract for other similar banks that we have begun to target," concluded Mr. Ramey.
A conference call is scheduled for today, at 2:00 PM EST.  Interested parties may participate in the call by dialing [phone]; international callers dial [phone] about 5-10 minutes prior to 2:00 PM EST.  The conference call will also be available on replay starting at 4:00 pm EST on February 16, 2010, and ending on March 16, 2010.  For the replay, please dial [phone] (replay account # 269, replay conference # 344883).  The access number for the replay for international callers is [phone] (replay account # 269, replay conference # 344883).
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 payments.  Additional information about US Dataworks is available at http://www.usdataworks.com/.
Certain statements made in this press release (other than the historical information contained herein) constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, including, but not limited to, statements regarding our expectation of continued growth, the benefits of our recent restructuring, the anticipated features and benefits of our new distribution payment capture solution, our vision for payment processing and our new solutions' ability to provide a higher return on investment for our clients.  Any forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including, but not limited to, the failure of our new solution to perform as anticipated, our ability to provide long-term customer value and agility, our ability to protect our intellectual property, our 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, our ability to avoid being delisted from the NYSE Alternext US (formerly the American Stock Exchange), our ability to repay or refinance our debt, 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 year ended March 31, 2009 and its quarterly report on Form 10-Q for the quarter ended September 30, 2009.  These forward-looking statements speak only as of the date hereof. US Dataworks disclaims any obligation to update these forward-looking statements.
  CONTACTS:

  Charles Ramey, CEO           Donald C. Weinberger
  US Dataworks, Inc.           Wolfe Axelrod Weinberger Assoc. LLC
  Tel. [phone]          Tel. [phone]
                               Fax [phone]



  - Tables to Follow -





                              US DATAWORKS, INC.
                      QUARTERLY INCOME STATEMENT DATA
                                 (UNAUDITED)

                                  Three Months Ended       Nine Months Ended
                                     December 31,             December 31,
                                   2009        2008         2009       2008

  Revenues     
    Software licensing revenues  30,977      36,508      30,977      66,508
    Software transactional 
     revenues, net              514,999     540,787   1,554,967   1,601,291
    Software maintenance 
     revenues                   208,816     217,775     629,675     666,257
    Software service revenues 1,512,066   1,204,941   4,146,889   3,765,741
                              ---------   ---------   ---------   ---------
                              2,266,858   2,000,011   6,362,508   6,099,797

  Cost of sales                 748,964     740,982   2,095,653   2,138,562
                              ---------   ---------   ---------   ---------
    Gross profit              1,517,894   1,259,029   4,266,855   3,961,235
    Gross profit margin            67.0%       63.0%       67.1%       64.9%

  Operating Expenses  
    Research and development    213,994     216,991     644,186     628,594
    Sales and marketing         220,562     145,545     720,152     457,100
    General and administrative  739,451     489,722   2,104,588   2,102,686
    Depreciation and 
     amortization                34,811      46,745     117,473     142,978
                              ---------   ---------   ---------   ---------
                              1,208,818     899,003   3,586,399   3,331,358

  Income from operations        309,076     360,026     680,454     629,877
    Net operating income margin    13.6%       18.0%       10.7%      10.3%

  Other income (expense)
    Financing costs             (99,648)          -    (217,895)   (329,692)
    Interest expense             (1,436)   (109,601)   (166,555) (2,603,020)
    Interest expense - 
     related parties           (134,066)   (128,197)   (400,740)   (207,026)
    Gain/Loss on Derivatives          -           -           -     621,281
    Other income (expense)          134      11,622         134      71,255
                              ---------   ---------   ---------   ---------
                               (235,016)   (226,176)   (785,056) (2,447,202)

  Income/(Loss) before provision 
   for income taxes              74,060     133,850    (104,600) (1,817,325)

    Net income margin               3.3%        6.7%       -1.6%      -29.8%

  Provision for income taxes
   Net Income/(Loss)             74,060     133,850    (104,600) (1,817,325)

  Basic and diluted gain/(loss) 
   per share                      $0.00       $0.00      $(0.00)     $(0.06)

  Basic weighted-average 
   shares outstanding        32,960,100  32,569,017  32,861,416  32,361,717
    Effect of diluted 
     securities:
       Stock options             55,400      21,053           -           -
   
  Diluted weighted-average 
   shares outstanding        33,015,500  32,590,070  32,861,416  32,361,717


                                US DATAWORKS, INC.
                        QUARTERLY BALANCE SHEET ANALYSIS
                     For the quarter ended December 31, 2009
                                   (UNAUDITED)
    ASSETS                                            December 31,
                                                          2009
                                                      ----------
  Current assets
    Cash and cash equivalents                          1,089,642
    Accounts receivable, trade                           617,286
    Prepaid expenses and other current assets            260,281
                                                       ---------
                       Total current assets           $1,967,209

  Property and equipment, net                            201,395
  Goodwill, net                                        4,020,698
  Other assets                                            32,111
                                                       ---------
                       Total assets                   $6,221,413
                                                      ==========

    LIABILITIES AND SHAREHOLDERS EQUITY
  Current liabilities
    Accounts payable                                     268,482
    Accrued expenses                                     188,964
    Accrued Interest - Related Party                      21,398
    Deferred Revenue                                     423,634
    Note payable, current                                 26,459
    Notes payable-related party, net 
     unamortized discount of $186,446                  3,905,949
                                                       ---------

                       Total current liabilities      $4,834,886
                                                      ----------

                       Total liabilities              $4,834,886
                                                      ==========

  Shareholders' equity
    Convertible series B preferred stock, 0001 par            11
    Common Stock. 0001 par                                 3,297
    Additional paid in capital                        65,563,370
    Accumulated deficit                              (64,180,151)


                       Total shareholders' equity     $1,386,527
                                                      ----------
                       Total liabilities and
                        shareholders' equity          $6,221,413
                                                      ==========


  US DATAWORKS, INC.
  INCOME STATEMENT DATA
  Non GAAP Reconciliations
  For the quarters ended Dec 31, 2009 and 2008


                                                          2009         2008
                                                          ----         ----
  Reconciliation of Adjusted EBITDA (See Note 1)
        Net Income                                     $74,060     $133,850
        Depreciation and Amortization 
         (incl. loss on disposal of assets)             34,811       46,745
        Stock Based compensation expense                60,952       32,033
        Other (income) expense                         235,015      226,176
                                                       -------      -------
        Adjusted EBITDA (See Note 1)                   404,838      438,804
                                                       =======      =======

  Reconciliation of EBITDA margin
        Revenue                                     $2,266,859   $2,000,011
        Adjusted EBITDA                                404,838      438,804
        Margin %                                            18%          22%

  Notes:
  1  Adjusted EBITDA is a non-GAAP measure we define as earnings before 
  interest, taxes, depreciation and amortization, and equity compensation 
  expense. We use Adjusted EBITDA as a supplemental financial measure to 
  assess (i) our operating and financial performance without regard to the 
  structure of our financing or the historical cost basis in our assets and 
  (ii) our ability to generate cash flow to cover our interest payments. 
  Adjusted EBITDA has limitations as an analytical tool and should not be 
  used as a substitute for financial measures presented in accordance with 
  GAAP, including net income, operating income and cash flow from operating 
  activities. Such limitations include the fact that Adjusted EBITDA does 
  not reflect (i) cash requirements to service interest and principal 
  payments on our debt, (ii) capital expenditure requirements or (iii) 
  income tax payment requirements and income tax accruals. In addition, 
  companies in our industry may define Adjusted EBITDA differently than we 
  do, thereby limiting its usefulness as a comparative measure.

DATASOURCE: US Dataworks, Inc.
CONTACT:  Charles Ramey, CEO of US Dataworks, Inc., [phone]; orDonald C. Weinberger of Wolfe Axelrod Weinberger Assoc. LLC, [phone],or Fax, [phone]
Web Site:  http://www.usdataworks.com/

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