US Dataworks, Inc. Announces Profitable Fiscal 2009 Financial Results

- Revenues increase by 40% over prior year -



HOUSTON, June 29  /PRNewswire-FirstCall/ -- US Dataworks, Inc. (AMEX:UDW), a leading developer of payment processing solutions, today announced its financial results for its fiscal year 2009.

Revenues increased by 39.9% in fiscal 2009 to $7,996,987, as compared to $5,717,593 in fiscal 2008.  Transactional revenues increased 16.8% to $2,158,409 in fiscal 2009, as compared to $1,848,130 in fiscal 2008.  The increase in transactional revenue was primarily attributable to new customers added during the fiscal year and a steady growth of transactions processed by our existing customers.  Professional service revenues increased 66.7% to $4,700,476 in fiscal 2009, as compared to $2,820,332 in fiscal 2008. The increase in professional service revenue was primarily attributable to the consulting agreements with major customers and related purchase orders.

Cost of sales, which principally includes the costs of the personnel who perform the services associated with our software maintenance, support, training and installation activities, increased by $195,024, or 9.9%, from $1,964,555 in fiscal 2008 to $2,159,579 in fiscal 2009.  However, gross profit as a percentage of total revenues increased from 65.6% in fiscal 2008 to 73.0% in fiscal 2009. This gross margin increase is primarily due to the significant increase in transactional revenue in fiscal 2009 as compared to fiscal 2008.

Total operating expenses decreased by $11,318,381, or 68.9%, from $16,438,670 in fiscal 2008 to $5,120,289 in fiscal 2009.  The decrease in operating expenses was principally attributable to the goodwill impairment expense of $10,112,931 recorded in fiscal 2008, as compared to no goodwill impairment charges in fiscal 2009, and to a $1,236,967 decrease in general and administrative expense in fiscal 2009, as compared to fiscal 2008.  The decrease in general and administrative expense is primarily attributable to a $940,000 decrease in compensation expense, a $160,000 decrease in the use of outside services and $127,000 decrease in insurance, office, and marketing expenses.  Management anticipates that operating expenses will increase slightly over the coming year as the Company continues to maintain and expand its customer base.

Total other income (expense), including interest expense and financing costs, decreased $3,712,173, from income of $1,010,741 in fiscal 2008 to an expense of $(2,701,432) in fiscal 2009. The decrease is principally due to the $2,253,946 in interest expense charge incurred when $4,000,000 in convertible notes were refinanced in August 2008 (due to the acceleration of the unamortized balance of the original issue discount on such notes and the acceleration of the unamortized portion of the financing costs for such notes) and a reduction in the gain on derivatives associated with the debt feature of such convertible notes of $1,072,956 recorded in fiscal 2009 as compared to fiscal 2008.

Charles E. Ramey, Chairman and CEO of the Company stated, "We are pleased with our results for fiscal 2009.  Our increase in recurring revenue, particularly transactional revenue, bodes well for our financial stability going forward.  Our ability to deliver our revenue growth of 40% with a high gross profit margin of 73% and an EBITDA margin of 15% was also due to our restructuring and our effective cost management."

Conference Call Information

Interested parties may participate in the call by dialing [phone]; international callers dial [phone] about 5-10 minutes prior to 10:00 AM EDT.  The conference call will also be available on replay starting at 1:00 pm EDT on June 29, 2009, and ending on July 6, 2009.  For the replay, please dial [phone] (replay account # 269, replay conference #326685).  The access number for the replay for international callers is [phone] (replay account # 269, replay conference #326685).

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.  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, refinance or extend the maturity date of 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.  These forward-looking statements speak only as of the date hereof. US Dataworks disclaims any obligation to update these forward-looking statements.

  US DATAWORKS, INC.
  Balance Sheet Analysis
  For the years ended March 31, 2009 and 2008

      ASSETS                                  March             March
                                               2009              2008
  Current assets
    Cash and cash equivalents                $403,863          $903,393
    Accounts receivable, trade                845,747           856,261
    Prepaid expenses and other
     current assets                           186,578           145,915

    Total current assets                    1,436,188         1,905,569

  Property and equipment                    2,352,183         2,337,646
  Accumulated Amortization and
   depreciation                            (2,046,400)       (1,858,959)
  Goodwill, net                             4,020,698         4,020,698
  Other assets                                194,359           357,124

    Total assets                           $5,957,028        $6,762,078

     LIABILITIES AND SHAREHOLDERS' EQUITY
  Current liabilities
    Current portion of Note
     payable - Equipment                      $35,279           $35,279
    Derivative Liability - Compound Embedded        -           353,749
    Derivative Liability - Warrants                 -           267,532
    Deferred revenue                          223,688           200,833
    Accounts payable                          247,132           271,677
    Interest Payable - related parties         38,336            18,188
    Accrued expenses                          199,940           366,538
    Notes Payable - related parties         4,203,500                 -

  Total current liabilities                 4,947,875         1,513,796

  Long-term Note Payable - Equipment           17,639            52,918
  Long-term Note Payable - Related Party            -           500,000
  Long-term convertible promissory note,
   net unamortized discount of $1,995,636           -         2,004,364

  Total liabilities                         4,965,514         4,071,078

  Shareholders' equity
    Convertible series B preferred stock,
     0001 par                                      55                55
    Common Stock. 0001 par                      3,273             3,206
    Additional paid in capital             65,063,737        64,778,977
    Accumulated deficit                   (64,075,551)      (62,091,238)

  Total shareholders' equity                  991,514         2,691,000

  Total liabilities and shareholders'
   equity                                  $5,957,028        $6,762,078



  US DATAWORKS, INC.
  INCOME STATEMENT DATA
  For the years ended March 31, 2009 and 2008

                          Qtr Ended     Qtr Ended
                            March         March         YTD          YTD
                             2009          2008     March 2009    March 2008
  Revenues
    Software licensing
     revenues              $179,423      $(7,788)    $245,931      $282,045
    Software transactional
     revenues               557,118      623,087    2,158,409     1,848,130
    Software maintenance
     revenues               225,914      238,339      892,171       896,358
    Software service
     revenues               934,735      866,842    4,700,476     2,820,332
                          1,897,190    1,720,480    7,996,987     5,846,865
    Discounts on Sales            -     (129,272)           -      (129,272)
    Net Revenue           1,897,190    1,591,208    7,996,987     5,717,593

  Cost of sales             552,062      495,243    2,159,579     1,964,555
    Gross profit          1,345,128    1,095,965    5,837,408     3,753,038

  Operating Expenses
    General and
     administrative       1,213,419    1,484,950    4,932,846     6,144,484
    Depreciation and
     amortization            44,465       48,252      187,443       181,255
    Goodwill Impairment           -    4,180,747            -    10,112,931

                          1,257,884    5,713,949    5,120,289    16,438,670

  Income(Loss) from
   operations                87,244   (4,617,984)     717,119   (12,685,632)

  Other income (expense)
    Financing costs         (18,518)     (40,000)    (348,210)     (152,680)
    Interest expense       (109,601)    (288,151)  (2,712,621)     (458,675)
    Interest expense -
     related parties       (126,111)     (10,668)    (333,137)      (47,256)
    Loss on disposition of
     assets                       -            -            -       (44,231)
    Gain on Derivatives           -      536,571      621,281     1,694,237
    Other income (expense)        -       11,565       71,255        19,346

                           (254,230)     209,317   (2,701,432)    1,010,741

  Income(Loss) before
   provision for income
   taxes                   (166,986)  (4,408,667)  (1,984,313)  (11,674,891)

  Provision for income
   taxes
  Income(Loss)            $(166,986) $(4,408,667) $(1,984,313) $(11,674,891)

  Basic and diluted income/
   (loss) per share          $(0.00)      $(0.14)      $(0.06)       $(0.37)

  Basic and diluted
   weighted-average      32,698,517   32,062,962   32,444,764    31,744,212



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

                                               2009              2008
  Reconciliation of Adjusted
  EBITDA (See Note 1)
     Net Income                           $(1,984,313)     $(11,674,891)
     Depreciation and Amortization
      (incl. loss on disposal of assets)      187,443           181,255
     Stock Based compensation expense         284,827           337,720
     Other (income) expense                 2,701,432        (1,010,741)
     Adjusted Ebitda (See Note 1)           1,189,389       (12,166,657)

  Reconciliation of EBITDA margin
     Revenue                               $7,996,987        $5,717,593
     Adjusted EBITDA                        1,189,389       (12,166,657)
     Margin %                                     15%              (213%)

  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.

  CONTACTS:

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


DATASOURCE: US Dataworks, Inc.



CONTACT:  Charles Ramey, CEO of US Dataworks, Inc., [phone]; or

Donald C. Weinberger of Wolfe Axelrod Weinberger Assoc. LLC, [phone],

Fax, [phone], for US Dataworks, Inc.



Web Site:  http://usdataworks.com/ 

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