US Dataworks, Inc. Announces Profitable Third Quarter Financial Results

- Quarterly revenues increase by 30.6% over prior year period -



HOUSTON, Feb. 17  /PRNewswire-FirstCall/ -- US Dataworks, Inc. (AMEX:UDW), a leading developer of payment processing solutions, today announced its financial results for its fiscal 2009 third quarter and for the nine months ended December 31, 2008.

Revenues for the quarter ended December 31, 2008 were $2,000,011, representing a 30.6% increase over revenues of $1,531,229 for the same period a year ago.  Income from operations for the third quarter was $360,026, compared to a loss from operations of $6,399,131 for the same period a year ago (and compared to a loss from operations of $466,947 for the same period a year ago excluding a one-time charge for goodwill impairment recorded in such earlier quarter). Net income for the third quarter was $133,850, or $0.00 per share, compared to a net loss of $5,551,203, or $(0.17) per share, for the same period a year ago (and compared to net income of $380,981, or $0.01 per share, excluding the one-time charge for goodwill impairment recorded in such earlier quarter).

Revenues for the nine months ended December 31, 2008 were $6,099,797, representing a 47.8% increase over revenues of $4,126,385 for the same period a year ago.  Income from operations for the nine months ended was $629,876, compared to an operating loss of $8,067,648 for the same period a year ago (and compared to a loss from operations of $2,135,646 excluding the one-time charge for goodwill impairment recorded in such earlier quarter).  Net loss for the third quarter was $1,817,326, or $(0.06) per share, compared to a net loss of $7,226,223, or $(0.23) per share, for the same period a year ago (and compared to a net loss of $1,334,326, or $(0.04) per share, excluding the one-time charge for goodwill impairment recorded in such earlier period).

Contributing to the net loss for the nine months ended December 31, 2008 was the $1,747,791 non-cash interest expense recorded in the fiscal 2009 second quarter due to the repayment of certain outstanding convertible promissory notes during that quarter.  The Company recorded an original issue discount when the notes were first issued reflecting the value of the conversion feature of the notes and the warrants that were issued with the notes.  The amount of such discount that remained at the time the notes were repaid in full during that quarter was fully expensed at that time.  This charge represents a significant portion of the decrease in other income for the nine months ended December 30, 2008 as compared to the same period a year ago.

Charles E. Ramey, Chairman and CEO of the Company stated, "We are pleased with our third quarter results which were profitable on an operating and net income basis. Leading the strength were transactional and professional service revenues, which increased by 21% and 80%, respectively, over the transactional and professional service revenues for the same period a year ago.  The increase in transactional revenues was principally due to an increase in the number of customers subject to transactional pricing combined with an increase in transactions processed by our current client base. Professional service revenue rose due to our contract with a major credit card company that began in February 2008."

Mr. Ramey added, "The announcement of today's financial results demonstrates that the initiatives taken earlier in the fiscal year have proven effective, enabling the Company to post net income of $133,850 for the third quarter. While the economic slowdown in the U.S. has certainly crimped credit lines and hindered the general flow of capital, we are well positioned to weather the storm, as seen in the third quarter results. We have restructured the Company to significantly lower costs while at the same time working diligently to retain existing clients as well as attract new ones. The combination of these factors led to our recent financial success. While we are very pleased with the quarter's performance, we remain cautiously optimistic about the future. We believe that the formula implemented for the Company's turnaround has proven successful and will continue to strive to improve results by growing the business while supporting the current clientele, which have enabled the Company to achieve profitability."

Conference Call Information

A conference call is scheduled for today, at 11:00 AM EST.  Interested parties may participate in the call by dialing [phone]; international callers dial [phone] about 5-10 minutes prior to 11:00 AM EST.  The conference call will also be available on replay starting at 1:00 pm EST on February 17, 2009, and ending on March 17, 2009.  For the replay, please dial [phone] (replay account # 269, replay conference # 313698).  The access number for the replay for international callers is [phone] (replay account # 269, replay conference # 313698).

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, the Company's position in the marketplace, its 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-KSB for the period ended March 31, 2008 and its quarterly reports on Form 10-Q for the periods ended September 30, 2008 and December 31, 2008.  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]

  - Financial Tables Follow -



                             US DATAWORKS, INC.
                       QUARTERLY INCOME STATEMENT DATA

                                 (UNAUDITED)


                             Three months ended        Nine months ended
                                 December 31,              December 31,
                              2008         2007         2008          2007
  Revenues
    Software licensing
     revenues                36,508      182,911       66,508       289,833
    Software transactional
     revenues               540,787      445,654    1,601,291     1,225,043
    Software maintenance
     revenues               217,775      233,010      666,257       658,019
    Software service
     revenues             1,204,941      669,654    3,765,741     1,953,490

    Net Revenue           2,000,011    1,531,229    6,099,797     4,126,385

  Cost of sales             564,257      574,230    1,607,517     1,469,312
    Gross profit          1,435,754      956,999    4,492,280     2,657,073

  Operating Expenses
    General and
     administrative       1,028,983    1,375,756    3,719,426     4,659,534
    Depreciation and
     amortization            46,745       48,190      142,978       133,003
    Goodwill Impairment           -    5,932,184            -     5,932,184

                          1,075,728    7,356,130    3,862,404    10,724,721

  Operating income/(loss)   360,026   (6,399,131)     629,876    (8,067,648)

  Other income (expense)
    Financing costs               -      (86,704)    (329,692)     (112,680)
    Interest expense       (109,601)    (157,721)  (2,603,020)     (170,524)
    Interest expense -
     related parties       (128,197)     (14,714)    (207,026)      (36,589)
    Loss on disposition
     of assets                    -            -            -       (44,231)
    Gain/(Loss) on
     Derivatives                  -    1,099,284      621,281     1,157,666
    Other income
     (expense)               11,622        7,783       71,255         7,783

                           (226,176)     847,928   (2,447,202)      801,425

    Income/(loss) before
     provision for
     income taxes           133,850   (5,551,203)  (1,817,326)   (7,266,223)

  Provision for
   income taxes                   -            -            -             -

  Net Income/(Loss)        $133,850  $(5,551,203) $(1,817,326)  $(7,266,223)

  Basic and diluted
   gain/(loss) per share      $0.00       $(0.17)      $(0.06)       $(0.23)

  Basic and diluted
   weighted - average
   (adjusted for reverse
   stock split
   1:5) shares
   outstanding           32,569,017   32,062,962   32,361,717    31,638,735


                             US DATAWORKS, INC.
                      Quarterly Balance Sheet Analysis
                   For the quarter ended December 31, 2008
                                 (UNAUDITED)



                                 ASSETS             December 31,
                                                        2008
  Current assets
    Cash and cash equivalents                         $505,826
    Accounts receivable, trade                         939,753
    Prepaid expenses and other current
     assets                                             88,153
      Total current assets                           1,533,732

  Property and equipment, net                          350,248
  Goodwill,
    net                                              4,020,698
   Other assets                                        302,523
                  Total assets                      $6,207,201

            LIABILITIES AND SHAREHOLDERS EQUITY
  Current liabilities
    Notes payable, current                             $35,279
    Note payable - related
     party                                           4,203,500
    Deferred revenue                                   339,456
    Accounts payable                                   267,648
    Accrued expenses                                   172,046
    Accrued Interest - related
     party                                              70,902
      Total current liabilities                      5,088,831

    Long term note payable                              26,459
      Total long term liabilities                       26,459

      Total liabilities                              5,115,290

  Shareholders' equity
    Convertible series B preferred stock, 0001 par          55
    Common Stock. 0001 par                               3,260
    Additional paid in capital                      64,997,162
    Accumulated deficit                            (63,908,566)

                    Total shareholders' equity       1,091,911
      Total liabilities and shareholders' equity    $6,207,201


DATASOURCE: US Dataworks, Inc.



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

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

or fax, [phone]



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

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