US Dataworks Reports Fiscal 2005 Third Quarter Results; 24% Increase in 3rd Quarter Revenues Over Prior Year

US Dataworks Reports Fiscal 2005 Third Quarter Results; 24%
Increase in 3rd Quarter Revenues Over Prior Year 


HOUSTON, Feb. 3  /PRNewswire-FirstCall/ -- US Dataworks (AMEX:UDW), a leading
developer of payment processing solutions, today announced financial results
for its fiscal 2005 third quarter ended December 31, 2004.

Revenues for the fiscal 2005 third quarter were $518,000 compared with revenues
of $416,000 for the same period a year ago.  Operating loss for the quarter was
$1,386,000 compared to an operating loss of $982,000 for the quarter ended
December 31, 2003.  Net loss for the third quarter was $1,320,000, or $0.05 per
share, compared to a net loss of $1,243,000 or $0.05 per share, for the
corresponding period in the prior year.

"Due primarily to seasonal factors, our recurring 'click' revenues from
customers that pay by the transaction during the third quarter were basically
flat with our second quarter.  We have over one billion transactions under
management available and processed approximately 537 million actual
transactions between January 1, 2004 and December 31, 2004," stated Charles E.
Ramey, CEO of US Dataworks.  "We continue to be very excited about our growth
opportunities over the next several years as the electronification(SM) of
payment processing increases rapidly.

"Our solutions are leading the industry.  National Automated Clearing House
(NACHA) recently announced that industry volume in 2004 grew over five times
the 2003 volume with an industry administrative return rate of 1.04%. Our
volume was approximately 57% of the industry total with an administrative
return rate of 0.1%, a significant performance difference.

"While we are pleased with solid year-over-year revenue growth, we have
witnessed slower than expected implementation of Check 21 solutions since it
became law in late October 2004.  As we have previously stated, we are in the
infancy of a rapidly increasing market and believe that our 'per transaction'
results, strategic marketing relationships and strategic alliances will
continue to grow.  We believe our investment in our R&D, direct sales force and
marketing efforts will drive recurring sales over the long term thereby
benefiting our customers as well as our shareholders," concluded Ramey.

CONFERENCE CALL

US Dataworks has scheduled a conference call for Thursday, February 3, 2005 at
5:00 p.m. eastern time.  To participate in the conference call, dial
303-262-2075 at least ten minutes before the call begins and ask for the US
Dataworks conference call.  A replay of the call will be available
approximately two hours after the live broadcast ends and will be accessible
until February 10, 2005.  To access the replay, dial [phone] using a
pass code of 11022273.

Investors, analysts and the general public will also have the opportunity to
listen to the conference call over the Internet by visiting
http://www.usdataworks.com/ .  To listen to the live call on the web, please
visit the company's web site at least fifteen minutes before the call begins to
register, download and install any necessary audio software.  For those who
cannot listen to the live web cast, an archive will be available shortly after
the call.

ABOUT US DATAWORKS

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 the extent to which the
Company's balance sheet has been strengthened, leadership in the ARC market has
been captured and efforts toward profitability have been continued and the
increasing of our efforts toward capturing further market share in ARC,
Check-21 and other electronic payment processing solutions 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, our ability to obtain future financing and other
risks detailed from time to time in the SEC reports of US Dataworks, Inc.,
including its annual report on Form 10-KSB/A for the period ended March 31,
2004.  These forward-looking statements speak only as of the date hereof.  US
Dataworks disclaims any obligation to update these forward-looking statements.

                           - Tables to Follow -



   STATEMENTS OF OPERATIONS
   For the Three and Nine Months Ended December 31, 2004 and 2003
   (UNAUDITED)

                           For the Three Months        For the Nine Months
                                  Ended                      Ended
                               December 31,                December 31,
                            2004          2003          2004          2003
  Revenues
    Software licensing
     revenues             $95,000       $56,803      $595,732      $769,670
    Software maintenance
     revenues             246,455        66,999       706,383       181,143
    Professional service
     revenues             176,480       292,656       728,785       911,216
      Total revenues      517,935       416,458     2,030,900     1,862,029

  Cost of sales           147,689       206,043       666,337       555,698
      Gross profit        370,246       210,415     1,364,563     1,306,331

  Operating expenses
    General and
     administrative     1,674,255     1,122,555     4,637,577     2,961,828
    Depreciation
     and amortization      81,727        70,069       237,499       206,700
      Total operating
       expense          1,755,982     1,192,624     4,875,076     3,168,528

  Loss from operations (1,385,736)     (982,209)   (3,510,513)   (1,862,197)

  Other income (expense)
    Financing costs           ---      (135,814)     (419,903)   (1,345,102)
    Interest expense      (22,730)     (128,826)     (187,686)   (1,069,774)
    Interest expense -
     related parties          ---           ---           ---      (113,360)
    Loss on extinguishment
     of debt                  ---           ---           ---      (635,259)
    Loss on extinguishment
     of debt - related
     parties                  ---           ---           ---    (1,722,631)
    Investor litigation
     settlement expense    75,800           ---      (924,199)          ---
    Other income (expense) 12,761         3,635        30,448         3,635
      Total other income
       (expense)           65,831      (261,005)   (1,501,340)   (4,882,491)

  Loss before provision
   for income taxes    (1,319,905)   (1,243,214)   (5,011,853)   (6,744,688)
  Provision for
   income taxes               ---           ---           ---           ---

  Net loss            $(1,319,905)  $(1,243,214)  $(5,011,853)  $(6,744,688)

  Basic and diluted
   loss per share
     Total basic and
      diluted loss
      per share            $(0.05)       $(0.05)       $(0.19)       $(0.39)
  Basic and diluted
   weighted-average
   shares outstanding  27,800,238    22,772,365    26,725,216    17,388,793

  Supplemental
   information:
    Software maintenance
     revenues
    Transactional
     revenues            $156,458       $34,999      $444,161       $55,664
    Nontransactional
     revenues              89,997        32,000       262,222       125,479
    Total maintenance
     revenues            $246,455       $66,999      $706,383      $181,143



   BALANCE SHEET
   December 31, 2004
   (UNAUDITED)

                             ASSETS
  Current assets
    Cash and cash equivalents                                   $2,734,134
    Accounts receivable, net of allowance
     for doubtful accounts of $0                                   640,080
    Prepaid expenses and other current assets                      116,134
      Total current assets                                       3,490,348
  Property and equipment, net                                      717,002
  Goodwill, net                                                 14,133,629
  Other assets                                                      43,793
            Total Assets                                       $18,384,772

               LIABILITIES AND SHAREHOLDERS' EQUITY
  Current liabilities
    Note payable- related party                                    $39,000
    Deferred revenue                                               283,764
    Accounts payable                                               242,836
    Accrued expenses                                               189,151
    Interest payable                                                22,730
    Convertible note payable                                       256,066
      Total current liabilities                                  1,033,547
    Convertible note payable                                       512,133
    Deferred revenue                                                41,683
    Deferred compensation                                           94,600
      Total liabilities                                          1,681,963

  Commitments
  Shareholders' equity
    Convertible Series B preferred stock,
     $0.0001 par value 700,000 shares
     authorized, 549,667 shares issued and
     outstanding, $0.75 liquidation preference,
     dividends of  $159,352 in arrears                                  55
    Common stock, $0.0001 par value
     90,000,000 shares authorized and 28,777,366 shares
     issued and outstanding                                          2,878
    Common stock subscription                                     (129,375)
    Additional paid-in capital                                  61,737,402
    Deferred compensation                                          (63,395)
    Accumulated deficit                                        (44,844,756)
      Total shareholders' equity                                16,702,809
        Total Liabilities and Shareholders' Equity             $18,384,772

   Contacts:
   John Reiland, CFO
   John Figone, VP-Business Development
   US Dataworks, Inc.
   [phone]
   http://www.usdataworks.com/

   Ken Dennard, Managing Partner
   Karen Roan, Sr. Vice President
   DRG&E   [phone]


DATASOURCE: US Dataworks



CONTACT:  John Reiland, CFO, or John Figone, VP-Business Development,

both of US Dataworks, Inc., [phone]; or Ken Dennard, Managing Partner,

or Karen Roan, Sr. Vice President, both of DRG&E, [phone], for US

Dataworks



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

Copyright