US Dataworks Announces Fiscal 2012 Fourth Quarter And Year End Results

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Jul 13, 2012, 07:00 ET

SUGAR LAND, Texas, July 13, 2012 /PRNewswire/ -- US Dataworks, Inc. (OTC Bulletin Board: UDWK), a leader in payment processing solutions, today announced its financial results for its fiscal 2012 fourth quarter and year ended March 31, 2012.

Revenue for the fourth quarter of fiscal 2012 was $1.6 million compared to revenue of $2.1 million for the fourth quarter of fiscal 2011. Net loss for the fourth quarter of fiscal 2012 was $41,000, or $0.01 per share, compared to net income of $116,000, or $0.01 per diluted share, for the fourth quarter of fiscal 2011.

Revenue for the fiscal 2012 was $6.6 million compared to revenue of $7.3 million for fiscal 2011. Net loss for fiscal 2012 was $485,000, or $0.01 per share, compared to a net loss of $608,000, or $0.02 per share, for fiscal 2011.

Charles E. Ramey, Chairman and CEO of US Dataworks, commented, "During the fiscal fourth quarter, we made changes that have laid the groundwork for achieving our strategic goal of market dominance in the cloud payment processing space. These included organizational changes, changes to our sales and marketing approach and the development of a channel partner program. We continue to execute on this plan and are beginning to see results.

"We are in a strong position to help clients reduce their costs and become more efficient. First, we have a management team that is up to the challenge of taking the company to the next level. Second, our Clearingworks® product offering has set the standard in cloud payment processing. Third, we are ahead of our competitors in our approach to payment processing and the market is now ready," added Ramey.

"Our focus remains on customer acquisition, transactions under management and average price per transaction; and we believe that our future results should improve in fiscal 2013 as our unique value proposition is being introduced to additional customers of all sizes in this vast emerging market," concluded Ramey.

Conference Call Information
US Dataworks' management has scheduled a conference call to review its fiscal 2012 fourth quarter and year end results on Tuesday, July 17, 2012 at 11:00 a.m. Eastern time, 10:00 a.m. Central time. To listen to the call, dial (480) 629-9643 at least 10 minutes before the call begins and ask for 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 July 24, 2012. To access the replay, dial (303) 590-3030 using a pass code of 4553184#.

Investors, analysts and the general public will also have the opportunity to listen to the conference call over the Internet by visiting 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 webcast, an archive will be available shortly after the call.

Additional information about Clearingworks as well as US Dataworks can be found on the company's website at www.clearingworks.com.

About US Dataworks
US Dataworks offers on-demand payment processing services with proven enterprise-class payment, deposit, returns processing, and powerful payment analytic tools. US Dataworks is a trusted payments provider to utilities, telecommunications providers, content providers, financial institutions and government agencies.

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 expectations of our ability to meet our future goals and expectations. 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 solutions 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 repay or refinance our debt, our ability to realize the anticipated benefits from our business initiatives, including our cloud-based solutions, and other risks detailed from time to time in our SEC reports including our Annual Report on Form 10-K for the fiscal year ended March 31, 2012. These forward-looking statements speak only as of the date hereof. US Dataworks disclaims any obligation to update these forward-looking statements.

Contacts:	Randy Frapart, CFO
	US Dataworks, Inc.
	281-504-8026

	Ken Dennard, Managing Partner
	Dennard Rupp Gray & Lascar, LLC
	[email protected]
	713-529-6600

US DATAWORKS, INC.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

	For the Three Months Ended March 31				For the Years Ended March 31
	2012		2011		2012		2011

Revenues:
Software transactional and subscription revenues	$	689,775	$	677,954	$	2,745,593	$	2,316,170
Software licensing revenues		(8,313)		430,413		119,640		537,277
Software maintenance revenues		182,028		195,882		701,615		621,731
Professional services revenues		689,693		746,155		2,956,531		3,740,785
Software resale revenues		9,319		6,716		122,035		59,555

Total revenues		1,562,502		2,057,120		6,645,414		7,275,518

Cost of revenues		574,624		625,025		2,226,836		2,503,022

Gross profit		987,878		1,432,095		4,418,578		4,772,496

Operating expenses:
Research and development		230,131		263,926		862,019		969,154
Sales and marketing		178,635		217,087		1,170,892		921,926
General and administrative		439,441		665,708		2,178,251		2,846,581
Depreciation and amortization		18,246		25,327		85,310		124,795
Total operating expense		866,453		1,172,049		4,296,472		4,862,456

Income/(loss) from operations		121,425		260,045		122,106		(89,960)

Other (expense) income:
Interest expense		(20,718)		(24,641)		(92,631)		(30,340)
Interest expense – related party		(142,821)		(121,366)		(517,387)		(489,558)
Other income		1,200		2,075		1,670		2,075
Total other expense		(162,339)		(143,932)		(608,348)		(517,823)

Net income/(loss)	$	(40,914)	$	116,113	$	(486,242)	$	(607,783)

Basic and diluted income/(loss) per share	$	(0.01)	$	0.01	$	(0.01)	$	(0.02)

Basic and diluted income/(loss) per share	$	(0.01)	$	0.01	$	(0.01)	$	(0.02)

Basic and diluted weighted-average shares outstanding		33,401,485		32,930,100		33,418,986		33,229,667

Basic and diluted weighted-average shares outstanding		33,401,485		32,930,100		33,418,986		33,229,667

US DATAWORKS, INC. BALANCE SHEETS

	March 31, 2012		March 31, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	81,985	$	44,096
Accounts receivable, trade		437,662		1,019,579
Prepaid expenses and other current assets		200,636		387,548
Total current assets		720,283		1,451,223
Property and equipment, net		184,387		240,500
Goodwill, net		4,020,698		4,020,698
Other assets		42,354		70,109

Total assets	$	4,967,722	$	5,782,530

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Current portion of long-term debt	$	244,667	$	663,667
Accounts payable		426,895		582,304
Accrued expenses		138,033		79,557
Accrued interest – related parties		383,592		87,299
Deferred revenue		424,191		688,340
Total current liabilities		1,617,378		2,101,167

Long term liabilities:
Notes payable, net of unamortized discount at March 31, 2012 and 2011 of $2,557 and $0, respectively		134,078		165,157
Notes payable – related parties, net of unamortized discount at March 31, 2012 and 2011 of $267,689 and $409,302, respectively		2,824,556		2,682,943
Total long term liabilities		2,958,634		2,848,100
Total liabilities		4,576,012		4,949,267

Commitments and contingencies

Stockholders' equity:

Convertible Series B preferred stock, $0.0001 par value; 700,000 shares authorized; 109,933 shares issued and outstanding; $3.75 liquidation preference; dividends of $458,802 and $417,444 in arrears as of March 31, 2012 and 2011, respectively		11		11
Common stock, $0.0001 par value; 90,000,000 shares authorized; 33,485,835 and 33,318,842 shares issued and outstanding as of March 31, 2012 and 2011, respectively		3,348		3,331
Additional paid-in capital		66,593,160		66,548,488
Accumulated deficit		(66,204,809)		(65,718,567)

Total stockholders' equity		391,710		833,263

Total liabilities and stockholders' equity	$	4,967,722	$	5,782,530




US DATAWORKS, INC. STATEMENTS OF CASH FLOWS For the years ended March 31, 2012 and 2011

	2012		2011
Cash flows from operating activities:
Net loss from operating activities	$	(486,242)	$	(607,783)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization of property and equipment		85,310		124,795
Amortization of note discount on notes payable		4,555		---
Amortization of note discount on notes payable – related party		141,613		134,435
Amortization of deferred financing costs – related party		27,755		20,726
Stock based compensation		37,577		113,194
Changes in operating assets and liabilities:
Accounts receivable		581,917		40,246
Prepaid expenses and other current assets		186,912		(79,895)
Accounts payable		(155,409)		347,227
Accrued expenses		58,476		(101,001)
Accrued interest – related party		296,293		57,137
Deferred revenue		(264,149)		(92,990)

Net cash provided by (used in) operating activities		514,608		(43,909)

Cash flows used in investing activities:
Purchase of property and equipment		(29,197)		(195,499)
Net cash used in investing activities		(29,197)		(195,499)

Cash flows from financing activities:
Repayment of note payable to bank		(1,066,548)		(1,380,275)
Proceeds from asset based bank loan		497,327		1,221,197
Proceeds from issuance of notes payable and detachable stock warrants		125,000		—
Payments on equipment note payable		(3,301)		(1,960)

Net cash used in financing activities		(447,522)		(161,038)

Net increase (decrease) in cash and cash equivalents		37,889		(400,446)
Cash and cash equivalents, beginning of year		44,096		444,542
Cash and cash equivalents, end of year	$	81,985	$	44,096

Supplemental disclosures of cash flow information:

Interest paid	$	86,252	$	385,464
Federal income taxes paid	$	—	$	—

US DATAWORKS, INC.
INCOME STATEMENT DATA
Non GAAP Reconciliations
For the three months and years ended March 31, 2012 and 2011

		For the Three Months Ended		For the Years Ended
		March 31,		March 31,
		2012	2011	2012	2011
Reconciliation of adjusted EBITDA (See Note 1)
	Net income (loss)	$ (40,914)	$ 116,113	$ (486,242)	$ (607,783)
	Depreciation and amortization	18,246	25,327	85,310	124,795
	Stock Based compensation expense	10,380	11,112	37,577	113,194
	Interest	163,539	145,997	610,018	519,898
	Adjusted EBITDA (See Note 1)	$ 151,251	$ 298,549	$ 246,663	$ 150,104

Reconciliation of EBITDA margin
	Revenue	$ 1,562,502	$ 2,057,120	$ 6,645,414	$ 7,275,518
	Adjusted EBITDA	$ 151,251	$ 298,549	$ 246,663	$ 150,104
	Margin %	9.7%	14.5%	3.7%	2.1%


Note 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.