<PAGE>

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington D.C., 20549

                                   ----------

                                   FORM 10-QSB
                                (Amendment No. 1)
                                   ----------

(Mark One)
[X]      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934

         For the quarterly period ended September 30, 2002

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
         THE SECURITIES EXCHANGE ACT OF 1934

         For the transition period                    to

                        Commission file number: 001-15385

                               US DATAWORKS, INC.
        (Exact name of small business issuer as specified in its charter)

            NEVADA                                      84-1290152
(State or other jurisdiction of          (I.R.S. employer identification number)
 incorporation or organization)

        5301 HOLLISTER ROAD, SUITE 250
                HOUSTON, TEXAS                            77040
   (Address of principal executive offices)             (Zip Code)

                    Issuer's telephone number: (713) 934-3855

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
YES [X] NO [ ]

Number of shares of Common Stock outstanding as of September 30, 2002:
56,803,171.

Transitional Small Business Disclosure Format (Check one): YES [ ] NO [X]



<PAGE>

                                EXPLANATORY NOTE

         US Dataworks, Inc. (the "Company"), by this Form 10-QSB/A, Amendment
No. 1 to Form 10-QSB, hereby amends and restates Part I, Items 1 and 2, and Part
II, Item 6.

                                       i


<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                                                              US DATAWORKS, INC.
                                                                        CONTENTS
                                                              September 30, 2002
--------------------------------------------------------------------------------

                                                                         Page
FINANCIAL STATEMENTS

     Balance Sheet                                                     F-2 - F-3

     Statements of Operations                                             F-4

     Statements of Cash Flows                                          F-5 - F-6

     Notes to Financial Statements                                    F-7 - F-18

                                      F-1


<PAGE>
<TABLE>

                                                                      US DATAWORKS, INC.
                                                                          BALANCE SHEETS
                                                                      September 30, 2002
----------------------------------------------------------------------------------------
<CAPTION>

                                         ASSETS
                                       (RESTATED)
<S>                                                                         <C>
CURRENT ASSETS
   Cash and cash equivalents ............................................   $   215,658
   Accounts receivable, net of allowance for doubtful accounts of $0 ....       498,141
   Due from related party ...............................................        12,000
   Prepaid expenses and other current assets ............................       141,288
                                                                            ------------
         Total current assets ...........................................       867,087

PROPERTY AND EQUIPMENT, net .............................................       968,412
GOODWILL, net ...........................................................    14,133,629
OTHER ASSETS ............................................................        26,661
                                                                            ------------
              TOTAL ASSETS ..............................................   $15,995,789
                                                                            ============

       The accompanying notes are an integral part of these financial statements.

                                          F-2
</TABLE>



<PAGE>
<TABLE>

                                                                                             US DATAWORKS, INC.
                                                                                                 BALANCE SHEETS
                                                                                             September 30, 2002
---------------------------------------------------------------------------------------------------------------
<CAPTION>

                                      LIABILITIES AND SHAREHOLDERS' EQUITY
                                                   (RESTATED)
<S>                                                                                               <C>
CURRENT LIABILITIES
   Notes payable, net of unamortized discount of $4,534 .......................................   $    192,233
   Notes payable - related parties ............................................................        949,000
   Current portion of capital lease obligations ...............................................          8,243
   Current portion of convertible promissory notes, net of unamortized discount of $94,847 ....      1,703,653
   Deferred revenue ...........................................................................        113,506
   Accounts payable ...........................................................................        728,616
   Accrued expenses ...........................................................................        510,932
   Interest payable, including $38,839 related parties ........................................         64,465
   Net liabilities of discontinued operations .................................................      1,128,250
                                                                                                  -------------
         Total current liabilities ............................................................      5,398,898

CONVERTIBLE PROMISSORY NOTES, net of current portion ..........................................        150,000
CAPITAL LEASE OBLIGATIONS, net of current portion .............................................         11,924
                                                                                                  -------------
         Total liabilities ....................................................................      5,560,822

COMMITMENTS

SHAREHOLDERS' EQUITY
   Convertible Series A preferred stock, $0.0001 par value
     800,000 shares authorized, 640,000 shares issued and outstanding,
     $2.50 liquidation preference, dividends of $361,356 in arrears ...........................             64
   Convertible Series B preferred stock, $0.0001 par value
     700,000 shares authorized, 629,666 shares issued and outstanding,
     $0.75 liquidation preference, dividends of $24,069 in arrears ............................             63
   Common stock, $0.0001 par value
     90,000,000 shares authorized and 56,803,171 shares issued and outstanding ................          5,680
   Common stock committed, 1,364,167 shares ...................................................        158,100
   Additional paid-in capital .................................................................     41,333,521
   Accumulated deficit ........................................................................    (31,062,461)
                                                                                                  -------------
         Total shareholders' equity ...........................................................     10,434,967
                                                                                                  -------------
              TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ......................................   $ 15,995,789
                                                                                                  =============

                   The accompanying notes are an integral part of these financial statements.

                                                      F-3
</TABLE>



<PAGE>
<TABLE>

                                                                                                            US DATAWORKS, INC.
                                                                                                      STATEMENTS OF OPERATIONS
                                                         For the Three Months and Six Months Ended September 30, 2002 and 2001
------------------------------------------------------------------------------------------------------------------------------
<CAPTION>

                                                                  FOR THE THREE MONTHS ENDED      FOR THE SIX MONTHS ENDED
                                                                          SEPTEMBER 30,                  SEPTEMBER 30,
                                                                     2002            2001           2002            2001
                                                                 -------------   -------------   -------------   -------------
                                                                  (RESTATED)      (RESTATED)      (RESTATED)      (RESTATED)
<S>                                                              <C>             <C>             <C>             <C>
REVENUES
   Software licensing revenues ...............................   $    204,900    $    275,923    $    707,550    $    473,423
   Software maintenance revenues .............................         81,647         164,475         137,464         164,475
   Software programming revenues .............................         31,100              --         245,764          76,277
                                                                 -------------   -------------   -------------   -------------
     Total revenues ..........................................        317,647         440,398       1,090,778         714,175

Cost of sales ................................................        218,595         164,879         387,922         274,725
                                                                 -------------   -------------   -------------   -------------
     Gross profit ............................................         99,052         275,519         702,856         439,450

OPERATING EXPENSES
   General and administrative ................................        561,240         419,504       1,407,085       1,210,803
   Depreciation and amortization .............................         75,849         839,661         153,640       1,562,177
   Consulting - related parties ..............................             --          44,910              --          85,910
                                                                 -------------   -------------   -------------   -------------
      Total operating expense ................................        637,089       1,304,075       1,560,725       2,858,890
                                                                 -------------   -------------   -------------   -------------
LOSS FROM OPERATIONS .........................................       (538,037)     (1,028,556)       (857,869)     (2,419,440)
                                                                 -------------   -------------   -------------   -------------
OTHER INCOME (EXPENSE)
   Financing costs ...........................................         (1,678)        (36,999)        (18,460)        (55,300)
   Interest expense ..........................................       (240,043)       (185,106)       (478,561)     (2,143,379)
   Interest expense - related parties ........................        (18,733)        (28,850)        (30,445)        (37,205)
   Loss on disposal of property and equipment ................        (50,556)             --         (50,556)             --
   Other income (expense) ....................................           (348)             --           1,244          2, 970
                                                                 -------------   -------------   -------------   -------------
      Total other income (expense) ...........................       (311,358)       (250,955)       (576,778)     (2,232,914)
                                                                 -------------   -------------   -------------   -------------

LOSS BEFORE PROVISION FOR INCOME TAXES .......................       (849,395)     (1,279,511)     (1,434,647)     (4,652,354)
PROVISION FOR INCOME TAXES ...................................             --             400              --             800
                                                                 -------------   -------------   -------------   -------------
LOSS FROM CONTINUING OPERATIONS ..............................       (849,395)     (1,279,911)     (1,434,647)     (4,653,154)
DISCONTINUED OPERATIONS
 Gain from operations of discontinued division, net of
    provision for income taxes of $0 (unaudited) .............             --           8,820              --         100,327
                                                                 -------------   -------------   -------------   -------------
      Total discontinued operations ..........................             --           8,820              --         100,327

NET LOSS .....................................................       (849,395)     (1,271,091)     (1,434,647)     (4,552,827)
   Dividends paid ............................................             --              --              --         264,698
                                                                 -------------   -------------   -------------   -------------
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS ....................   $   (849,395)   $ (1,271,091)   $ (1,434,647)   $ (4,817,525)
                                                                 =============   =============   =============   =============
BASIC AND DILUTED LOSS PER SHARE
  From continuing operation ..................................   $      (0.01)   $      (0.03)   $      (0.03)   $      (0.11)
  From discontinued operations ...............................             --              --              --               0
                                                                 -------------   -------------   -------------   -------------
      Total basic and diluted loss per share .................   $      (0.01)   $      (0.03)   $      (0.03)   $      (0.11)
                                                                 =============   =============   =============   =============
BASIC AND DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING ........     56,802,222      43,920,476      55,899,806      42,342,802
                                                                 =============   =============   =============   =============

                          The accompanying notes are an integral part of these financial statements.

                                                              F-4
</TABLE>



<PAGE>
<TABLE>

                                                                                          US DATAWORKS, INC.
                                                                                     STATEMENTS OF CASH FLOW
                                                        For the Six Months Ended September 30, 2001 and 2002
------------------------------------------------------------------------------------------------------------
<CAPTION>

                                                                                     2002           2001
                                                                                 ------------   ------------
                                                                                  (RESTATED)     (RESTATED)
<S>                                                                              <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss from continuing operations .......................................   $(1,434,647)   $(4,756,218)
   Adjustments to reconcile net loss to net cash used in operating activities:
     Depreciation and amortization of property and equipment .................       153,640        384,375
     Amortization of goodwill ................................................            --      1,177,802
     Loss on disposal of property and equipment ..............................        50,556             --
     Interest charges on convertible promissory notes ........................       342,056      2,111,071
     Issuance of stock for services rendered .................................       140,623         66,800
     Issuance of stock for legal settlement ..................................         2,900             --
     Issuance of stock for lock-up agreement .................................           400         18,814
     Issuance of stock for extension of notes payable due date ...............           616             --
     Issuance of warrants for lock-up agreements .............................            --         11,520
     Issuance of warrants for services .......................................         1,875             --
     (Increase) decrease in
       Accounts receivable ...................................................      (327,468)       109,036
       Work in progress ......................................................        11,312             --
       Prepaid expenses and other current assets .............................       (94,397)        13,835
       Other assets ..........................................................         5,738             --
     Increase (decrease) in
       Deferred revenue ......................................................      (149,417)        77,700
       Accounts payable ......................................................       282,557         55,063
       Accrued expenses ......................................................       201,964        (16,129)
       Interest payable ......................................................        11,240          1,001
       Interest payable - related parties ....................................        56,445          2,109
                                                                                 ------------   ------------
Net cash used in continuing operations .......................................      (744,007)      (743,161)
Net cash used in discontinued operations .....................................       (69,245)      (482,645)
                                                                                 ------------   ------------
Net cash used in operating activities ........................................      (813,252)    (1,225,806)
                                                                                 ------------   ------------
CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of property and equipment ........................................       (15,670)       (17,102)
   Repayments to related parties .............................................       (66,506)       (42,258)
                                                                                 ------------   ------------
Net cash used in investing activities ........................................       (82,176)       (59,360)
                                                                                 ------------   ------------

                 The accompanying notes are an integral part of these financial statements.

                                                    F-5
</TABLE>



<PAGE>
<TABLE>

                                                                                US DATAWORKS, INC.
                                                                           STATEMENTS OF CASH FLOW
                                              For the Six Months Ended September 30, 2001 and 2002
--------------------------------------------------------------------------------------------------
<CAPTION>

                                                                           2002           2001
                                                                       ------------   ------------
                                                                        (RESTATED)     (RESTATED)
<S>                                                                    <C>            <C>
CASH FLOWS FROM FINANCING ACTIVITIES
   Payments on capital lease obligations ...........................        (4,629)        (4,204)
   Proceeds from notes payable .....................................       188,682         10,000
   Repayment of notes payable ......................................      (141,591)       (90,080)
   Proceeds from notes payable - related party .....................       390,000             --
   Repayment of notes payable - related party ......................       (96,000)      (263,789)
   Proceeds from convertible promissory notes ......................       627,500        750,000
   Repayment of convertible promissory notes .......................       (10,000)      (160,000)
   Proceeds from common stock ......................................            --        304,654
   Stock issuance costs ............................................            --        (68,149)
   Proceeds from subscription receivables ..........................        21,010             --
   Proceeds from exercise of warrants ..............................         2,098             --
   Rescission of preferred stock ...................................            --        (10,000)
   Payment of dividends ............................................            --       (264,698)
                                                                       ------------   ------------
Net cash provided by financing activities ..........................       977,070        203,734
                                                                       ------------   ------------
Net decrease in cash and cash equivalents ..........................        81,642     (1,081,432)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD .....................       134,016      1,159,230
                                                                       ------------   ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD ...........................   $   215,658    $    77,798
                                                                       ============   ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
   INTEREST PAID ...................................................   $    94,795    $   109,804
                                                                       ============   ============
</TABLE>

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

     During the six months ended September 30, 2002, the Company completed the
following:

     o    In April and May 2002, issued 1,424,259 shares of common stock that it
          had committed to issue during the year ended March 31, 2002.

     o    In July and August 2002, $157,500 of convertible promissory notes were
          converted into 1,359,167 shares of common stock. At September 30,
          2002, the stock certificates had not been issued and therefore the
          full amount is included in common stock committed.

     During the six months ended September 30, 2001, the Company completed the
following:

     o    Accrued interest of $26,000 was transferred to the repayment amount of
          a convertible promissory note from accrued interest.

     o    Certain founding shareholders of US Dataworks, Inc. exchanged
          1,528,000 shares of common stock for $220,000 of notes payable.

     o    Recorded deferred financing costs of $891,248 related to the issuance
          of $750,000 of convertible promissory notes.

     o    Issued 475,000 shares of common stock valued at $190,000, which were
          committed prior to March 31, 2001.

   See accompanying notes are an integral part of these financial statements.

                                      F-6


<PAGE>

                               US DATAWORKS, INC.

                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND BUSINESS

     US Dataworks, Inc. (the "Company"), a Nevada corporation, develops,
markets, and supports transaction processing software for Windows NT computer
systems. Its customer base includes many of the largest financial institutions
as well as credit card companies, government institutions, and high-volume
merchants in the United States. It also has a strategic alliance with CheckFree
Corporation (NASDAQ: CKFR) to license the Company's software for its banking
customers and Thomson Financial Publishing, a unit of Thomson Corporation (TSE:
TOC), to incorporate its EPICWare database into the Company's products. Prior to
acquiring US Dataworks, Inc., a Delaware corporation, the Company was a
financial services company specializing in the integration of proprietary
software applications with Applications Service Provider ("ASP") services and an
internet service provider ("ISP"). During July and December 2001, the Company
started shutting down its ISP and ASP operations, respectively, and at March 31,
2002 all ISP and ASP activities had ceased. Effective May 9, 2002, the Company
merged with US Dataworks, Inc., a Delaware corporation, and dissolved the
Delaware corporation.

     Effective March 31, 2001, and with a closing date of April 2, 2001,
Sonicport acquired 100%, or 3,571,429 shares, of the outstanding common stock of
Dataworks (formerly known as Allstate Dataworks, Inc.) in exchange for
14,666,667 new shares of Sonicport's common stock and warrants to purchase
1,000,000 shares of Sonicport's common stock. The warrants have an exercise
price of $0.73, vest immediately, and expire on April 2, 2006. In addition,
certain shareholders of Sonicport transferred their ownership in 4,000,000
shares of the Sonicport's common stock to the shareholders of Dataworks and
committed to return 2,200,000 shares of Sonicport's common stock to Sonicport in
exchange for promissory notes in the amount of $220,000. These shareholders had
returned 1,528,000 shares at June 30, 2001. Of the Dataworks shares, 878,572
were acquired from officers of Dataworks who are also officers of the Sonicport.

     The Company previously recorded the acquisition of US Dataworks in a manner
similar to a pooling of interests. Management has reassessed the facts and
circumstances of the transaction and has changed the method used to record the
Acquisition from a manner similar to a pooling of interests to the purchase
method, which is in conformity with generally accepted accounting principles in
accordance with APB 16, "Business Combinations." The purchase price has been
allocated to the assets acquired and liabilities assumed based on the estimated
fair values at the date of acquisition. The excess of the purchase price over
the estimated fair value of the net assets acquired is attributed to goodwill
which is being amortized over seven years using the straight line method. The
results of operations of US Dataworks have been included in the consolidated
financial statements from April 1, 2001.

     The fair value of assets acquired and liabilities assumed is summarized as
follows:

           Accounts receivable                                   $     179,583
           Property and equipment                                   16,489,233
           Goodwill                                                  5,427,305
           Other assets                                                 14,509
           Notes payable                                            (1,346,754)
           Accounts payable and accrued expenses                       (43,841)
           Other liabilities                                           (41,293)
           Due from related parties                                    (52,957)
                                                                 --------------
           Purchase price                                        $  17,437,262
                                                                 ==============

                                      F-7


<PAGE>

NOTE 1 - ORGANIZATION AND BUSINESS (CONTINUED)

     The aggregate purchase price was $17,437,262. The value of the 14,666,667
new shares of Sonicport's common stock issued and the 4,000,000 shares
transferred by certain shareholders of Sonicport to the shareholders of US
Dataworks of $16,893,334 was determined based on the average closing market
price of Sonicport's common stock over the period consisting of two days before
and after the terms of the acquisition agreement were agreed to and announced.
The value of the warrants to purchase 1,000,000 shares was determined to be
$543,928 and was derived using the Black Scholes option pricing model using the
following assumptions: expected life of 2 years, risk-free interest rate of
5.49%, expected volatility of 100% and expected dividend yield of 0%.

NOTE  2 - RESTATEMENT

     The Company previously recorded the acquisition of US Dataworks in a manner
similar to a pooling of interests. Management has reassessed the facts and
circumstances of the transaction and has changed the method used to record the
acquisition from a manner similar to a pooling of interests to the purchase
method, which is in conformity with generally accepted accounting principles.
The effect of the restatement on net sales, cost of sales, gross profit, net
loss, basic and diluted loss per common share, current assets, property and
equipment, total assets, current liabilities, total liabilities and total
liabilities and shareholders' deficit as of and for the six months ended
September 20, 2002 is as follows:
<TABLE>
<CAPTION>

                                             AS ORIGINALLY    RESTATEMENT
                                               REPORTED       ADJUSTMENTS     AS RESTATED
                                             -------------   -------------   -------------
<S>                                          <C>             <C>             <C>
Net Sales ................................   $  1,090,778    $         --    $  1,090,778
Cost of Sales ............................        387,922              --         387,922
Gross Profit .............................        702,856              --         702,856
Net Loss .................................     (1,316,347)       (118,300)     (1,434,647)
Loss Per Common Share:
   Basic .................................          (0.02)          (0.01)          (0.03)
   Diluted ...............................          (0.02)          (0.01)          (0.03)
Current Assets ...........................   $    867,087    $         --    $    867,087
Property and Equipment, net ..............        140,312         828,100         968,412
Goodwill, net ............................             --      14,133,629      14,133,629
Total assets .............................      1,034,060      14,961,729      15,995,789
Current Liabilities ......................      5,398,898              --       5,398,898
Total Liabilities ........................      5,560,822              --       5,560,822
Total Liabilities and Shareholders' Equity
   (Deficit) .............................   $  1,034,060    $ 14,961,729    $ 15,995,789
</TABLE>

                                      F-8


<PAGE>

NOTE  2 - RESTATEMENT (CONTINUED)

     The effect of the restatement on net sales, cost of sales, gross profit,
net loss, basic and diluted loss per common share, current assets, property and
equipment, total assets, current liabilities, total liabilities and total
liabilities and shareholders' deficit as of and for the six months ended
September 30, 2001 is as follows:
<TABLE>
<CAPTION>

                                                  AS ORIGINALLY    RESTATEMENT
                                                    REPORTED       ADJUSTMENTS     AS RESTATED
                                                  -------------   -------------   -------------
<S>                                               <C>             <C>             <C>
Net Sales .....................................   $    714,175    $         --    $    714,175
Cost of Sales .................................        274,725              --         274,725
Gross Profit ..................................        439,450              --         439,450
Net Loss ......................................     (3,243,373)     (1,309,454)     (4,552,827)
Loss Per Common Share:
   Basic ......................................          (0.08)          (0.03)          (0.11)
   Diluted ....................................          (0.08)          (0.03)          (0.11)
Current Assets ................................   $    601,481    $         --    $    601,481
Property and Equipment ........................      1,049,198       1,064,700       2,113,898
Goodwill ......................................             --      15,311,431      15,311,431
Total assets ..................................      1,661,682      16,376,131      18,037,813
Current Liabilities ...........................      3,919,148              --       3,919,148
Total Liabilities .............................      4,407,015              --       4,407,015
Total Liabilities and Shareholders' Equity
   (Deficit) ..................................   $  1,661,682    $ 16,376,131    $ 18,037,813
</TABLE>

NOTE 3 - DISPOSAL OF OPERATIONS

     Effective July 31, 2001, management of the Company formally decided to
start shutting down the operations of its Internet service provider,
SeeYouOnline. All assets and liabilities of SeeYouOnline were retained by the
Company. SeeYouOnline ceased providing Internet access services on August 15,
2001.

     Effective December 31, 2001, management of the Company formally decided to
start shutting down the operations of its application service provider ("ASP")
division. On February 14, 2002, the Company entered into an agreement (the
"Settlement Agreement") to settle all outstanding matters and terminate any
existing business between the Company and certain affiliates of the Company. As
part of the Settlement Agreement, effective February 14, 2002, the following
occurred:

          o    the Company transferred to an affiliate all rights in its ASP
               technology software which had a net book value of $723,378

          o    664,000 warrants issued on March 31, 2001 with an exercise price
               of $0.73 issued to the controlling shareholders of the affiliates
               were cancelled

          o    an affiliate and two significant shareholders of the Company
               forgave $260,206 of payables due from the Company, and the
               Company forgave $300,519 of receivables due from the affiliate

          o    notes payable in the amounts of $50,000 and $46,000 entered into
               in November 2001 between the Company and the controlling
               shareholders of the affiliates, respectively, remain payable and
               are to be paid off from proceeds from any future financing
               arrangements

          o    a $1,024,400 balance on the note payable due to an affiliate,
               issued to the Subsidiary on July 12, 2000 and refinanced on April
               2, 2001, and accrued expenses for two significant shareholders of
               the Company and an affiliate for $105,600 and $20,000,
               respectively, remain payable and are to be paid off from any
               future financing arrangements.

                                      F-9


<PAGE>

NOTE 3 - DISPOSAL OF OPERATIONS (CONTINUED)

     At September 30, 2002, net liabilities from discontinued activities
included accounts payable of $41,018 and a note payable to an affiliate of
$1,087,232.

     The results from discontinued operations for the ASP division and
SeeYouOnline for the six months ended September 30, 2001 included total revenues
of $471,412 and $220,521, respectively, and income(loss) from operations of
($103,064) and $203,391, respectively.

     At March 31, 2002, all activities relating to these two discontinued
divisions had ceased, and additional costs relating to these two divisions are
not expected to be incurred subsequent to March 31, 2002.

NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis of Presentation
     ---------------------

     The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America for
interim financial information and with the instructions to Form 10-QSB and
Regulation S-B.

NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Accordingly, they do not include all of the information and footnotes
required by accounting principles generally accepted in the United States of
America for complete financial statements. In the opinion of management, all
normal, recurring adjustments considered necessary for a fair presentation have
been included. The financial statements should be read in conjunction with the
audited financial statements and notes thereto included in the Company's Annual
Report on Form 10-KSB/A for the year ended March 31, 2002. The results of
operations for the six months ended September 30, 2002 are not necessarily
indicative of the results that may be expected for the year ended March 31,
2003.

     Going Concern
     -------------

     The Company has received a report from its independent auditors that
includes an explanatory paragraph describing the uncertainty as to the Company's
ability to continue as a going concern. These consolidated financial statements
contemplate the ability to continue as such and do not include any adjustments
that might result from this uncertainty.

     Revenue Recognition
     -------------------

     The Company recognizes revenues in accordance with the provisions of the
American Institute of Certified Public Accountants' Statement of Position 97-2,
"Software Revenue Recognition." The Company licenses its software products under
nonexclusive, nontransferable license agreements. For software arrangements that
require significant production, modification, or customization, the entire
arrangement is accounted for in conformity with Accounting Research Bulletin No.
45, "Long-term Construction-Type Contracts," using the relevant guidance
Statement of Position 81-1, "Accounting for Performance of Construction-Type
Contracts and Certain Production-Type Contracts," using the completed contract
method. Software arrangements are considered to be complete following departure
from the site after customization. For those arrangements that do not require
significant production, modification, or customization, revenue is recognized
when a license agreement has been signed, delivery of the software product has
occurred, the related fee is fixed or determinable, and collectibility is
probable.

     For license agreements that include a separately identifiable fee for
contracted maintenance services, such revenues are recognized on a straight-line
basis over the life of the maintenance agreement noted in the license agreement,
but following any installation period of the software.

                                      F-10


<PAGE>

NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Revenue Recognition (Continued)
     -------------------------------

     In December 1999, Securities and Exchange Commission ("SEC") Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements," was issued. SAB No. 101 provides the SEC staff's views in applying
accounting principles generally accepted in the United States of America to
selected revenue recognition issues, including software revenue recognition. The
Company adopted SAB No. 101 in the fourth quarter of the year ended March 31,
2002.

     Goodwill
     --------

     In July 2001, the FASB issued Statement of Financial Accounting Standards
No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets," which is effective
for fiscal years beginning after December 15, 2001. SFAS 142 prohibits the
amortization of goodwill and intangible assets with indefinite useful lives but
requires that these assets be reviewed for impairment at least annually or on an
interim basis if an event occurs or circumstances change that could indicate
that their value has diminished or been impaired. Other intangible assets will
continue to be amortized over their estimated useful lives. The Company
evaluates the remaining useful lives of these intangibles on an annual basis to
determine whether events or circumstances warrant a revision to the remaining
period of amortization. Pursuant to SFAS 142, amortization of goodwill recorded
in business combinations prior to June 30, 2001 ceased effective March 31, 2002.
Goodwill resulting from business combinations completed after June 30, 2001 will
not be amortized.

     The Company will test goodwill and intangible assets with indefinite lives
for impairment during the fiscal year beginning April 1, 2002 and any resulting
impairment charge will be reflected as a cumulative effect of a change in
accounting principle. Under SFAS 142, the Company is required to screen goodwill
for potential impairment by September 30, 2002 and measure the amount of
impairment, if any, by March 31, 2003.

     The following table reconciles net loss and loss per share as reported for
the three and six months ended September 30, 2002 and 2001 to net loss and loss
per share as adjusted to exclude amortization expense, net of taxes, related to
goodwill that is no longer being amortized:
<TABLE>
<CAPTION>

                                            For the three months ended      For the six months ended
                                                  September 30,                    September 30,
                                              2002            2001             2002             2001
                                          ------------   --------------   --------------   --------------
<S>                                       <C>            <C>              <C>              <C>
Reported net loss, before
   extraordinary item .................   $  (849,395)   $  (1,271,091)   $  (1,434,647)   $  (4,817,525)
Reported net loss .....................      (849,395)      (1,271,091)      (1,434,647)      (4,817,525
Add back: Goodwill amortization .......            --          588,901               --        1,177,802
Adjusted net loss ....................    $  (849,395)   $    (682,190)   $  (1,434,647)   $  (3,639,723)
Basic loss per share
   Reported net loss before
     extraordinary item ...............   $     (0.01)   $       (0.03)   $       (0.03)   $       (0.11)
   Reported net loss ..................         (0.01)           (0.03)           (0.03)           (0.11)
   Add back:  goodwill amortization ...            --            (0.02)              --            (0.03)
   Adjusted net loss ..................   $     (0.01)   $       (0.01)   $       (0.03)   $       (0.08)
Diluted loss per share
   Reported net loss before
     extraordinary item ...............   $     (0.01)   $       (0.03)   $       (0.03)   $       (0.11)
   Reported net loss ..................         (0.01)           (0.03)           (0.03)           (0.11)
   Add back goodwill amortization .....            --            (0.02)              --            (0.03)
   Adjusted net loss ..................         (0.01)           (0.01)           (0.03)           (0.08)
</TABLE>

                                      F-11


<PAGE>

NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Reclassifications
     -----------------

     Certain amounts in the September 30, 2001 statement of operations have been
reclassified to conform with the current period presentation. Such
reclassifications did not have any effect on the reported net loss.

     Loss per Share
     --------------

     The Company calculates loss per share in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings per Share." Basic loss per
share is computed by dividing the loss available to common shareholders by the
weighted-average number of common shares outstanding. Diluted loss per share is
computed similar to basic loss per share except that the denominator is
increased to include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the additional
common shares were dilutive.

     The following potential common shares have been excluded from the
computation of diluted net loss per share for the periods presented because the
effect would have been anti-dilutive:
<TABLE>
<CAPTION>

                                                                                         For the Six Months Ended
                                                                                               September 30,
                                                                                      --------------------------------
                                                                                          2002               2001
                                                                                      -------------      -------------
<S>                                                                                      <C>                <C>
Options outstanding under the Company's stock option plans                               2,222,500          2,960,000
Options granted outside the Company's stock option plans                                 1,050,250          1,050,250
Warrants issued in conjunction with convertible Series B preferred stock                   629,666            629,666
Warrants issued in conjunction with private placements                                     531,500            531,500
Warrants issued as a financing cost for notes payable and convertible notes payable      3,527,185          2,515,000
Warrants issued in conjunction with lock-up agreements                                     729,759            729,759
Warrants issued for services rendered                                                    1,742,000          1,661,500
Warrants issued as part of the acquisition of US Dataworks, a Delaware corporation         336,000          1,000,000
Convertible Series A preferred stock                                                       640,000            640,000
Convertible Series B preferred stock                                                       629,666            629,666
</TABLE>

     Concentrations of Credit Risk
     -----------------------------

     The Company sells its products throughout the United States and extends
credit to its customers. It also performs ongoing credit evaluations of such
customers. The Company does not obtain collateral to secure its accounts
receivable. The Company evaluates its accounts receivable on a regular basis for
collectibility and provides for an allowance for potential credit losses as
deemed necessary.

     One strategic partner of the Company accounted for 55% of the Company's net
sales for the six months ended September 30, 2002. At September 30, 2002,
amounts due from this strategic partner was 67% of accounts receivable.

                                      F-12


<PAGE>

NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Recently Issued Accounting Pronouncement
     ----------------------------------------

     In June 2002, the Financial Accounting Standards Board issued SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities." This
statement addresses financial accounting and reporting for costs associated with
exit or disposal activities and nullifies Emerging Issues Task Force ("EITF")
Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." This statement requires that a liability for a cost associated
with an exit or disposal activity be recognized when the liability is incurred.
Under EITF Issue 94-3, a liability for an exit cost, as defined, was recognized
at the date of an entity's commitment to an exit plan. The provisions of this
statement are effective for exit or disposal activities that are initiated after
December 31, 2002 with earlier application encouraged. The Company does not
expect adoption of SFAS No. 146 to have a material impact, if any, on its
financial position or results of operations.

     In October 2002, the FASB issued SFAS No. 147, "Acquisitions of Certain
Financial Institutions." SFAS No. 147 removes the requirement in SFAS No. 72 and
Interpretation 9 thereto, to recognize and amortize any excess of the fair value
of liabilities assumed over the fair value of tangible and identifiable
intangible assets acquired as an unidentifiable intangible asset. This statement
requires that those transactions be accounted for in accordance with SFAS No.
141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." In addition, this statement amends SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," to include certain financial
institution-related intangible assets. This statement is not applicable to the
Company.

NOTE 5 - PROPERTY AND EQUIPMENT

     Property and equipment at September 30, 2002 consisted of the following:

       Furniture and fixtures                                  $      76,536
       Telephone equipment                                            91,017
       Computer equipment                                            135,261
       Computer software                                           1,183,000
       Leasehold improvements                                         13,517
                                                               --------------
                                                                   1,499,331
       Less accumulated depreciation and amortization                530,919
                                                               --------------
       TOTAL                                                   $     968,412
                                                               ==============

     Depreciation and amortization expense for the six months ended September
30, 2002 and 2001 was $153,640 and $384,375, respectively. For the six months
ended September 30, 2001, $53,156 of depreciation and amortization expense was
related to discontinued operations.

                                      F-13


<PAGE>

NOTE 6 - NOTES PAYABLE

     Notes payable at September 30, 2002 consisted of the following:

         Notes payable, interest at 6% per annum, unsecured,
            due in February 2003.                                   $    76,769
         Notes payable, interest at 10% per annum, unsecured,
            due in May 2002 through March 2003.                          10,000
         Notes payable, interest at 12% per annum, unsecured,
            due in April 2002 through January 2003.                      75,000
         Notes payable, interest at 10% per annum, unsecured,
            due in April and August 2003.                                35,000
                                                                   -------------
                                                                        196,769
         Less current portion                                           196,769
                                                                   -------------
         Long-term portion                                         $         --
                                                                   =============

     On July 1, 2000, the Company entered into a note payable agreement for
$52,500. The note is for a 20-month term and bears interest at 10% per annum.
Principal and interest are due monthly. As of March 31, 2002, the balance on the
note payable was $4,785. In May 2002, the outstanding balance on the note was
paid in full.

     During the period October 30, 2001 through January 28, 2002, the Company
entered into Subscription Agreements to issue certain units in exchange for
gross proceeds of $125,000. The first unit was for $50,000 and consisted of a
promissory note, a warrant to purchase 2,500 shares of the Company's common
stock, and 18,750 shares of the Company's common stock. The second unit was for
$15,000 and consisted of a promissory note, a warrant to purchase 1,500 shares
of the Company's common stock, and 11,250 shares of the Company's common stock.
Six other units were each for $10,000, and each unit consisted of a promissory
note, a warrant to purchase 1,000 shares of the Company's common stock, and
7,500 shares of the Company's common stock. The $50,000 promissory note is for a
six-month term, the $15,000 promissory note is for a one-year term, and the
$10,000 promissory notes are for a term of one year. All of the notes bear
interest at 12% per annum and are unsecured. In May 2002, the Company repaid
$25,000 on the $50,000 promissory note. The remaining $25,000 was repaid in
August 2002.

     In April 2002, the Company entered into Subscription Agreements for gross
proceeds of $30,000. Each of the three $10,000 units consisted of a promissory
note and a warrant to purchase 1,000 shares of the Company's common stock. The
promissory notes are for a term of one year, bear interest at 10% per annum, and
are unsecured. Each warrant vests immediately and entitles the holder to
purchase one share of the Company's common stock at $0.40 per share and expires
three years from the date of issuance. The amount to be allocated to the
warrants as a debt discount was determined to be immaterial.

     In August 2002, the Company entered into Subscription Agreements for gross
proceeds of $5,000. The $5,000 unit consisted of a promissory note and a warrant
to purchase 250 shares of the Company's common stock. The promissory notes are
for a term of one year, bear interest at 10% per annum, and are unsecured. Each
warrant vests immediately and entitles the holder to purchase one share of the
Company's common stock at $0.20 per share and expires three years from the date
of issuance. The amount to be allocated to the warrants as a debt discount was
determined to be immaterial.

     In July 2002, the Company entered into a loan agreement to finance an
insurance policy. The amount financed was $132,010 at 6% per annum, due in nine
monthly installments of principal and interest totaling $15,353. The principal
balance at September 30, 2002 was $76,769.

                                      F-14


<PAGE>

NOTE 7 - NOTES PAYABLE - RELATED PARTIES

     On November 1 and November 28, 2001, the Company entered into note
agreements with a shareholder and an affiliate for $50,000 and $46,000,
respectively. The notes bear interest at 5% per annum, are unsecured, and are
due upon demand. During May 2002, the principal was repaid, and the interest
accrued was forgiven by the note holders.

     During the six months ended September 30, 2002, the Company entered into
four separate note agreements totaling $390,000 with the Company's Chief
Executive Officer. The note proceeds were used to fund the Company's business
operations. The notes bear interest at 12% per annum, are unsecured, and are due
upon demand.

NOTE 8 - CONVERTIBLE PROMISSORY NOTES

     On May 7, 2002 through August 26, 2002, the Company entered into
Subscription Agreements in exchange for gross proceeds of $627,500. The units
issued consisted of 39 convertible promissory notes and warrants to purchase
367,750 shares of the Company's common stock. The holders of thirty-seven of the
promissory notes for a total of $487,500 have the option to convert the notes at
any time after 31 days following the issuance date of the note. The holders of
two of the promissory notes for a total of $140,000 have the option to convert
the notes at any time after 91 days following the issuance date of the note.

     The Company has the option to redeem $487,500 of the notes at any time
prior to the notes' maturity date at 105% of the face value of the note, plus
accrued interest, if any, at any time prior to the maturity date. The notes are
convertible at 80% of the average closing price for the 20 trading days
immediately preceding the conversion date, but not less than $0.20 per share
(for $10,000 of the notes) or $0.15 per share (for $160,000 of the notes) or
$0.12 per share (for $229,500 of the notes) or $0.10 per share (for $88,000 of
the notes). The notes earn interest at 10% per annum, the principal and any
unpaid interest are due one year following the issuance date of the note, and
interest is payable in cash on June 1, 2002, September 1, 2002, December 1,
2002, and March 1, 2003.

     The Company has the option to redeem $140,000 of the notes at any time
prior to the notes' maturity date at 110% of the face value of the notes if the
notes are redeemed within 90 days of the issuance date of the notes, or at 105%
of the face value of the notes if the notes are redeemed more than 90 days from
the issuance date of the notes. The notes are convertible at 80% of the average
closing price for the 20 trading days immediately preceding the conversion date,
but not less than $0.13 per share. The notes earn interest at 10% per annum, the
principal and any unpaid interest are due one year following the issuance date
of the notes, and interest is payable in cash on September 1, 2002, December 1,
2002, and March 1, 2003.

     The warrants to purchase 367,750 shares of the Company's common stock are
exercisable at prices ranging from $0.10 to $0.23 per share and expire three
years from the date of issuance.

     The Company allocates the proceeds received from debt or convertible debt
with detachable warrants or shares of common stock using the relative fair value
of the individual elements at the time of issuance. The amount allocated to the
beneficial conversion features and recorded as interest expense was calculated
as $199,882. The amount allocated to the warrants as a debt discount was
calculated at $36,161 and will be recognized as interest expense over the period
until the notes mature. In the event the debt is settled prior to the maturity
date, an expense will be recognized based on the difference between the carrying
amount and the amount of the payment. During the six months ended September 30,
2002, the Company recognized $10,291 in interest expense related to the
accretion of the debt discount on the warrants.

     On January 17 and January 26, 2000, the Company entered into a Subscription
Agreement for two, 10% Convertible Promissory Notes (the "January Notes") for
$100,000 and $150,000, respectively, with a director of the Company. The holder
of the January Notes has the option to convert the January Notes at any time
after the closing date of the January Notes. The January Notes are convertible
at the lesser of $2.50 or 75% of the average closing bid price of the Company's
common stock for the five trading days prior to conversion.

                                      F-15


<PAGE>

NOTE 8 - CONVERTIBLE PROMISSORY NOTES (CONTINUED)

     The Company recorded a financing charge of $169,374, representing the
difference between the $2.50 exercise price of the January Notes and the
Company's stock price of $4.20 and $4.19 on the respective issuance dates.
Interest is due on the January Notes on April 1 and October 1. Principal and any
unpaid interest are due on February 28, 2002, if the January Notes have not been
converted prior to such date by either party to the January Notes.

     On May 9, 2002, the note holder resigned as a director. On August 13, 2002,
the Company settled with the note holder for $299,800, representing the
principal of $250,000 plus accrued interest to the settlement date of $49,800,
plus 10% interest on the settlement amount, with the settlement amount to be
paid over 12 months from the settlement date.

NOTE 9 - COMMITMENTS AND CONTINGENCIES

     Litigation
     ----------

     On July 19, 2002, an individual and former director of US Dataworks, H. J.
Frazier, filed a lawsuit against US Dataworks in Los Angeles Superior Court
alleging breach of debenture agreement. In the complaint, the plaintiff prays
for damages in the amount of $275,000, plus prejudgment interest and cost of
suit. US Dataworks and Mr. Frazier have reached a settlement pursuant to which
US Dataworks will make monthly payments in the amount of $23,800 per month until
March 1, 2003. On March 1, 2003, US Dataworks has the option to pay the
remaining balance or to make monthly payments in the amount of $26,167 through
August 1, 2003. US Dataworks also agreed to pay Mr. Frazier's attorney's fees
and costs, up to a maximum of $5,000, and reimburse Mr. Frazier for the cost of
the suit. Upon payment in full, Mr. Frazier will dismiss the lawsuit with
prejudice. As of September 30, 2002, the Company has made timely payments and is
current regarding this agreement.

NOTE 10 - SHAREHOLDERS' DEFICIT

     Convertible Series A Preferred Stock
     ------------------------------------

     At September 30, 2002, there were dividends in arrears of $361,356, or
$0.56 per share.

     Convertible Series B Preferred Stock
     ------------------------------------

     At September 30, 2002, there were dividends in arrears of $24,069, or $0.04
per share.

     Payment of Dividends
     --------------------

     On May 24, 2001 and June 4, 2001, the Company declared and paid dividends
of $120,000 and $120,000, respectively, on the Company's Series A preferred
stock. On April 18, 2001, the Company declared and paid dividends of $24,698 on
the Company's Series B preferred stock.

     Common Stock and Warrants
     -------------------------

     During the six months ended September 30, 2002, the Company completed the
following:

          o    In April and May 2002, issued 1,424,259 shares of common stock
               that it had committed to issue during the year ended March 31,
               2002.

          o    In April 2002, issued 10,000 shares of common stock as a
               litigation settlement.

          o    In May 2002, issued 6,250 warrants as payment for services
               rendered valued at $1,875, which was the fair market value of the
               services rendered.

                                      F-16


<PAGE>

NOTE 10 - SHAREHOLDERS' DEFICIT (CONTINUED)

     Common Stock and Warrants (Continued)
     -------------------------------------

          o    In May 2002, issued 74,300 shares of common stock as part of a
               financing agreement that ended March 31, 2002. As of March 31,
               2002, there was a subscription receivable of $21,010 that was
               subsequently written off because the Company determined it to be
               uncollectible.

          o    In June 2002, issued 6,250 shares of common stock in exchange for
               proceeds of $1,500 upon the exercise of warrants.

          o    In July and August 2002, $157,500 of convertible promissory notes
               were converted into 1,359,167 shares of common stock. At
               September 30, 2002, the stock certificates had not been issued
               and therefore the full amount is included in common stock
               committed.

     Common Stock for Services Rendered
     ----------------------------------

     During the six months ended September 30, 2002, the Company completed the
following:

          o    In May 2002, the Company issued 108,750 shares of common stock as
               payment for services rendered valued at $40,865, which was the
               fair market value of the services rendered.

          o    In June 2002, the Company issued 525,000 shares of common stock
               for services rendered valued at $99,750, which was the fair
               market value of the services rendered.

     Common Stock for Lock-Up Agreements
     -----------------------------------

     In May 2002, the Company issued 1,740 shares of common stock valued at
$400. This stock was issued to certain purchasers of the Company's common stock
as consideration for the purchasers to enter into lock-up agreements for the
sale of their shares of common stock for a period of one year. The cost of the
issuance of the shares was recognized as a financing cost in the statement of
operations.

     Common Stock and Warrants as a Financing Cost

     On July 17, 2002, the Company issued 5,137 shares of common stock and
warrants to purchase 685 shares of common stock to a note holder as compensation
for the note holder to extend the maturity date of $25,000 of the holder's
$50,000 promissory note with the Company. This note was paid in full in August
2002.

NOTE 11 - RELATED PARTY TRANSACTIONS

     During the six months ended September 30, 2002, the Company paid rent
expense totaling $3,000 to an affiliated company, which is owned by significant
shareholders of the Company.

NOTE 12 - SUBSEQUENT EVENTS

     Termination of Agreement
     ------------------------

     On October 31, 2002, the Company entered into a mutual settlement agreement
with Checkfree Corporation terminating its strategic alliance. Under the terms
of the agreement the Company will continue to service customers on existing
contracts. As of November 18, 2002, all outstanding balances due from Checkfree
have been collected.

                                      F-17


<PAGE>

NOTE 12 - SUBSEQUENT EVENTS (CONTINUED)

     Signing of Resellers Agreement
     ------------------------------

     On November 13, 2002, the Company formed a strategic alliance with BancTec.
BancTec will be reselling our products over the next five years. The Company
anticipates this agreement will increase its revenues during future quarters.

     Backlog
     -------

     Subsequent to September 30, 2002, the Company signed various contracts with
major retailers and banks resulting in a backlog of $1.1 million in license and
systems integration fees, the majority of software under such contracts will be
installed by December 31, 2002.

                                      F-18


<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

     The following discussion and analysis of our financial condition and
results of operations should be read with the unaudited consolidated financial
statements and related notes included elsewhere in this Report.

     When used in this Report, the words "expects," "anticipates," "believes,"
"plans," "will" and similar expressions are intended to identify forward-looking
statements. These are statements that relate to future periods and include, but
are not limited to, statements as to statements regarding our critical
accounting policies, adequacy of cash, expectations regarding net losses and
cash flow, statements regarding our growth and profitability, our revenues,
investments in marketing and promotion, our need for future financing, our
dependence on personnel and our ability to respond to rapid technological
change. Forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
projected. These risks and uncertainties include, but are not limited to, those
discussed below, as well as risks related to our ability to develop and timely
introduce products that address market demand, our ability to maintain our
strategic alliances, the impact of alternative technological advances and
competitive products, market fluctuations, our ability to obtain future
financing, and the risks set forth below under "Factors that May Affect Our
Results." These forward-looking statements speak only as of the date hereof. US
Dataworks expressly disclaims any obligation or undertaking to release publicly
any updates or revisions to any forward-looking statements contained herein to
reflect any change in the our expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is based.

     All references to "US Dataworks," "we," "us" or "our" means US Dataworks,
Inc.

     MICRworks, Returnworks, Remitworks and Remoteworks are trademarks of US
Dataworks. Other trademarks referenced herein are the property of their
respective owners.

OVERVIEW

     US Dataworks is a developer of electronic check processing software,
serving several of the top banking institutions, credit card issuers, and the
United States Government. We generate revenue from the licensing, system
integration and maintenance of our core products: MICRworks, Returnworks,
Remitworks and Remoteworks for the financial services industry. The software
developed by us is designed to enable organizations to transition from
traditional paper-based payment and billing processes to electronic solutions.
US Dataworks' products include check processing, point-of-purchase transactions
and turnkey Automated Clearing House, or ACH, payments. Our products are
designed to provide organizations with an in-house solution that will complement
such organizations' existing technologies and systems. US Dataworks' strategy is
to identify, design and develop products that fill specific niches in the
financial transaction processing industry.

     On September 25, 2002, the Company's stockholders elected a new board of
directors consisting of Joe Abrell and John L. Nicholson, M.D. as Class I
directors, Hayden D. Watson and Thomas L. West, Jr. as Class II directors, and
Charles E. Ramey and Terry Stepanik as Class III Directors. Following the
Stockholders' meeting, the board of directors appointed Terry Stepanik as the
Company's Interim Chief Financial Officer.

     On October 31, 2002, the Company entered into a mutual settlement agreement
with Checkfree Corporation terminating its strategic alliance with Checkfree.
Under the terms of the agreement the Company will continue to receive revenues
generated under the contracts entered into with the customers established
through its alliance with Checkfree.

     On November 13, 2002, the Company formed a strategic alliance with BancTec,
Inc., which the Company anticipates will increase its revenues during future
quarters.

CRITICAL ACCOUNTING POLICIES

     The discussion and analysis of our financial condition and results of
operations is based upon our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent assets and

                                       1


<PAGE>

liabilities. On an on-going basis, we evaluate these estimates, including
those related to revenue recognition and concentration of credit risk. We
base our estimates on historical experience and on various other assumptions
that we believe to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions.

     We believe that of the significant accounting policies used in the
preparation of our consolidated financial statements (see Note 4 to the
Consolidated Financial Statements), the following are critical accounting
policies, which may involve a higher degree of judgment, complexity and
estimates.

     REVENUE RECOGNITION

     We license our software products under non-exclusive, non-transferable
license agreements. For license agreements that require significant production
or modification, we do not recognize revenue until we have completed the work
under the agreement. For those license agreements that do not require
significant production or modification, we recognize revenue when the license
agreement has been signed, delivery of the software product has occurred, the
related fee is fixed or determinable and collectibility is probable. If the
license agreement includes a separate fee for maintenance services, we recognize
revenue ratably over the term of the agreement.

     CONCENTRATIONS OF CREDIT RISK

     We extend credit to our customers and perform ongoing credit evaluations of
our customers. We do not obtain collateral from our customers to secure our
accounts receivables. We evaluate our accounts receivable on a regular basis for
collectibility and provide for an allowance for potential credit losses as
deemed necessary.

RESULTS OF OPERATIONS

     The results of operations reflected in this discussion include the
operations of US Dataworks for the three months and six months ended September
30, 2002 and 2001. The acquisition agreement between US Dataworks (then
Sonicport, Inc.) and US Dataworks, Inc., a Delaware corporation, was signed on
March 31, 2001, with an effective date of April 2, 2001. Balance sheet
information, as well as revenue and expenses, are affected by this consolidation
and it is important to understand this when viewing the overall results.

     REVENUE

     Revenue decreased by $122,751 or 28% to $317,647 for the three months ended
September 30, 2002 from $440,398 for the three months ended September 30, 2001.
The decrease in revenue was primarily attributable to a decrease in the number
of license agreements we entered into in the three months ended September 30,
2002. Revenue increased by $376,603 or 53% to $1,090,778 for the six months
ended September 30, 2002 from $714,175 for the six months ended September 30,
2001. This increase is due to the Company's focus on its continuing operations
in 2002 resulting in an increased number of license agreements being sold.
Subsequent to September 30, 2002, the Company signed various contracts with
major retailers and banks resulting in a backlog of $1.1 million in license and
systems integration fees, the majority of software under such contracts will be
installed by December 31, 2002.

     COST OF SALES

     Cost of sales increased by $53,716 or 33% to $218,595 for the three months
ended September 30, 2002 from $164,879 for the three months ended September 30,
2001. The increase was primarily attributable to an increase in labor related
costs. Cost of sales increased by $113,197 or 41% to $387,922 for the six months
ended September 30, 2002 from $274,725 for the six months ended September 30,
2001. The primary reason for this increase was also due to labor related costs.

                                       2


<PAGE>

     OPERATING EXPENSES

     Total operating expenses decreased by $622,076 or 49% to $637,089 for the
three months ended September 30, 2002 from $1,259,165 for the three months ended
September 30, 2001. The decrease was primarily attributable to a $588,901
decrease in the amortization of goodwill. The Company ceased the periodic
amortization of goodwill as of March 31, 2002 (see Note 4 to the Financial
Statements). Total operating expenses decreased by $1,212,255 or 44% to
$1,560,725 for the six months ended September 30, 2002 from $2,772,980 for the
six months ended September 30, 2001. This decrease in operating expenses for the
six month period was also due to a $1,177,802 decrease in the amortization of
goodwill.

     OTHER EXPENSES

     Other expenses, including interest expense and financing costs, increased
during the three months ended September 30, 2002 primarily due to interest
charges on our convertible promissory notes in the form of fixed conversion
features and amounts allocated to warrants as a debt discount. Interest expense
increased by $44,820 or 21% to $258,776 for the three months ended September 30,
2002 from $213,956 for the three months ended September 30, 2001. Interest
expenses decreased by $1,671,578 or 77% to $509,006 for the six months ended
September 30, 2002 from $2,180,584 for the six months ended September 30, 2001.
This decrease is attributed to the type of convertible promissory notes issued
in 2001. During March through May 2001, we raised approximately $2.3 million
through the issuance of convertible promissory notes that had substantial
beneficial conversion features. These beneficial conversion features resulted in
interest expense of $2 million that was expensed in the three months ended June
30, 2001.

     DISCONTINUED OPERATIONS

     For the three months and six months ended September 30, 2002, we did not
recognize a gain or a loss on discontinued operations of our internet service
provider, or ISP, and application services provider, or ASP, divisions, as
compared to a gain of $8,820 and $100,327 for the three months and six months
ended September 30, 2001, respectively. In April 2001, we completed the
acquisition of US Dataworks, Inc., a Delaware corporation, a developer of
electronic check processing software. In August 2001, we ceased operations in
our ISP division due to the increased competition in the ISP market and the
resulting negative effect on our cash flow. In February 2002, we sold our ASP
technology software and ceased operations in our ASP division in order to focus
on our core business of software development.

     NET LOSS

     Net loss increased by $421,696 or 33% to a net loss of $849,395 for the
three months ended September 30, 2002 from $1,271,091 for the three months ended
September 30, 2001. Net loss decreased by $3,118,180 or 69% to a net loss of
$1,434,647 for the six months ended September 30, 2002 from $4,552,827 for the
six months ended September 30, 2001.

LIQUIDITY AND CAPITAL RESOURCES

     Cash and cash equivalents increased by $137,860 or 177% to $215,658 for the
six months ended September 30, 2002 from $77,798 for the six months ended
September 30, 2001. This increase was primarily due to an increase in proceeds
received from our financing activities. Cash used for operating activities was
$813,252 for the six months ended September 30, 2002, of which $69,245 was used
in discontinued operating activities, compared to $1,225,806 for the six months
ended September 30, 2001, of which $482,645 was used in discontinued operating
activities.

     Cash used for investment activities for the six months ended September 30,
2002 consisted of repayments to our affiliates and the purchase of property and
equipment totaling $82,176. Cash used for investment activities for six months
ended September 30, 2001 consisted of the purchase of property and equipment and
repayments to our affiliates totaling $59,360.

     Financing activities provided cash of $977,070 for the six months ended
September 30, 2002 and included the issuance of $627,500 in convertible
promissory notes, $390,000 proceeds from a related party, and $188,682 from the
issuance of promissory notes.

                                       3


<PAGE>

     Financing activities provided cash of $203,734 for the six months ended
September 30, 2001 and included the issuance of $10,000 in promissory notes,
$750,000 in convertible promissory notes and $304,654 from the sales of our
common stock.

FACTORS THAT MAY OUR AFFECT RESULTS

WE HAVE A GENERAL HISTORY OF LOSSES AND CANNOT ASSURE YOU THAT WE WILL OPERATE
PROFITABLY IN THE FUTURE.

     We have incurred losses for the last two fiscal years and expect that our
net losses and negative cash flow will continue for the foreseeable future. Our
auditors have included an explanatory paragraph in their Independent Auditor's
Report included in our audited financial statements for the years ended March
31, 2002 and 2001 filed with our annual report on Form 10-KSB for fiscal year
ended March 31, 2002, to the effect that our loss from operations for the year
ended March 31, 2002, and the accumulated deficit at March 31, 2002 raise
substantial doubt about our ability to continue as a going concern. We have
incurred significant losses in the last two years. As of September 30, 2002, our
accumulated deficit was $31,062,461. We believe that our planned growth and
profitability will depend in large part on our ability to continue to promote
our brand name and gain and expand clients for whom we would provide licensing
agreements and system integration. Accordingly, we intend to invest heavily in
marketing, strategic partnerships, development of our client base, and
development of our marketing technology and operating infrastructure.

WE WILL NEED TO RAISE ADDITIONAL CAPITAL IN THE NEXT SIX MONTHS.

     We believe we currently have adequate cash to fund anticipated cash needs
for at least the next six months. We will need to raise additional capital and
are actively pursuing various financing options. However, we may not be able to
raise additional funds on favorable terms or at all. If we are unable to acquire
additional capital or are required to raise it on terms that are less
satisfactory than we desire, it will have a material adverse effect on our
financial condition and our ability to continue to operate our business. If we
raise capital through additional equity financings, these financings may result
in dilution to existing shareholders.

OUR OPERATING RESULTS ARE SUBJECT TO FLUCTUATIONS CAUSED BY MANY FACTORS WHICH
COULD RESULT IN US DATAWORKS' FAILURE TO ACHIEVE ITS REVENUE OR PROFITABILITY
EXPECTATIONS.

     Our operating results can vary significantly depending upon a number
factors, many of which are outside our control. Factors that may affect our
quarterly operating results include:

          o    market acceptance of and changes in demand for our products and
               services;

          o    gain or loss of clients or strategic relationships;

          o    announcement or introduction of new software, services and
               products by us or by our competitors;

          o    our ability to build brand recognition;

          o    timing of sales to customers;

          o    price competition;

          o    our ability to upgrade and develop systems and infrastructure to
               accommodate growth;

          o    our ability to attract and integrate new personnel in a timely
               and effective manner;

          o    our ability to introduce and market products and services in
               accordance with market demand;

          o    changes in governmental regulation;

                                       4


<PAGE>

          o    reduction in or delay of capital spending by our clients due to
               the effects of terrorism, war and political instability; and

          o    general economic conditions, including economic conditions
               specific to the financial services industry.

     Most of our operating expenses are relatively fixed in the short-term. We
may be unable to adjust spending rapidly to compensate for any unexpected sales
shortfall, which could harm our quarterly operating results. Because of the
emerging nature of the markets in which we compete, we do not have the ability
to predict future operating results with any certainty. Because of the above
factors, you should not rely on period-to-period comparisons of results of
operation as an indication of future performances.

OUR BUSINESS IS DEPENDENT ON GENERAL ECONOMIC AND BUSINESS CONDITIONS.

     The revenue growth and profitability of our business depends on the overall
demand for computer software and services in the product segments in which we
compete. Because our sales are primarily to major banking and government
customers, our business also depends on general economic and business
conditions. A softening of demand caused by a weakening of the economy may
result in decreased revenue or lower growth rates.

WE MAY NOT BE ABLE TO ATTRACT, RETAIN OR INTEGRATE KEY PERSONNEL, WHICH MAY
PREVENT US FROM SUCCEEDING.

     We may not be able to retain our key personnel or attract other qualified
personnel in the future. Our success will depend upon the continued service of
key management personnel. The loss of services of any of the key members of our
management team or our failure to attract and retain other key personnel could
disrupt operations and have a negative effect on employee productivity and
morale and harm our financial results.

WE OPERATE IN A MARKET THAT IS INTENSELY AND INCREASINGLY COMPETITIVE.

     The market for financial services software is relatively new and highly
competitive. Our future success will depend on our ability to adapt to rapidly
changing technologies, evolving industry standards, product offerings and
evolving demands of the marketplace.

     Some of our competitors have longer operating histories, larger installed
customer bases, greater name recognition and longer relationships with clients
and significantly greater financial, technical, marketing and public relations
resources than US Dataworks. Our competitors may also be better positioned to
address technological and market developments or may react more favorably to
technological changes. We compete on the basis of a number of factors, including
the breadth and quality of services, creative design and systems engineering
expertise, pricing, and technological innovation and understanding clients'
strategies and needs. Competitors may develop or offer strategic services that
provide significant technological, creative, performance, price or other
advantages over the services offered by US Dataworks. If we fail to gain market
share or lose existing market share, our financial condition, operating results
and business could be adversely affected and the value of the investment in us
could be reduced significantly. We may not have the financial resources,
technical expertise or marketing, distribution or support capabilities to
compete successfully.

OUR PRINCIPAL STOCKHOLDERS, EXECUTIVE OFFICERS AND DIRECTORS HAVE SIGNIFICANT
VOTING POWER AND MAY TAKE ACTIONS THAT MAY NOT BE IN THE BEST INTEREST OF OUR
OTHER STOCKHOLDERS.

     Our principal stockholders, executive officers, directors and their
affiliates, in the aggregate, own more than 40% of our outstanding common stock.
These stockholders, if they act together, will be able to control our management
and affairs and all matters requiring shareholder approval, including the
election and removal of directors and approval of significant corporate
transactions. This influence over our affairs might be adverse to the interest
of our other stockholders. In addition, this concentration of ownership may
delay or prevent a change in control and might have an adverse effect on the
market price of our common stock.

                                       5


<PAGE>

FUTURE SALES OF OUR COMMON STOCK MAY CAUSE THE MARKET PRICE OF OUR COMMON STOCK
TO DECLINE.

     As of September 30, 2002, there were 56,803,171 shares of common stock
outstanding, of which approximately 45,000,000 are restricted securities under
the Securities Act, a majority of which are held by affiliates of US Dataworks.
These restricted securities will be eligible for sale from time to time upon
expiration of applicable holding periods under Rule 144 under the Securities
Act. If these holders sell in the public market, these sales could cause the
market price of our common stock to decline. This also could make it more
difficult for us to raise funds through future offerings of our common stock.

OUR ABILITY TO PROTECT OUR INTELLECTUAL PROPERTY MAY HINDER OUR ABILITY TO
COMPETE.

     We rely on a combination of patent, trademark, trade secrets,
confidentiality procedures and contractual procedures to protect our
intellectual property rights. If we are unable to adequately protect our
intellectual property, our business may suffer from the piracy of our technology
and the associated loss in revenue. Any patents that we may hold may not
sufficiently protect our intellectual property and may be challenged by third
parties. Our efforts to protect our intellectual property rights, may not
prevent the misappropriation of our intellectual property. Other parties may
also independently develop similar or competing products that do not infringe
upon our intellectual property rights. These infringement claims or any future
claims could cause us to spend significant time and money to defend our
products, redesign our products or develop or license a substitute technology.
We may be unsuccessful in acquiring or developing substitute technology and any
required license may be unavailable on commercially reasonable terms, if at all.
In the event of litigation to determine the validity of any third party claims
or claims by us against such third party, such litigation, whether or not
determined in our favor, could result in significant expense and divert the
efforts of our technical and management personnel, regardless of the outcome of
such litigation.

                          PART II - OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits:

     The exhibit listed below is required by Item 601 of Regulation S-B.

         EXHIBIT
          NUMBER                     DESCRIPTION OF DOCUMENT
          ------                     -----------------------

          99.1           Statement of Chief Executive Officer and Chief
                         Financial Officer under 18 U.S.C. ss. 1350.

     (b) Reports on Form 8-K.

     The Company did not file any reports on Form 8-K with the Securities and
Exchange Commission during the three months ended September 30, 2002.

                                       6


<PAGE>

                                    SIGNATURE

     In accordance with the requirements of the Exchange Act, the registrant
caused this amendment to report to be signed on its behalf by the undersigned,
thereunto duly authorized.

     Dated:  June 10, 2003

                                 US DATAWORKS, INC.

                                 By /s/ John S. Reiland
                                    --------------------------------------------
                                    John S. Reiland
                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)



<PAGE>

CERTIFICATIONS
--------------

I, Charles E. Ramey, certify that:

1. I have reviewed this quarterly report on Form 10-QSB/A, Amendment No. 1 to
Form 10-QSB, of US Dataworks, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

     b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

     c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

     a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

     b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Dated: June 10, 2003

                                                  /s/ Charles E. Ramey
                                                  ------------------------------
                                                  Charles E. Ramey
                                                  Chief Executive Officer



<PAGE>

I, John S. Reiland, certify that:

1. I have reviewed this quarterly report on Form 10-QSB/A, Amendment No. 1 to
Form 10-QSB, of US Dataworks, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

     b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

     c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

     a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

     b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Dated: June 10, 2003

                                                  /s/ John S. Reiland
                                                  ------------------------------
                                                  John S. Reiland
                                                  Chief Financial Officer



<PAGE>

                                  EXHIBIT INDEX

    EXHIBIT
    NUMBER                          DESCRIPTION OF DOCUMENT
    ------                          -----------------------

     99.1           Statement of Chief Executive Officer and Chief Financial
                    Officer under 18 U.S.C. ss. 1350.