September 30, 2002

News Release: U.S. Wireless Data Reports 105% Revenue Growth in Fiscal 2002

U.S. Wireless Data, Inc. (USWD) (OTC: USWE), the leader in wireless transaction processing, today released operating results for the twelve months ended June 30, 2002. The Company reported a 105% increase in revenue from ongoing operations and substantial progress in the growth and development of its core wireless business. "Our key operating metrics continue to improve," said Chairman and CEO Dean M. Leavitt. "We have refocused the business on our wireless Synapse(SM) platform, which has allowed us to further reduce costs. Our burn rate continues to decline, and is now less than $2.0 million per quarter and dropping further. In addition, the sale of the operations of our NXT subsidiary has provided cash needed to help fund our growth for the next year in a non-dilutive manner. We are very excited about the future of this company, and the many wireless data applications that we are building."

Revenue

USWD had record revenues for the twelve months ended June 30, 2002 of $2.52 million, as compared to $1.23 million for the fiscal year 2001. This represents a 105% improvement from the prior year and is attributable to significant increases in all revenue categories including activation fees, monthly fees and transaction fees, all of which are discussed in more detail below.

These amounts do not include revenues from USWD's former subsidiary, NXT Corporation, the operations of which were sold in August 2002 for $5 million in cash. In accordance with generally accepted accounting principles ("GAAP"), NXT's financial results are classified as discontinued operations.

- Activation fees

Revenue from activation fees, which is generated from activations of new sites added through our proprietary Synapse Service, for the year ended June 30, 2002 was $313,000, a $171,000 or 120% increase as compared to the prior fiscal year.

- Monthly fees

Revenue from recurring monthly fees, which is generated from the number of active sites that can process transactions through our Synapse Service, was $1,462,000 for the year ended June 30, 2002, an $810,000 or 124% increase as compared to the prior fiscal year.

- Transaction fees

Revenue from transaction fees for the twelve months ended June 30, 2002 was $154,000, compared to $83,000 during the prior fiscal year, a $71,000 or 86% increase. Total transactions for the twelve months ended June 30, 2002 were 5.2 million, compared to 2.4 million for the prior fiscal year, an increase of over 2.8 million transactions or 122%.

- Product sales

Revenue from product sales is primarily derived from the sale of our proprietary wireless conversion devices, the Synapse Adapter and the Synapse Enabler. Product sales revenue increased for the twelve months ended June 30, 2002 to $570,000 from $349,000 during the prior fiscal year, a $221,000 or 63% increase.

Gross Profit

Total gross profit for the twelve months ended June 30, 2002 was $1,228,000, compared to a gross profit of $521,000 in fiscal year 2001, a $707,000 or 136% increase. Gross profit from services for the twelve months ended June 30, 2002 was $1,127,000, compared to $382,000 for the prior fiscal year, a 195% increase. This improvement was primarily due to volume increases in new activations of Synapse services and the growth in the number of active sites. Gross profit from product sales for the twelve months ended June 30, 2002 was $101,000, compared to $139,000 for the prior fiscal year, a 27% decrease. Eliminating the effect of an inventory adjustment recorded in the year ended June 30, 2001, gross profit from product sales for the twelve months ended June 30, 2002 increased 46% compared to the prior fiscal year due to volume increases in product sales.

Gross Margin

Total gross margin (gross profit as a percentage of total revenues) for the twelve months ended June 30, 2002 increased to 48.7% from 42.3% for the prior fiscal year. This improvement is attributable to the greater percentage of revenue related to services and a decrease in cost of revenues related to lower carrier costs.

Gross margin from services was 57.8% for the twelve months ended June 30, 2002 compared to 43.3% for the prior fiscal year. This improvement is primarily attributed to the growth in higher margin recurring monthly fees due to the growth in the number of active sites. The mix of rates charged to our clients and a decrease in cost of revenues related to lower carrier costs also contributed to the expansion of gross margin from services.

Gross margin from product sales was 17.7% for the twelve months ended June 30, 2002 compared to 39.8% for the prior fiscal year. The decrease is primarily attributed to an inventory adjustment recorded in the year ended June 30, 2001 and a larger mix of Synapse Enablers for vending, which have a lower margin than our standard equipment selling prices. We expect the margins on the Synapse Enablers for vending to increase as additional units are deployed allowing us to benefit from cost reductions based on volume manufacturing.

Net Loss/EBITDA/Cash Position

For the full year 2002, the net loss totaled $25.55 million or $1.92 per share, as compared to a net loss of $19.26 million or $1.88 per share, for the prior fiscal year. The net loss for the 2002 fiscal year includes various one-time, non-cash adjustments including a goodwill and intangible asset impairment charge of $5.7 million, an inventory writedown of $3.5 million against our inventory of Synapse Adapters, and a reduction of the restructuring accrual by $0.7 million.

EBITDA is presented because it is a widely accepted indicator of funds available to service debt, although it is not a measure of liquidity or of financial performance under accounting principles generally accepted in the United States of America. The EBITDA presented may not be comparable to similarly titled measures reported by other companies. We believe that EBITDA, while providing useful information, should not be considered in isolation or as an alternative to net income or cash flows as determined under GAAP. As an internal measure of operating performance, the company uses an adjusted version of EBITDA, which is net loss excluding interest, other income, taxes, depreciation and amortization, and certain other nonrecurring items. Adjusted EBITDA loss for fiscal 2002 was $9.8 million or $0.74 per share as compared to $13.5 million or $1.32 per share in 2001, an improvement of $3.7 million or approximately 28%.

As of June 30, 2002, the monthly adjusted EBITDA loss was averaging approximately $0.8 million. This compares with a monthly adjusted EBITDA loss in excess of $1.1 million at the end of fiscal 2001. Adjusted EBITDA is expected to continue to improve as revenue growth and further cost reductions are realized in future quarters. We currently anticipate that the monthly adjusted EBITDA loss will approach $0.5 million by December 2002 and that we will achieve a breakeven point in the second half of calendar 2003.

At June 30, 2002, we had $2.86 million in cash and cash equivalents. At August 31, 2002, cash and cash equivalents aggregated approximately $1.91 million. In September 2002, we received a cash payment of $5 million representing the gross proceeds from the sale of the operations of our wholly-owned subsidiary NXT Corporation. We estimate that we will net approximately $4.0 million from the transaction after taking into account transaction-related expenses and the settlement of NXT's net working capital liabilities that remain with us.

We currently anticipate negative cash flow approximating $1.90 million for each of the first two quarters for fiscal 2003 (ignoring the net proceeds of the sale of NXT and any remaining payment due for the original acquisition of NXT). Taking into account all cash items, we expect no change in our cash balance at December 31, 2002 relative to our June 30, 2002 cash balance of $2.86 million. Furthermore, we anticipate that cash flow will improve on a quarterly basis in the third quarter of fiscal 2003, since a large percentage of our operating costs are fixed and we expect to increase our revenues. We expect continued growth in the number of active sites and product sales, including revenues from services and products for vending. We are also focused on conserving cash, including restructuring ce