Claimsnet.com Reports Second Quarter 2004 Results; Including a 34% Increase in Revenues DALLAS, July 20 /PRNewswire-FirstCall/ -- Claimsnet.com inc. (OTC:CLAI) (BULLETIN BOARD: CLAI) , a leading provider of Internet-based business-to- business solutions for the healthcare industry, today reported its results for the second quarter of fiscal 2004, which ended June 30, 2004. For the quarter ended June 30, 2004, the Company reported revenues of $225,000, a 34% increase compared to the $168,000 reported for the second quarter of 2003. All expense categories decreased compared with the second quarter of the prior fiscal year. Cost of revenues for the second quarter of 2004 was $168,000 compared to $174,000 for the second quarter of fiscal 2003, a 3% decrease. There were no research and development expenses incurred during the second quarter of 2004 while $4,000 of research and development expenses were reported for the second quarter of 2003. Selling, general and administrative expenses of $269,000 were reported for the second quarter of 2004, representing a 47% reduction from the $506,000 reported for the second quarter of 2003, which included a non-cash charge of $180,000 related to the issuance of warrants to two directors for services performed outside of their director duties. The Company reported a gross profit of $57,000 for the second quarter of 2004, compared with a $(6,000) gross loss for the second quarter of 2003. This is the fourth consecutive quarter in which the Company has reported a gross profit. The Company recognized a $91,000 gain on settlement of a liability for the second quarter of 2004. The Company recognized a $912,000 gain on settlement of liabilities for the second quarter of 2003. The loss from operations for the second quarter of 2004 was $(212,000), a 59% decrease from the loss of $(516,000) reported for the second quarter of 2003. The net loss for the second quarter of 2004 was $(126,000), or $(.01) per share, compared to net income of $391,000, or $.02 per share, for the second quarter of 2003. "We are pleased to report another increase in revenues and the Company's fourth consecutive quarterly gross profit," commented Don Crosbie, chief executive officer of Claimsnet. "We enhanced our operations group during the quarter to escalate the activity from previously announced contract signings and to prepare for anticipated new clients. We have signed more than forty new client contracts and relationships since June 2003 as a direct result of successful sales and marketing efforts." Claimsnet.com inc. is a leading provider of Internet-based claim processing solutions for the healthcare payer industry, including distinctive, advanced ASP technology. Headquartered in Dallas, Claimsnet offers systems that are distinguished by ease of use, customer care, security and measurable cost advantages. More information on Claimsnet can be found at the Company's web site at http://www.claimsnet.com/ . Safe Harbor Statement Under the Private Securities Litigation Act 1995 -- With the exception of historical information, the matters discussed in this press release are forward looking statements that involve a number of risks and uncertainties. The actual future results of the Company could differ significantly from those statements. Factors that could cause or contribute to such differences include, but are not limited to, maintaining access to external sources of capital, regulatory actions, success of marketing strategies, actions of the Company's competitors, dependence on suppliers and distribution channels, and continued use of the internet. Further information on the Company's risk factors is contained in the Company's quarterly, annual, and other periodic reports as filed with the Securities and Exchange Commission. [Table to Follow] CLAIMSNET.COM INC. AND SUBSIDIARIES SUMMARY OPERATIONS STATEMENT INFORMATION (In thousands except per share data) Quarter Ended June 30, 2004 2003 REVENUES $ 225 $ 168 COST OF REVENUES $ 168 $ 174 GROSS PROFIT (LOSS) $ 57 $ (6) RESEARCH AND DEVELOPMENT $ --- $ 4 SELLING, GENERAL AND ADMINISTRATIVE $ 269 $ 506 LOSS FROM OPERATIONS $ (212) $ (516) GAIN ON NEGOTIATED SETTLEMENTS OF LIABILITIES $ 91 $ 912 INTEREST EXPENSE $ (5) $ (5) NET INCOME (LOSS) $ (126) $ 391 NET INCOME (LOSS) PER COMMON SHARE - BASIC $(0.01) $ 0.02 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC 24,182 17,730 NET INCOME (LOSS) PER COMMON SHARE - DILUTED $(0.01) $ 0.02 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED 24,182 22,136 DATASOURCE: Claimsnet.com inc. CONTACT: Don Crosbie of Claimsnet.com inc., +1-972-458-1701 Ext. 112, or Web site: http://www.claimsnet.com/

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