Claimsnet.com Reports Third Quarter 2004 Results; Including an 85% Increase in Revenues DALLAS, Oct. 19 /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 third quarter of fiscal 2004, which ended September 30, 2004. For the quarter ended September 30, 2004, the Company reported revenues of $291,000, an 85% increase compared to the $157,000 reported for the third quarter of 2003. Cost of revenues for the third quarter of 2004 was $184,000 compared to $115,000 for the third quarter of fiscal 2003, a 60% increase, a direct result of the rising revenues of the company. There were no research and development expenses incurred during the third quarter of 2004 while $10,000 of research and development expenses were reported for the third quarter of 2003. Selling, general and administrative expenses of $258,000 were reported for the third quarter of 2004, representing a 16% reduction from the $308,000 reported for the third quarter of 2003. The Company reported a record gross profit of $107,000, or a 37% gross profit margin, for the third quarter of 2004, compared with a $42,000 gross profit for the third quarter of 2003. This is the fifth consecutive quarter in which the Company has reported a gross profit. The loss from operations for the third quarter of 2004 was $(151,000), a 45% decrease from the loss of $(276,000) reported for the third quarter of 2003, and the lowest operating loss in more than six years. The net loss for the third quarter of 2004 was $(156,000), or $(.01) per share, compared to a net loss of $(312,000), or $(0.02) per share, for the third quarter of 2003. "We are pleased to report another increase in revenues and the Company's fifth consecutive quarterly gross profit," commented Don Crosbie, chief executive officer of Claimsnet. "Our focus on increasing sales and the overall productivity of the company is becoming increasingly evident in the improving results, as we execute the strategic plan to bring the company to profitability," he stated. The Company also announced today that the Company's Chief Financial Officer, Paul W. Miller, has joined Tatum Partners, a professional services firm providing financial leadership, and will be resigning effective November 24, 2004. He will be replaced as CFO by Laura Bray, who has served for the last two years as our Controller. 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 September 30, 2004 2003 REVENUES $ 291 $ 157 COST OF REVENUES $ 184 $ 115 GROSS PROFIT $ 107 $ 42 RESEARCH AND DEVELOPMENT $ --- $ 10 SELLING, GENERAL AND ADMINISTRATIVE $ 258 $ 308 LOSS FROM OPERATIONS $ (151) $ (276) INTEREST EXPENSE $ (5) $ (5) LOSS ON SALE OF ASSETS $ --- $ (31) NET INCOME (LOSS) $ (156) $ (312) NET INCOME (LOSS) PER COMMON SHARE - BASIC $(0.01) $(0.02) WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED 25,014 20,537 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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