SOURCE: Primal Solutions, Inc.

Primal Solutions, Inc.

May 15, 2008 14:30 ET

Primal Solutions Announces Results for First Quarter 2008

IRVINE, CA--(Marketwire - May 15, 2008) - Primal Solutions, Inc. (OTCBB: PSOL)

First Quarter 2008 Highlights

--  Revenue: recurring revenue up 30% over the year earlier quarter
--  Operating income: 136% year-over-year increase from the first quarter
    of 2007
--  Cash from operations: generated $203,000 in cash from operations while
    paying down $211,000 in debt
--  Working capital: decreased working capital deficit by $1.2 million
--  Debt restructuring: fully settled an unsecured debt obligation and
    restructured senior secured debt.  Subsequent to the close of the March 31,
    2008 quarter, fully settled junior secured debt
    

Primal Solutions, Inc. (OTCBB: PSOL), a market leader for innovative managed solutions that turn data into revenue, today announced financial results for the quarter ended March 31, 2008.

Revenue and Operating Income

For the quarter ended March 31, 2008, total revenues slightly decreased to $1,528,000 from $1,605,000 for the same period in 2007. Operating income increased 136% to $189,000 from $80,000 for the same period in 2007.

"Our shift to a recurring pay-as-you-go, software-as-a-service (SaaS) business model is virtually complete," stated Joe Simrell, Chief Executive Officer of Primal Solutions. "Our SaaS revenue was up 30% during the quarter compared to the same quarter in 2007, and now represents 86% of total revenue compared to 65% in the same period of 2007. Additionally, our focus on cost control resulted in an improvement of 136% in operating income over the same period in 2007."

Debt restructured

"We are very pleased with the results of our debt reduction initiative during the first quarter. Besides reaching settlements with two of our debt holders, we successfully restructured our senior secured debt with our largest shareholder. We believe these activities have contributed to increasing shareholder value."

"With good visibility into future revenue and a significantly improved balance sheet, our focus will be on growing the business while maintaining operating profitability and positive cash flow."

New product initiatives

"During the first quarter we introduced a new offering under our IPC Analytics™ solution suite. Initially targeted at North American Cable Operators and other providers of VoIP telephony services, the IPC Analytics Marketing Dashboard solution is designed for internal marketing and product management users and enables them to better understand trends in customer acquisition, retention effectiveness and telephony product penetration and profitability."

About Primal

Primal Solutions, Inc. (OTCBB: PSOL), is a market leader for innovative managed solutions that turn data into revenue. Our IPC Platform™ suite -- delivered as a managed service and powered by patent-pending technology -- captures, correlates, tracks, manages, monetizes, and analyzes communications transaction data to enable communications providers to generate increased revenues, improve profitability, and control costs. A trusted partner, Primal has long running relationships with leading Cable MSOs, including Time Warner Cable, Bright House Networks, Bresnan Communications, and Bend Broadband.

Forward-looking Statements

This news release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of known and unknown risks and uncertainties that may cause the company's actual results or outcomes to be materially different from those anticipated and discussed herein. These include the company's historic lack of profitability, end-use customers' acceptance and actual demand, which may differ significantly from expectations, the need for the company to manage its growth, the need to raise funds for operations, and other risks associated with the regulation of the Internet and the telecommunications industry. Additional discussion of these and other factors affecting the company's business and prospects is contained in the company's periodic filings with the Securities and Exchange Commission.

Primal, the Primal Solutions logo, IPC Platform, and IPC Analytics are trademarks of Primal Solutions, Inc. All other trademarks and product names are the property of their respective owners.

                             PRIMAL SOLUTIONS, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS

                                                March 31,     December 31,
                                                  2008            2007
                                              -------------  -------------
ASSETS                                         (Unaudited)
------
Current Assets
  Cash and cash equivalents                   $     516,000  $     524,000
  Accounts receivable                               133,000        137,000
  Prepaid expenses and other current assets         123,000        144,000
                                              -------------  -------------
      Total current assets                          772,000        805,000

Property and equipment, net of accumulated
 depreciation of $1,537,000 and $1,512,000,
 respectively                                       247,000        271,000
Goodwill                                            593,000        593,000
Other assets                                         53,000         76,000
                                              -------------  -------------
                                              $   1,665,000  $   1,745,000
                                              =============  =============
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current Liabilities
  Accounts payable                            $     112,000  $      57,000
  Accrued liabilities                               244,000        376,000
  Accrued salaries and benefits                     389,000        532,000
  Deferred revenue                                  193,000        172,000
  Short-term borrowings and current portion of
   long-term debt                                   515,000        632,000
  Current portion of senior convertible debt,
   net of discount of $0 and $177,000,
   respectively                                     431,000      1,323,000
                                              -------------  -------------
      Total current liabilities                   1,884,000      3,092,000

Long-term debt, net of current portion              651,000        706,000
Noncurrent portion of senior convertible debt,
 net of discount of $0 for each period            1,069,000             --
Other long-term liabilities                          60,000         58,000
                                              -------------  -------------
                                                  3,664,000      3,856,000
Stockholders' Deficit
Preferred stock, $0.01 par value; 5,000,000
 shares authorized; none issued and
 outstanding                                             --             --
Common stock, $0.01 par value; 95,000,000
 shares authorized; 38,373,634 shares issued
 and outstanding in each period                     384,000        384,000
Additional paid-in capital                       14,029,000     13,998,000
Warrants                                          2,172,000      2,172,000
Accumulated deficit                             (18,584,000)   (18,665,000)
                                              -------------  -------------
      Net stockholders' deficit                  (1,999,000)    (2,111,000)
                                              -------------  -------------
                                              $   1,665,000  $   1,745,000
                                              =============  =============


                          PRIMAL SOLUTIONS, INC.
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                              (Unaudited)


                                              Three Months ended March 31,
                                              ----------------------------
                                                   2008           2007
                                              -------------  -------------

Net revenue                                   $   1,528,000  $   1,605,000

Cost of revenue                                     350,000        460,000
Research and development                            425,000        360,000
Selling, general and administrative                 564,000        705,000
                                              -------------  -------------
  Total costs                                     1,339,000      1,525,000
                                              -------------  -------------

Operating income                                    189,000         80,000
Gain from debt extinguishment                       137,000             --
Interest and other expenses, net                   (241,000)      (207,000)
                                              -------------  -------------
Income (loss) before income tax provision            85,000       (127,000)
Income tax provision                                  3,000          2,000
                                              -------------  -------------
Net income (loss)                             $      82,000  $    (129,000)
                                              =============  =============

Basic earnings per share                      $        0.00  $       (0.00)
                                              =============  =============
Diluted earnings per share                    $        0.00  $       (0.00)
                                              =============  =============

Basic weighted average number of common and
 common equivalent shares outstanding            38,373,634     38,373,634
Diluted weighted average number of common and
 common equivalent shares outstanding            38,403,515     38,373,634

Contact Information

  • Investors Contact:
    Terrea Tamanaha
    +1 949.608.5776
    Email Contact
    or
    Media Contacts:
    Madison Alexander PR for Primal Solutions
    Dan Chmielewski
    Email Contact
    O: +1.714.832.8716
    M: +1.949.231.2965