Debt Resolve, Inc. (�Debt Resolve�) (AMEX: DRV) announced today
that on March 31, 2008, Debt Resolve, Inc. entered into a
Securities Purchase Agreement with Harmonie International, LLC for
the private placement of 2,966,102 shares of Debt Resolve�s common
stock, par value $.001 per share at a price of $2.36 per share, and
a ten-year warrant to purchase up to 3,707,627 shares of Common
Stock, at an exercise price of $2.36 per share, resulting in
aggregate gross cash proceeds to Debt Resolve of $7,000,000. The
transaction closed simultaneously with the execution of the
Purchase Agreement, with Harmonie International initiating an
international wire transfer process at such time with funding to be
completed on or before April 17, 2008. On April 2, 2008, the
American Stock Exchange approved for listing the shares of Common
Stock issued in the Private Placement. Harmonie International, LLC
is a privately owned company participating in investments in a
number of industries including the purchase and securitization of
consumer and commercial debt. Harmonie International, LLC maintains
its principal office in Detroit, MI and has European offices in
Marbella, Spain and London, England. Harmonie International was
introduced to Debt Resolve by The Resolution Group, Inc., (TRG), of
Irvine, CA. This private placement satisfies the obligation of TRG
as set forth in an agreement dated December 4, 2007, to provide at
least $4.5 million in funding. TRG will continue to work with Debt
Resolve in a joint venture for mortgage collections, a note
modification program and the referral of clients in the banking and
healthcare industries. Debt Resolve also announced its financial
results for the 2007 fiscal year by filing Form 10-KSB on April 15,
2008. Highlights of some of Debt Resolve�s results for the year
ending December 31, 2007 include: Received placements in client
accounts with a face value of over $4 billion Penetrated the
European Union by engaging in a distribution agreement with ODC
Tools in the Benelux Region Reduced operating expenses by over 40%,
in the 4th Quarter 2007, 1st Quarter 2008 and continuing
Restructured senior management team with the addition of a new CEO
Launched DR Default for Sub-Prime Mortgage Collections Entered into
a partnership and distribution relationship with The Resolution
Group, in Irvine, CA Received Top 100 Collection Technology Award
Added another Top Tier Bank to the client base Added a major client
in the United Kingdom Fiscal Year 2007 Earnings Debt Resolve
announced that revenues for the Fiscal Year of 2007 were
$2,845,823, compared to revenues of $98,042 for the Fiscal Year
2006. Debt Resolve also announced a loss from continuing operations
in fiscal year 2007 of ($12,143,832), or ($1.51) per share,
compared to a loss of ($21,642,086) or ($5.23) per share for fiscal
year 2006. The total loss for fiscal year 2007 includes $2,463,745
of non-cash stock-based compensation, $1,206,335 of non-cash
impairment charges and $959.811 in terminated acquisition cost
relating to the proposed acquisition of Creditors Interchange. The
fiscal year 2007 loss also includes $132,400 of non-cash
amortization of deferred debt discount. Net cash used in operating
activities was $7,400,000. DEBT RESOLVE, INC. and SUBSIDIARIES
Consolidated Statements of Operations � Years Ended December 31,
2007 � 2006 � Revenues $ 2,845,823 � $ 98,042 � � Costs and
expenses: � Payroll and related expenses 7,038,243 5,524,059
General and administrative expenses 5,395,224 3,255,055 Terminated
acquisition costs 959,811 -- Patent licensing expense � related
parties -- 6,828,453 Impairment of goodwill and intangible assets
1,206,335 -- Depreciation and amortization expense � 227,060 � �
51,728 � � Total expenses � 14,826,673 � � 15,659,295 � � Loss from
operations � (11,980,850 ) � (15,561,253 ) � Other (expense)
income: Interest income 41,946 -- Interest expense (18,042 )
(778,243 ) Interest expense � related party (46,370 ) --
Amortization of deferred debt discount (132,400 ) (4,641,985 )
Amortization of deferred financing costs -- (665,105 ) Other income
(expense) � (8,116 ) � 4,500 � Total other expense � (162,982 ) �
(6,080,833 ) � Loss from continuing operations (12,143,832 )
(21,642,086 ) � Loss from discontinued operations � (452,085 ) �
(53,579 ) � Net loss $ (12,595,917 ) $ (21,695,665 ) � Net loss per
common share: basic and diluted (see Note 2) - Continuing
operations $ (1.51 ) $ (5.23 ) - Discontinued operations $ (0.06 )
$ (0.01 ) - Total $ (1.57 ) $ (5.24 ) � Weighted average number of
common shares outstanding - basic and diluted (see Note 2) �
8,033,348 � � 4,143,866 � DEBT RESOLVE, INC. and SUBSIDIARIES
Consolidated Balance Sheet December 31, 2007 � Assets � Current
assets: Restricted cash $ 67,818 Accounts receivable 84,013 Other
receivable 200,000 Prepaid expenses and other current assets �
108,189 � Total current assets 460,020 � Fixed assets, net 283,095
� Deposits and other assets 108,780 Intangible assets, net �
208,848 � � Total assets $ 1,060,743 � � Liabilities and
Stockholders� Deficiency � Current liabilities: Accounts payable
and accrued liabilities $ 2,448,314 Collections payable 42,606
Short-term note (net of deferred debt discount of $29,400) 70,600
Lines of credit � related parties � 1,011,000 � Total current
liabilities 3,572,520 � Notes payable (net of deferred debt
discount of $70,975) � 254,025 � Total liabilities � 3,826,545 � �
� Commitments and contingencies � Stockholders� deficiency:
Preferred stock, 10,000,000 shares authorized, $0.001 par value,
none issued and outstanding -- Common stock, 100,000,000 shares
authorized, $0.001 par value, 8,474,363 issued and outstanding
8,474 Additional paid-in capital 42,501,655 Accumulated deficit �
(45,275,931 ) � Total stockholders� deficiency � (2,765,802 ) �
Total liabilities and stockholders� deficiency $ 1,060,743 � CEO
Ken Montgomery discussed the Debt Resolve 2007 milestones and plans
for the remainder of 2008: �While we have been successful in
gaining an equity partner with Harmonie International, we are
delighted to report that we have experienced significant activity
and interest among clients and prospective clients during the first
three months of 2008. We continue to pursue prospective clients in
the Financial Services space, and have aggressively entered the
Healthcare industry with both our traditional collection agency
First Performance, as well as our Internet solution Debt Resolve
system.� �Following an aggressive strategy to reengineer operations
at First Performance, which was completed in late 2007, we have
seen a doubling of the cash flow at our agency each month since
January, 2008. We have added additional volume from our existing
clients, and have placed six new clients through the end of the
first quarter.� �Our pipeline of prospective clients has increased
by 50% on both platforms since the first of the year, and we
project a continuation of this activity throughout the year.� �The
Internet business of Debt Resolve continues to show improvement.
Our clients are experiencing above average settlement rates with
our DR Settle module (called the �bump rate�) as compared to the
traditional agency settlement rates, and more than 50% of consumers
who log on to our system settle their outstanding accounts. Debt
Resolve proves that if you leave people alone, treat them with
respect and do not force a number on them, they will do amazing
things, like settle debt on their own and pay more money than
expected.� �Our web application development efforts are continuing
to grow. We expect to beta test service enhancements in June of
this year, with an announcement of a final release in mid summer.�
�Also on the Internet side, we launched a major client in the
United Kingdom in early 2008, which has quickly risen to one of our
largest revenue producing clients worldwide.� �Debt Resolve aligned
with the American Arbitration Association in February 2008 to offer
an alternative to the costly expense of arbitrating consumer
accounts receivable. We are extremely excited about the prospects
for growth of our business given this partnership.� James D.
Burchetta, Co-Chairman and Founder of Debt Resolve, commented: "We
continued to market our leading online collection technology to
multiple sectors. Our customer base grew significantly from the
prior year, as we continue to reduce costs and improve the bottom
line. Debt Resolve, along with subsidiary First Performance, offers
an integrated and seamless solution in the debt collection space.�
About Debt Resolve, Inc. Debt Resolve provides lenders, collection
agencies, debt buyers and utilities with a patent-based online
bidding system for the resolution and settlement of consumer debt
and a collections and skip tracing solution that is effective at
every stage of collection and recovery. Through its subsidiary,
First Performance Corporation, Debt Resolve is actively engaged in
operating a collection agency for the benefit of its clients, which
include banks, finance companies and purchasers of distressed
accounts receivable. The stock of Debt Resolve is traded on the
American Stock Exchange. Debt Resolve is headquartered in White
Plains, New York. For more information, please visit the website at
www.debtresolve.com. Forward-Looking Statements and Disclaimer
Certain statements in this press release and elsewhere by
management of the Company that are neither reported financial
results nor other historical information are �forward-looking
statements� within the meaning of the Private Securities Litigation
Reform Act of 1995. Such information includes, without limitation,
the business outlook, assessment of market conditions, anticipated
financial and operating results, strategies, future plans,
contingencies and contemplated transactions of the Company. Such
forward-looking statements are not guarantees of future performance
and are subject to known and unknown risks, uncertainties and other
factors which may cause or contribute to actual results of the
Company�s operations, or the performance or achievements of the
Company, or industry results, to differ materially from those
expressed or implied by the forward-looking statements. In addition
to any such risks, uncertainties and other factors discussed
elsewhere in this press release, risks, uncertainties and other
factors that could cause or contribute to actual results differing
materially from those expressed or implied by the forward-looking
statements include, but are not limited to, events or circumstances
which affect the ability of Debt Resolve to realize improvements in
operating earnings expected from the acquisition of First
Performance; competitive pricing for the Company�s products and
services; fluctuations in demand for the Company�s products or
services; changes to economic growth in the United States and
international economies; government policies and regulations,
including, but not limited to those affecting the collection of
consumer debt; adverse results in current or future litigation;
currency movements; and other risk factors discussed in the
Company�s Annual Report on Form 10-KSB for the year ended December
31, 2007, and in other filings made from time to time with the SEC.
Debt Resolve undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future events or otherwise. Investors are advised, however, to
consult any further disclosures made on related subjects in the
Company�s reports filed with the SEC.
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