Debt Resolve Closes $7 Million Investment with Harmonie International, LLC

  
    
  
  
    
      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.