Prescient Applied Intelligence Reports Fourth Quarter and Full Year 2006 Results

Business Wire, March 28, 2007

Company Achieves Profitability in Fourth Quarter

WEST CHESTER, Pa. -- Prescient Applied Intelligence, Inc. (OTCBB:PPID), a leading provider of supply chain and advanced commerce solutions for retailers and suppliers, today reported financial results for the fourth quarter and full year ended December 31, 2006.

"In 2006, we completed the integration efforts from the viaLink merger, which resulted in significant reductions in operating expenses," said Jane Hoffer, president and CEO, Prescient. "We also de-emphasized certain non-performing offerings to concentrate on initiatives that will grow the bottom line. This has contributed to Prescient's revenue growth across all categories during the fourth quarter, as well as our fourth quarter profitability."

"The initiatives that we introduced in 2006 - Store Level Replenishment (SLR) and Visibility & Analytics (V&A) - fulfill Prescient's vision of providing solutions that couple supply chain planning with retail programs to drive results at the store shelf," continued Hoffer.

According to Bill Bishop, chairman of Willard Bishop, improving efficiencies in the direct store delivery (DSD) process is one of the ways in which retailers and suppliers can drive more profitable sales through better performance at the store shelf. Willard Bishop is widely recognized for its expertise in strategies that improve the retail customer experience. "Prescient helps retailers and suppliers focus on shelf conditions and leverage the insights from scan based trading to positively impact sales in leading DSD categories," said Bishop.

HIGHLIGHTS - Fourth Quarter 2006

Revenues

* Total revenues were $2.5 million for the fourth quarter of 2006, which represented an increase of 24% compared to the third quarter of 2006 and an 8% increase over the fourth quarter of 2005.

* Subscription revenues for the 2006 fourth quarter were $1.5 million, which is an increase of 5% over the third quarter of 2006 and a 14% increase compared to the same period in 2005.

* License revenues for the fourth quarter of 2006 were $0.2 million, representing an increase of more than 100% compared to the third quarter of 2006 and a 56% increase over the fourth quarter of 2005.

Operating Expenses

* Total operating expenses in the fourth quarter were $2.3 million, including $0.2 million of depreciation and amortization. Operating expenses decreased $0.9 million or 28% compared to the same period in 2005 and remained flat, with a less than 1% change, from the third quarter of 2006.

"Successful cost-cutting measures such as the relocation of our data center to a more economical facility, the downsizing of our Dallas office space, and significant reductions in personnel-related costs contributed to fourth quarter profitability and puts us in a stronger position for 2007, said Hoffer."

"We continue to focus on opportunities that are strategic to our business. In 2006, Prescient expanded its retail business through the addition of two retail hubs, including one that represents a new channel for our business, chain drug stores," continued Hoffer.

Income

* Operating income for the fourth quarter of 2006 was $0.2 million which was an increase of 159% compared to the third quarter loss and a 119% increase over the same period in 2005.

* The net loss applicable to common stockholders for the 2006 fourth quarter was $0.1 million (Q306: 3.0 million; Q405: $1.1 million), or $0.0 per share (Q306: $(0.07) per share; Q405: $(0.03) per share) representing a 96% improvement compared to the third quarter of 2006 and a 90% improvement from the fourth quarter of 2005.

HIGHLIGHTS - Year ending December 31, 2006

Revenues

* Total revenues were $9.2 million in 2006, which represented a 2% decrease from 2005.

* Subscription revenues for 2006 were $5.8 million, which is an increase of 9% from the $5.3 million reported in 2005.

* License revenues in 2006 were $0.6 million; maintenance revenues were $1.6 million and services revenues were $1.2 million. As compared to 2005, these represented increases of 16%, 3% and a decrease of 40%, respectively.

Operating Expenses

* Total Operating expenses in 2006 were $10.4 million as compared to $11.6 million in 2005, an 11% decrease year over year.

Income

* The Company reported a net operating loss of $1.1 million for the year ended December 31, 2006 which compares to an operating loss of $2.2 million for the year ended December 31, 2005.

* The net loss applicable to common stockholders reported for 2006 was $4.3 million (2005: $2.4 million), or $(0.11) per share (2005: $(0.07) per share). The net loss applicable to common stockholders for 2006 includes a $1.2 million loss from a settlement with Tak Investments, LLC, a deemed dividend to the Series E Preferred stockholders of $0.4 million also in connection with the settlement, and accumulated undeclared dividends to the Series E Preferred stockholders of $1.3 million.

Cash & Cash Equivalents

* Cash provided by operations was $0.1 million during the year ended December 31, 2006 as compared to ($2.3) million used in the prior year. Cash and cash equivalents were $1,016,000 as of December 31, 2006, up from $716,000 at December 31, 2005.