UNITED ~~STATES SECURITIES~~ ~~AND EXCHANGE COMMISSION~~STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) ~~June~~September 1520, 2004

PRIMAL SOLUTIONS, INC.

(Exact name of registrant as specified in its chapter)

Delaware	333-46494	36-4170318
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

18881 Von Karman Avenue Suite 500 Irvine, California 92612
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (949) 260-1500

~~EXPLANATORY~~Check ~~NOTE~~the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

~~The~~o Written ~~transaction~~communications ~~described~~pursuant ~~in Item 1 below potentially may be deemed a “change of control” event. Although the Company does not believe that a change of control has occurred, it has elected~~ to ~~file this~~Rule ~~Current~~425 ~~Report~~ under ~~Item~~the 1Securities onAct a(17 ~~voluntary~~CFR ~~basis~~230.425)

~~Item~~o Soliciting material 1.pursuant ~~Change~~to ofRule ~~Control~~14a-12 ofunder ~~Registrant~~the Exchange Act (17 CFR 240.14a-12)

~~PRIVATE PLACEMENT. On~~o Pre-commencement ~~June 15,~~communications ~~2004,~~pursuant ~~Primal~~to ~~Solutions,~~Rule ~~Inc.~~ 14d-2(~~the “Company”~~b) ~~closed~~under a private placement of its common stock and warrants to institutional investors and other accredited investors. The Company sold a total of 14,284,782 new shares of its common stock, and warrants to purchase a total of 7,142,393 new shares of its common stock in the ~~private~~Exchange ~~placement. Investors~~Act ~~received~~(17 ~~a warrant to purchase one share of common stock for~~CFR ~~each two shares of common stock purchased; therefore, the effective price in the private placement is $0~~240.~~23 for each unit, consisting of one share of common stock and a warrant to purchase one~~14d-~~half of a share of common stock. The warrants have an exercise period of five years with an exercise price of $0.28 per share. The warrants are exercisable in cash, representing a potential $~~2~~.0 million in additional proceeds, bringing the total gross proceeds of this offering to approximately $5.3 million upon full exercise of the warrants.~~(b))

~~Pursuant~~o Pre-commencement tocommunications ~~the~~pursuant ~~Purchase Agreement, the Company issued an aggregate of 13,043,478 shares of its common stock at a price of $.23 per share~~ to ~~Special~~Rule ~~Situation Private Equity Fund , L.P., Special Situation Technology Fund, L.P., and Special Situation Technology Fund II, L.P.~~ 13e-4(~~collectively, “Institutional Investors”~~c)~~, and~~ ~~received~~under ~~gross proceeds of $3.0 million in cash from~~ the ~~Institutional Investors. The~~Exchange ~~Company~~Act ~~also~~(17 ~~issued~~CFR ~~warrants to the Institutional Investors to purchase an aggregate of 6,521,739 shares of its common stock at an exercise price of $~~240.~~28 per share for a five~~13e-year period. Additionally, the Company and the Institutional Investors entered into a Registration Rights Agreement, whereby, among other things, the Company agreed to file a “resale” registration statement with the U.S. Securities and Exchange Commission 4(~~“SEC”~~c), covering the shares of the Company’s common stock issued and underlying the warrants in connection with the private placement, no later than July 30, 2004. A form of the Purchase Agreement, the Registration Rights Agreement, and Warrant are filed herewith as Exhibits 10.18, 10.19, and 10.20, respectively (collectively, the “Institutional Investor Agreements”).

~~As a~~Item condition precedent to closing the private placement with the Institutional Investors under the Institutional Investor Agreements, the Company was required to have received gross proceeds from the sale of its common stock and warrants of not less than $250,000 from accredited investors on terms no more favorable than those offered to the Institutional Investors5. ~~The~~02. ~~Institutional~~Departure ~~Investors also required that the accredited investors be comprised~~ of ~~at least, but not limited to, each member of the Company’s Board of~~ Directors, ~~its~~or ~~Chief~~Principal ~~Executive~~Officers; ~~Officer,~~Election ~~and its Chief Financial Officer (the Board~~ of Directors,; ~~together~~Appointment ~~with the Chief Executive Officer and the Chief Financial Officer, “Management”). Accordingly, Management contributed gross proceeds~~ of ~~$125,500 in~~Principal cash to purchase an aggregate of 545,653 shares of the Company’s common stock at a price of $.23 per share, and warrants to purchase an aggregate of 272,827 shares of the Company’s common stock exercisable at $.28 per share for five years. Additionally, other accredited investors contributed gross proceeds of $160,000 in cash to purchase an aggregate of 695,651 shares of the Company’s common stock at a price of $.23 per share, and warrants to purchase an aggregate of 347,827 shares of the Company’s common stock exercisable at $.28 per share for five years.Officers

~~In connection~~On ~~therewith~~September 20, ~~the non-Management other accredited investors entered~~2004, ~~into~~Todd ~~the~~R. ~~Institutional~~Taylor, ~~Investor~~Chief ~~Agreements. The~~Financial ~~Company~~Officer and ~~each~~Vice President of ~~the~~Finance ~~Management executed a Purchase Agreement~~ and aAdministration ~~Registration~~of ~~Rights~~Primal ~~Agreement~~Solutions, ~~and~~Inc. (the “Company”), ~~issued~~announced ~~warrants on terms no~~his ~~more favorable than as offered to the Institutional Investors~~resignation. ~~Additionally,~~Mr. ~~each~~Taylor’s ~~of the Management was~~resignation ~~required~~will bybecome ~~the~~effective ~~Institutional~~on ~~Investors~~October 15, ~~to execute a Lock-Up Agreement~~2004. ~~providing~~The ~~for~~Company ~~certain~~has ~~restrictions~~initiated on the ~~transfer~~process ofto ~~shares~~identify ofa ~~the~~successor ~~Company’s common~~to ~~stock owned by such person as set forth in the Lock-Up Agreement~~Mr. A Taylor.

2SIGNATURE

~~form~~Pursuant ofto the ~~Purchase~~requirements ~~Agreement,~~of the ~~Registration~~Securities ~~Rights~~Exchange ~~Agreement,~~Act ~~Warrant~~of 1934, ~~and~~the registrant has ~~Lock-Up~~duly ~~Agreement~~caused ~~are~~this ~~filed~~report ~~herewith~~to asbe ~~Exhibits~~signed ~~10.21,~~on ~~10.22,~~its ~~10.23,~~behalf ~~and~~by ~~10.24~~the undersigned hereunto ~~respectively~~duly authorized.

The shares of the Company’s common stock and the warrants issued to the investors in the private placement have not been registered under the Securities Act of 1933, as amended (“Securities Act”), in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act and Regulation D Rule 506 promulgated under the Securities Act, which exempts transactions by an issuer not involving any public offering. All of the stock and warrant certificates representing these securities bear a legend stating that they have not been registered under the Securities Act and are subject to restrictions on transfer.

Date: September 22, 2004	PRIMAL SOLUTIONS, INC.


	By:	/s/ Joseph R. Simrell

		Joseph R. Simrell

		Chief Executive Officer

NOPrimal ~~CLAIM~~Solutions, ~~OF “GROUP” AND NO CHANGE IN MANAGEMENT~~Inc. ~~It is the Company’s belief that the three~~ • 18881 ~~Institutional~~Von ~~Investors~~Karman ~~may~~Avenue, beSuite ~~deemed to constitute a “group” within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934 (“Exchange Act”)~~500 • Irvine, ~~for purposes of this disclosure on Form 8-K.~~CA Each of the Management expressly disclaim the existence of a “group” either among themselves or between any of them and any other investor in the private placement or any other record or beneficial owner of the Company’s voting securities. The Company has not received any indication from any other investor in the private placement that it will act as a “group” either among themselves or between any of them and any other investor in the private placement or any other record or beneficial owner of the Company’s voting securities.92612

~~The consummation~~949. of260. ~~the private placement resulted in no changes to the composition~~1500 • 949. of260. ~~the~~1515 Board of Directors of the Company, its Chief Executive Officer or its Chief Financial Officer; and the Company does not know of any arrangements or understandings among or between any of the investors in the private placement with respect to the election of directorsfax • www.primal.com

Without acting in concert as a “group” with the intent to control or influence the business or affairs of the Company, none of the investors has a majority of the voting power of the Company’s common stock as a result of the private placement.2

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table set forth information regarding the number of shares of the Company’s common stock beneficially owned on June 15, 2004, after giving effect to the issuances pursuant to the Purchase Agreements, by:

• each person who is known by the Company to beneficially own 5% or more of its common stock;

• each of the directors and executive officers of the Company; and

• all of the Company’s directors and executive officers as a group.

Shares of Common Stock Beneficially Owned

For purposes of this table, a person is deemed to be the “beneficial owner” of the number of shares of common stock that such person has the right to acquire within 60 days of June 15, 2004 through the exercise of any option, warrant or right, through the conversion of any security, through the power to revoke a trust, discretionary account, or similar arrangement, or through the automatic termination of a trust, discretionary account or similar arrangement.

Name of Beneficial Owner / Management	Number of Shares	Percent of Class
David Mechler (1)	2,755,082	7.7	%
Mark J. Nielsen (2) (14)	1,273,967	3.6	%
Arun Anand (3) (14)	203,119		*
Murari Cholappadi (4) (14)	203,119		*
Sanjay Gupta (5) (14)	203,119		*
John Faltys (6) (14)	2,230,541	6.2	%
Joseph R. Simrell (7) (14)	1,655,420	4.6	%
David Haynes (8) (14)	1,763,755	4.9	%
Michael G. Fowler (9)	267,434		*
Tim Hoolihan (10)	232,422		*
Todd R. Taylor (11)	126,438		*
Louis A. Delmonico (12)	521,522	1.4	%
John E. Rehfeld (13)	1,214,322	3.4	%
Special Situations Funds (15)	19,565,217	46.2	%
All executive officers and directors as a group (8 persons) (16)	8,011,854	21.1	%

*Constitutes less than 1%

(1) Includes 2,646,386 shares of common stock beneficially owned by Mr. Mechler and 108,696 shares of common stock underlying warrants exercisable as of the date set forth above or within 60 days thereafter. The business address for this person is P.O. Box 1439, Medina, Texas 78055.

(2) Includes 1,273,967 shares of common stock beneficially owned by Mr. Nielsen. See Note 14. The business address for this person is 27126-B Paseo Espada, Suite 725, San Juan Capistrano, California 92675.

(3) Includes 203,119 shares of common stock owned by Mr. Anand. See Note 14. The business address for this person is 13403 Venice Villa Lane, Sugar Land, Texas 77478.

(4) Includes 203,119 shares of common stock beneficially owned by Mr. Cholappadi. See Note 14. The business address for this person is 2434 Crossing Way, Wayne, New Jersey 07470.

(5) Includes 203,119 shares of common stock beneficially owned by Mr. Gupta. See Note 14. The business address for this person is 90 N. Michigan Avenue, #205, Pasadena, California 91106.

(6) Includes 1,954,454 shares of common stock beneficially owned by Mr. Faltys and 276,087 shares of common stock underlying warrants exercisable as of the date set forth above or within 60 days thereafter. See Note 14. The business address for this person is 18881 Von Karman Avenue, Suite 500, Irvine, California 92612.

(7) Includes 1,459,407 shares of common stock beneficially owned by Mr. Simrell, 196,013 shares of common stock underlying options and warrants exercisable as of the date set forth above or within 60 days thereafter. See Note 14. The business address for this person is 18881 Von Karman Avenue, Suite 500, Irvine, California 92612.

(8) Includes 1,459,407 shares of common stock beneficially owned by Mr. D. Haynes and 304,348 shares of common stock underlying warrants exercisable as of the date set forth above or within 60 days thereafter. See Note 14. The business address for this person is 18881 Von Karman Avenue, Suite 500, Irvine, California 92612.

(9) Includes 1,500 shares of common stock beneficially owned by Mr. Fowler and 265,934 shares of common stock underlying options exercisable as of the date set forth above or within 60 days thereafter. The business address for this person is 18881 Von Karman Avenue, Suite 500, Irvine, California 92612.

(10) Includes 47,750 shares of common stock beneficially owned by Mr. Hoolihan and 184,672 shares of common stock underlying options exercisable as of the date set forth above or within 60 days thereafter. The business address for this person is 18881 Von Karman Avenue, Suite 500, Irvine, California 92612.

(11) Includes 4,348 shares of common stock beneficially owned by Mr. Taylor and 122,090 shares of common stock underlying options and warrants exercisable as of the date set forth above or within 60 days thereafter. The business address for this person is 18881 Von Karman Avenue, Suite 500, Irvine, California 92612.

(12) Includes 154,348 shares of common stock beneficially owned by Dr. Delmonico and 367,174 shares of common stock underlying options and warrants exercisable as of the date set forth above or within 60 days thereafter. The business address for this person is 18881 Von Karman Avenue, Suite 500, Irvine, California 92612.

(13) Includes 855,626 shares of common stock beneficially owned by Mr. Rehfeld and 358,696 shares of common stock underlying options and warrants exercisable as of the date set forth above or within 60 days thereafter. The business address for this person is 18881 Von Karman Avenue, Suite 500, Irvine, California 92612.

(14) In the past, the Company has disclosed that Mr. P. Haynes (in his capacity as the Chairman of Avery), Thurston Group, Inc. and each of its affiliates, and Waveland, LLC (a limited liability company wholly owned by Mr. P. Haynes) and each of its affiliates (collectively, the “Haynes Parties “), granted to Messrs. Nielsen, Anand, Cholappadi, Gupta, Faltys, Simrell, and D. Haynes an irrevocable proxy to vote all the shares of the Primal common stock that any of the Haynes Parties received in the Distribution (as that term is defined in the Company's Form 10-KSB as filed with the SEC on March 30, 2004) and certain shares of the Company’s common stock, if any, acquired thereafter. As discussed in the Company's Form 10-KSB as filed with the SEC on March 30, 2004, Primal has elected to treat the proxy granted to the Old Primal Stockholders as expired effective September 24, 2003.

(15) Includes (i) 6,521,739 shares of common stock beneficially owned by Special Situations Private Equity Fund, L.P. and 3,260,870 shares of common stock underlying warrants exercisable as of the date set forth above or within 60 days thereafter, (ii) 1,043,478 shares of common stock beneficially owned by Special Situations Technology Fund, L.P. and 521,739 shares of common stock underlying warrants exercisable as of the date set forth above or within 60 days thereafter and (iii) 5,478,261 shares of common stock beneficially owned by Special Situations Technology Fund II, L.P and 2,739,130 shares of common stock underlying warrants exercisable as of the date set forth above or within 60 days thereafter. The business address for Special Situations Funds is 153 E. 53rd Street, 55th Floor, New York, New York 10022.

(16) Includes all shares and options described in Notes 6, 7, 8, 9, 10, 11, 12 and 13, above.

The summary of the transactions described in this Form 8-K is qualified by reference to the Purchase Agreements and other agreements or instruments executed in connection with the Purchase Agreements, all of which are exhibits hereto.

Item 7. Financial Statements and Exhibits.

10.18		Purchase Agreement between the Company and the Institutional Investors and Non-Management Other Accredited Investors, dated June 8, 2004
10.19		Registration Rights Agreement between the Company and the Institutional Investors and Non-Management Other Accredited Investors, dated June 8, 2004
10.20		Form of Warrants for the issuance of warrants to the Institutional Investors and Non-Management Other Accredited Investors
10.21		Purchase Agreement between the Company and Management, dated June 8, 2004
10.22		Registration Rights Agreement between the Company and Management, dated June 8, 2004
10.23		Form of Warrants for the issuance of warrants to Management
10.24		Form of Lock-up Agreement, dated June 8, 2004

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: June 18, 2004	PRIMAL SOLUTIONS, INC.
	By:	/s/ Joseph R. Simrell
		Joseph R. Simrell
		President and Chief Executive Officer

EXHIBIT INDEX

Exhibit Number		Description
10.18		Purchase Agreement between the Company and the Institutional Investors and Non-Management Other Accredited Investors, dated June 8, 2004
10.19		Registration Rights Agreement between the Company and the Institutional Investors and Non-Management Other Accredited Investors, dated June 8, 2004
10.20		Form of Warrants for the issuance of warrants to the Institutional Investors and Non-Management Other Accredited Investors
10.21		Purchase Agreement between the Company and Management, dated June 8, 2004
10.22		Registration Rights Agreement between the Company and Management, dated June 8, 2004
10.23		Form of Warrants for the issuance of warrants to Management
10.24		Form of Lock-up Agreement, dated June 8, 2004

[Attach the Exhibit Documents]

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