VSRV Voiceserve Inc (CE)

VoiceServe, Inc. (OTCBB:VSRV), a low-cost, next-generation Internet Telephony software and service provider, today reported financial results for its first quarter ended June 30, 2010. The Company reported revenues of $1.1 million for the first quarter of its fiscal year 2011, a 57 percent increase over for the same period of the previous fiscal year and an increase of 13 percent over the fourth quarter of fiscal year 2010. The Company reported net earnings of $126,000 for the first quarter, which includes $122,000 of income from the revaluation of common stock warrant liability. This marks the Company’s first profitable quarter since the Company’s inception in 2007. This compares to a net loss of $(444,000) or $(0.01) per basic share for the first quarter of fiscal year 2010, which includes stock based compensation of $379,000.

For the three month ended June 30, 2010, VoiceServe’s gross profit on revenue was $621,000, yielding gross margins of 58 percent. This compares to average gross margin of 65 percent during the previous fiscal year. The decrease in gross margin in the current fiscal quarter reflects an increase in investment in development of new products to be released during the current fiscal year.

Sales, general and administrative (SG&A) costs were $617,000, which includes stock based compensation of $21,000. This compares to SG&A of $858,000 in the first quarter of the previous fiscal year, which includes stock based compensation of $379,000. Excluding the stock based compensation for both periods, SG&A for the current fiscal year first quarter increased by 117,000 or 24 percent. Compared to the fourth quarter of fiscal year 2010, SG&A decreased by $110,000 or 15 percent. The Company expects SG&A to trend higher during the year, primarily as a result of an increase in marketing (especially industry conferences), and sales personnel to support its move into the North and Latin American markets and additional research and development professionals as the Company expands its service offerings, including IPTV. However, as a percent of total revenue, SG&A is expected to trend lower as the Company continues to build it customer base. SG&A was 56 percent of revenue during the first quarter of fiscal year 2011, down from 70 percent and 74 percent, respectively, in the prior two quarters.

Cash and cash equivalents on June 30, 2010 were $809,000 and the Company has no long term debt. During the first quarter of 2011, the Company completed a sale of 2,760,000 shares of its common stock to certain accredited investors for $690,000 on May 26, 2010. The investors also received warrants to purchase one share of the Company’s common stock for each share of its common stock purchased in the offering for $0.50, which expire on December 26, 2015.

Voiceserve recently announced the introduction of softphone dialers for Apple’s iPhone, iPod and iPad. The softphone dialers enables users of these devices to take advantage of the significantly lower cost VoIP communications. For example, users of Apple’s highly successful iPad are able to download the softphone dialer on to their tablet computer, turning it into a virtual phone. Calls can be made simply by using the touch screen pad and dialing a desired number or simply using contact information already downloaded on the unit, anywhere in the world. The Company also provides Instant (text) Messaging service for Android, Apple and Symbian cellular phone. Similar to using Instant Messaging on computers, user can interact with several people at the same time and see who is participating in the Instant Message session. The service is open system, enabling it to communicate across different protocols – similar to email.

“These are very exciting times for Voiceserve. Our efforts at closely managing costs while growing the company’s revenue base has brought us to profitability. As we continue to expand our reach into other markets, such as the U.S. and Latin America, and further penetrate our existing markets, we expect to continue a profitable trend, said Michael Bibelman, VoiceServe’s CEO. “Our incredibly versatile VoIP software provides a comprehensive base for companies of all sizes to either take advantage of the cost efficiencies inherent in VoIP communications or become wholesalers, resellers or retailers in the fast expanding VoIP market. To stay on the leading-edge of our industry, we are continually developing services that enhance the functionality of our VoIP offering. Our customers advise us of their needs and our talented technical professionals develop service around them. We are a very customer centric business.”

Alexander Ellinson, Voiceserve’s chairman, added, “Our focus on the markets’ end user demands is gaining world-wide exposure, both from our existing customer base as well as potential new customers. Industry exhibitions are providing a dynamic venue for Voiceserve to advertise its comprehensive VoIP software package. We attract considerable attention at these exhibitions and generate impressive leads on which our sales force follows up. Some of our first to market products have won awards at some of these key events. We expect the momentum being built for Voiceserve’s products, coupled with the company’s popular first-to-market features, will support continued growth.”

About VoiceServe, Inc.

VoiceServe is a software platform provider focusing primarily on delivering affordable, complete, next generation services to Internet Telephony Providers (ITSPs). Products include VoipSwitch, a custom modular all-in-one Voice over Internet Protocol (VoIP) management platform licensing solution for resellers; VoIP airtime minutes bundled with optional convenient features, including virtual numbers, direct dial, web callback, and call forwarding; IP-PBX; and mobile softphone, and video technologies. For further information please visit www.voiceserve.com. More information about Voipswitch can be found at www.voipswitch.com

Certain statements in this news release may constitute “forward-looking” statements within the meaning of section 21E of the Securities and Exchange Act of 1934. The Company believes that its expectations, as expressed in these statements are based on reasonable assumptions regarding the risks and uncertainties inherent in achieving those expectations. These statements are not, however, guarantees of future performance and actual results may differ materially. Risk factors are listed in the most recent Annual Report on Form 10-KB and Quarterly Report on Form 10-QB filed with the Securities and Exchange Commission.

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VOICESERVE, INC. AND SUBSIDIARIES Consolidated Balance Sheets         June 3, 2009 March 31, 2010 (Unaudited) Assets   Current assets: Cash and cash equivalents $ 808,632 $ 218,438 Accounts receivable, net of allowance for doubtful accounts of $64,679 and $0, respectively 56,505 32,839 Inventory - - Prepaid expenses and other current assets 16,381 16,901 Total current assets 881,518 268,178   Property and equipment, net of accumulated depreciation of $63,157 and $53,986 respectively 10,774 11,662 Intangible assets, net of accumulated amortization of $450,417 and $277,917, respectively 2,166,374 2,223,874   Total assets $ 3,058,666 $ 2,503,714   Liabilities and Stockholders' Equity   Current liabilities: Accounts payable $ 230,986 $ 256,458 Accrued expenses payable 45,450 57,705 Deferred software license fees 215,049 245,666 Loans payable to related parties 33,715 34,212 Due sellers of VoipSwitch Inc. 150,000 150,000 Total current liabilities 675,200 744,041 Liability for common stock purchase warrants 335,754 - Total current liabilities 1,010,954 744,041   Stockholders' equity: Preferred stock, $.001 par value; authorized 10,000,000 shares, none issued and outstanding - - Common stock, $.001 par value; authorized 100,000,000 shares, issued and outstanding 32,402,935 and 29,402,935 shares, respectively 35,204 32,403 Additional paid-in capital 4,894,675 4,733,537 Deficit (2,868,646) (2,994,155) Accumulated other comprehensive income (loss) (13,521) (12,112) Total Stockholders’ Equity 2,047,712 1,759,673 Total Liabilities and Stockholders’ Equity $ 3,058,666 $ 2,503,714 VOICESERVE, INC. AND SUBSIDIARIES Consolidated Statements of Operations             Three Months Ended June 30, 2010   2009 Operating revenues: Software license fees $ 1,004,097 $ 637,991 Revenues from communications airtime and devices 69,863 23,913   Total operating revenues 1,073,960 661,904   Cost of operating revenues: Software license fees 415,221 206,082 Cost of communications airtime and devices 37,701 41,872   Total cost of operating revenues 452,922 247,954   Gross profit (loss) 621,038 413,950   Operating expenses: Selling, general and administrative expenses (including stock-based compensation of $21,064 and $379,265, respectively) 616,884 858,368   Total operating expenses 616,884 858,368   Income (loss) from operations 4,154 (444,418)   Income from revaluation of liability for common stock purchase warrants 121,854 - Interest income - 1 Interest expense     (499) (23)   Income (loss) before income taxes 125,509 (444,440)   Income taxes (benefit) - -   Net income (loss) $ 125,509 $ (444,440)   Net income (loss) per share - basic and diluted $ 0.00 $ (0.01)   Weighted average number of shares outstanding basic and diluted 33,536,297 29,160,680