VSRV Voiceserve Inc (CE)

VoiceServe, Inc. (OTC BB: VSRV), a low-cost, next-generation Internet Telephony software and service provider, today reported financial results for its second quarter and six month period ended September 30, 2010. The Company reported revenues of $2,108,685 for the first six months of fiscal year 2011, a 49 percent increase over the same period of the previous fiscal year. The Company reported a net loss for the current six month period of $(466,694) or $(0.01) per basic share, which includes stock based compensation of $308,462, compared to a net loss of $(501,918) or $(0.02) per basic share for the same period of the previous fiscal year, which includes stock based compensation of $387,110. Excluding stock based compensation, the Company generated a net loss of $(158,232) and $(114,808) for the six month periods ended September 30, 2010 and 2009, respectively.

For the second quarter ended September 30, 2010 the Company recorded revenues of $1,034,725. This compares to revenue of $725,783 for the previous fiscal year second quarter and $1,073,960 for the current fiscal year first quarter ended June 30, 2010. The Company noted that the period between June 30 and September 30 is its slowest period due to vacations and holidays throughout its current markets in Europe and the Middle East. The Company reported a net loss for the current second quarter of $(593,203) or $(0.02) per basic share, which included $287,398 in stock based compensation primarily related to stock options granted to executive management and members of the Company’s Board of Directors. This compares to a net loss of $(57,478) in the previous fiscal year second quarter and a net profit of $125,509 in the first quarter of the current fiscal year, which included income from revaluation of liability for common stock purchase warrants of $121,854.

Sales, general and administrative (SG&A) costs during the first six months of fiscal 2011 were $1,724,116, inclusive of stock based compensation, compared $1,409,897 for the six month period of the previous fiscal year, also inclusive of stock based compensation. Increased SG&A for the current fiscal year reflects increased marketing and Internet advertising investment, increased sales and sales-engineers professionals, the added expense of Directors and Officers insurance, which the company purchased in the later part of the second quarter. Higher marketing costs are directly associated with management’s decision to increase its participation in telecommunications industry conferences, which has historically generated considerable sales leads and provided crucial exposure to senior telecommunications professionals and associations. Voiceserve also hired several sales and engineer professionals to support its geographic expansion into North and Latin America and further develop its video on demand offering, which it plans to introduce in the third or fourth quarter of the current fiscal years.

Cash and cash equivalents as of September 30, 2010 were $533,471 and the Company has no long term debt.

Michael Bibelman, VoiceServe’s CEO, said, “Shortly after completing the private placement, we started the process of building our sales and engineering staff to prepare for our strategy of penetrating the North American market, especially the United States, and Latin America, where we will initially focus on Brazil. While we were fortunate to have found and hired talented professional, the benefits of their work will begin to surface during the third quarter. We also heightened our development efforts in Video-on-Demand and expect to introduce our service over the next few months.” Mr. Bibelman continued, “We attended three industry conferences in October. We attended the IT Expo West in Los Angeles, the Gitex TechnologyWeek in Dubai, and the Futurecom in Sao Paulo. The conference in Sao Paulo was especially exciting. With South American economies experience solid GDP growth, the conference generated over 265 sales leads. We are in the process of establishing representation in Brazil with local, Portuguese speaking VoIP professionals, and believe this market will be very strong for Voiceserve in the foreseeable future.”

Alex Ellinson, Voiceserve’s Chairman, added, “To further the company’s corporate guidance, we added two highly regarded professionals to Voiceserve’s board of directors: Andrew Millet, a certified accountant and founder of a charted accountancy, tax and business advisory firm in the UK, and telecom industry veteran, Michael Taylor, a British Barrister. We also appointed Alfred Stefansky, a seasoned financial professional, as chief financial officer. Each appointee received shares in Voiceserve as a further incentive to provide crucial support to the company’s success. Although the granting of the shares, in addition to the company’s employee stock option plan, had an impact on the recent quarter’s SG&A, the long-term impact on the company’s growth should prove the investment worthy.” Mr. Ellinson concluded, “We continue to have confidence in our ability to achieve targeted revenue and earnings this year, as our efforts in building company infrastructure, coupled with our successful presence at leading telecom industry conferences, begin to impact business development.”

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.

   

VOICESERVE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

  September 30, March 31, 2010 2010 (Unaudited)

Assets

  Current assets: Cash and cash equivalents $ 533,471 $ 218,438 Accounts receivable, net of allowance for doubtful accounts of $30,000 and $0, respectively 98,885 32,839 Prepaid expenses and other current assets 17,143 16,901 Total current assets 649,499 268,178   Property and equipment, net of accumulated depreciation of $64,848 and $60,227, respectively 52,562 11,662 Intangible assets, net of accumulated amortization of $622,917 and $507,917, respectively 2,108,874 2,223,874 Total assets $ 2,810,935 $ 2,503,714  

Liabilities and Stockholders' Equity

  Current liabilities: Accounts payable $ 286,522 $ 256,458 Accrued expenses payable 58,800 57,705 Deferred software license fees 276,499 245,666 Loans payable to related parties 35,471 34,212 Due sellers of VoipSwitch Inc. 150,000 150,000 Total current liabilities 807,292 744,041 Liability for common stock purchase warrants 302,634 - Total liabilities 1,109,926 744,041   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 36,104,429 (including 900,000 shares committed to be issued) and 32,402,935 shares, respectively 36,104 32,403 Additional paid-in capital 5,181,191 4,733,537 Deficit (3,460,849) (2,994,155) Accumulated other comprehensive income (loss) (55,437) (12,112) Total stockholders' equity 1,701,009 1,759,673 Total liabilities and stockholders' equity $ 2,810,935 $ 2,503,714    

VOICESERVE, INC. AND SUBSIDIARIES

Consolidated Statement of Operations

  Three Months Ended Six Months Ended September 30 September 30,   2010     2009   2010     2009 Operating revenues: Software license fees $ 953,114 $ 725,709 $ 1,957,211 $ 1,363,700 Revenues from communications air time and devices   81,611   24,074   151,474   47,987 Total operating revenues   1,034,725   749,783   2,108,685   1,411,687   Cost of operating revenues: Software license fees 457,197 218,901 872,418 424,983 Communications air time   96,732   36,834   134,433   78,706 Total cost of operating revenues   553,929   255,735   1,006,851   503,689   Gross profit (loss)   480,796   494,048   1,101,834   907,998   Operating expenses: Selling, general and administrative expenses (including stock-based compensation of $287,398, $7,845,

$308,462 and $387,110, respectively)

  1,107,232   551,529   1,724,116   1,409,897 Total operating expenses   1,107,232   551,529   1,724,116   1,409,897 Income (loss) from operations (526,436) (57,481) (622,282) (501,899)   Income from revaluation of liability for common stock purchase warrants 33,120 - 154,974 - Interest income 614 - 614 1 Interest expense   499   3   -   (20) Income (loss) before income taxes (592,203) (57,478) (466,694) (501,918) Income taxes (benefit)   -   -   -   - Net income (loss) $ (592,203) $ (57,478) $ (466,694) $ (501,918)   Net income (loss) per share - basic and diluted $ (0.02) $ (0.00) $ (0.01) $ (0.02)   Weighted average number of shares outstanding - basic and diluted 35,204,429 32,402,935 30,754,584 31,578,760