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8-K - CURRENT REPORT - VOICESERVE INCf8k070511_vserve.htm
Exhibit 99.1

Voiceserve, Inc. Reports Full Year and Fourth Quarter
Fiscal 2011 Financial Results

Company delivers 33% year-over-year revenue increase

Company schedules conference call to provide progress update

LONDON, ENGLAND – July 5, 2011 – Voiceserve, Inc. (OTC BB: VSRV), a low-cost, next-generation Internet Telephony software and service provider, today reported financial results for its full year and fourth quarter fiscal year ended March 31, 2011.  Fiscal year 2011 caps off a highly productive year for the Company during which it enhanced its management team and Board of Directors, completed a private placement of its common stock, increased its sales, marketing and engineering staffs, and completed the build-out of its VoIP software platform to include mobile dialers for the broad range of smart phones including Blackberry, Symbian, Windows, Android and Iphone/Ipad. The Android and iPhone/iPad units include the advanced features consisting of video conferencing and group instant messaging. In addition the company launched its video-on-demand (VOD) module which can be linked to the latest tablets and smart phones. Voiceserve has now completed its shift from a development stage entity to a growth stage company in full commercialization mode.

Voiceserve reported revenue for fiscal 2011 of $4.4 million, an increase of approximately 33 percent compared to $3.3 million for the prior fiscal year. The Company’s revenue growth reflected increased licensing sales from the successful launch of its Blackberry and Android mobile modules. Voiceserve anticipates revenue growth acceleration during its current fiscal year 2012, as its recently completed, comprehensive VoIP software platform, inclusive of innovative apps for mobile phone and VOD, penetrates the market. The Company reported a net loss of $(772,000) or $(0.02) per basic share for fiscal 2011. This compares to a net loss of $(665,000) or $(0.02) per basic share for fiscal year 2010.  Voiceserve expects to achieve profitability in the current fiscal year.

For fiscal 2011, Voiceserve’s gross profit totaled $2.1 million, yielding a gross margin of 48 percent, compared to a gross margin of 65 percent for the prior fiscal year. The year-over-year gross margin decrease was the result of the Company’s decision to expand into new geographic markets, specifically North and Latin America, and the development of video-on-demand technology. The Company expects its gross margin to improve to levels more reflective of a software company in the current fiscal year.
Sales, general and administrative (SG&A) costs in fiscal 2011 were $3.2 million compared to $2.8 million for the previous fiscal year.  The increase in SG&A year-over-year reflects increased marketing costs, increased sales and sales-engineer staff, the development of new software applications (especially for mobile phones), and the further development of its video-on-demand offering. Voiceserve intends to continue to closely manage costs, which decreased as a percent of gross revenue by approximately 13 percent, year-over-year.

The Company reported revenues for the fourth quarter of fiscal 2011 of $1.0 million, representing a 12 percent increase over the comparable period in fiscal 2010 of $913,000 and compares to $1.3 million in the third quarter of its fiscal year 2011.  The decrease in revenue from the third to the fourth quarter of the current fiscal year resulted from the company’s decision to transition its sales strategy. Since inception, Voiceserve focused its sales effort on small-to-medium sized businesses, and deployed standard channels of advertising. However, during the last quarter of fiscal year 2011, the Company redirected a significant portion of its sales effort to focus on sales to larger, global corporations. Results from this strategic transition are expected to surface in the first quarter of the current fiscal year. In addition, the Company increased its sales force during the fourth quarter to ensure sufficient sales coverage to the full spectrum of target companies. The Company reported a net loss for its fourth quarter of $(263,000), compared to losses of $(115,000) and $(42,000) for the fourth quarter of the prior fiscal year and the third quarter of the fiscal 2011, respectively.

At March 31, 2011, the Company had cash and cash equivalents of $142,000 and accounts receivable of $49,000; the Company’s DSO (days sales outstanding) represents approximately 5 days, which is considered exceptionally low by industry standards.  The Company continues to carry no long term debt and stockholder’s equity totals $1.7 million.  Subsequent to fiscal 2011 year end, the Company completed a sale of 3,830,769 shares of its common stock to certain accredited investors for $498,000 in a Private Investment in Public Entity (PIPE) transaction.   Investors participating in this transaction also received warrants to purchase one half of a share of the Company’s common stock at $0.30 for each share of its common stock purchased in the offering. The use of proceeds is predominately directed towards expanding its sales and marketing effort and for general business purposes.  Inclusive of the PIPE completed after fiscal 2011, Voiceserve has approximately 42.2 million shares of common stock outstanding and fully diluted shares of approximately 47.9 million.  The aggregate proceeds if all options and warrants were to be exercised would approximate $2.2 million.

“We spent the past year building out the applications for our software platform and we believe we have succeeded in creating an advanced, disruptive technology.  Uniquely, Voiceserve’s entire software platform, which features multiple advanced and first-to-market applications, is consolidated onto one simplified billing module.  In addition, our platform is Windows-based, and thus open-architecture, simple and fast to deploy, backed by strong customer support, and also competitively priced.   We recently shifted our marketing effort to include significant corporate enterprises and are receiving a great deal of attention from prospective clients. We believe our global mobile dialers and video-on-demand capabilities are a material competitive advantage within the VoIP industry and have already led to several contracts in this current first quarter with large telecommunications carriers,” commented Michael Bibelman, Voiceserve’s CEO.

Alexander Ellinson, Voiceserve’s Chairman, added, “Our industry is under extraordinary change and we believe that our team is consistently at the forefront of this change and that our suite of next generation VoIP software solutions is attractive to large carriers.  Over the past three years, we have consistently grown our reseller business while concurrently achieving significant milestones in the build-out of our software platform and numerous application modules. Now that our product offering is complete, we see the growth in our business accelerating and significant recurring revenue building. While our traditional sales effort will continue to grow, it is becoming clear that newly launched initiatives with large enterprises will be a material additional contributor to revenues beginning in the first quarter of fiscal year 2012. Consequently, we anticipate generating revenue of approximately $9 million in the current fiscal year 2012 with fully diluted earnings per share of $0.08.”
Conference Call Details:
Date/Time: Thursday, July 7, 2011—1:00 p.m. (ET)
Telephone Number: 800-920-7487
International Dial-In Number: 404-920-1710
Participant Pass code: 41587979#
A replay of the conference call in its entirety will be available approximately two hours after its completion on the Company’s investor relations website at

Investor Contact:

Yvonne L. Zappulla
Managing Director
Grannus Financial Advisors, Inc.

Alexander Ellinson
President & Chairman
Voiceserve, Inc.
+44 208 136 6000
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 More information about Voipswitch can be found at

Certain information included in this press release contains statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which may be identified by words such as “may,” “could,” “will,” “plan,” “expect,” “anticipate,” “estimate,” “project,” “intend” or other similar expressions, involve important risks and uncertainties that could significantly affect results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by or on behalf of the Company. Factors that could cause such differences include, but are not limited to, the Company’s ability to adapt to rapid changes in the market for voice and messaging services and successfully introduce new products and services; the Company’s ability to attract new customers; worsening economic conditions; system disruptions or flaws in the Company’s technology; results of future litigation or intellectual property matters involving the Company; the Company’s dependence upon key personnel; additional competition from existing and new competitors; inflation; deflation; the ability to attract and retain qualified management; uncertainties relating to regulation of VoIP services; the incurrence of unplanned capital expenditures; the ability to obtain financing for working capital, capital expenditures and general corporate purposes.



*** Financial Statements Follow ***

Consolidated Statements of Operations

    Three Months Ended March 31,     Twelve Months Ended March 31,  
    2011     2010     2011     2010  
Operating revenues:                        
   Software license fees and support   $ 1,016,825     $ 887,383     $ 4,140,211     $ 3,168,876  
   Communications airtime and devices     6,223       25,757       255,117       141,189  
   Total operating revenues     1,023,048       913,140       4,395,328       3,310,065  
Cost of operating revenues:                                
   Software license fees and support     630,773       330,539       2,076,685       1,038,671  
   Communications airtime and devices     (15,271 )     (14,783 )     228,778       124,422  
   Total cost of operating revenues     615,502       315,756       2,305,463       1,163,093  
Gross profit (loss)     407.546       597,384       2,089,865       2,146,972  
Operating expenses:                                
   Selling, general and administrative expenses,   including stock-based compensation of   $10,924; $10,815; $330,552; and $405,772,   respectively     702,953       712,981       3,166,134       2,812,453  
      Total operating expenses     702,953       712,981       3,166,134       2,812,453  
Income (loss) from operations     (295,407 )     (115,597 )     (1,076,269 )     (665,481 )
Income from revaluation of liability for common stock purchase warrants     34,227       -       305,394       -  
Interest income     (604 )     38       29       39  
Interest expense     (1,169 )     20       (1,211 )     -  
Income (loss) before income taxes     (262,953 )     (115,539 )     (772,057 )     (665,442 )
Income taxes (benefit)     -       -       -       -  
Net income (loss)   $ (262,953 )   $ (115,539 )   $ (772,057 )   $ (665,442 )
Net income (loss) per share - basic and diluted   $ (0.01 )   $ (0.00 )   $ (0.02 )   $ (0.02 )
Weighted average number of shares                                
   outstanding - basic and diluted     38,754,430       32,402,938       36,352,342       31,990,848  


Consolidated Balance Sheets

March 31, 2011
March 31, 2010
Current assets:
   Cash and cash equivalents
  $ 141,739     $ 218,438  
   Accounts receivable, net of allowance
      for doubtful accounts of $6,735 and $0, respectively
    48,769       32,839  
   Prepaid expenses and other current assets
    82,823       16,901  
      Total current assets
    273,331       268,178  
Property and equipment, net of accumulated depreciation
   of $66,878and $60,227 respectively
    10,045       11,662  
Intangible assets, net of  accumulated amortization of
   $737,917 and $507,917, respectively
    2,125,124       2,223,874  
Total assets
  $ 2,408,500     $ 2,503,714  
Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable
  $ 348,494     $ 256,458  
   Accrued expenses payable
    11,464       57,705  
   Deferred software license fees
    188,197       245,666  
   Loans payable to related parties
    38,236       34,212  
   Due sellers of VoipSwitch Inc.
    -       150,000  
      Total current liabilities
    586,390       744,041  
   Liability for common stock purchase warrants
    152,214       -  
      Total liabilities
    738,604       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
      38,354,429 and 32,402,935 shares, respectively
    38,354       32,403  
   Additional paid-in capital
    5,482,281       4,733,537  
    (3,766,212 )     (2,994,155 )
   Accumulated other comprehensive income (loss)
    (84,527 )     (12,112 )
      Total stockholders' equity
    1,669,896       1,759,673  
Total liabilities and stockholders' equity
  $ 2,408,500     $ 2,503,714  
See notes to consolidated financial statements.