Voiceserve, Inc. (OTCBB: VSRV), a low-cost, next-generation
Internet Telephony software and service provider, today reported
financial results for its first fiscal quarter ended June 30, 2011.
During the first quarter of its 2012 fiscal year, Voiceserve
expanded beyond its original wholesale/retail business and signed
its first international commercial contracts, released an advanced
version of its mobile dialers enabling HD quality video calls and
completed a private placement of its common stock, the proceeds
from which were used to increase its sales, marketing and
engineering staffs.
The Company reported revenues of $1.2 million for the first
quarter of its fiscal year 2012, a 9.2 percent increase over for
the same period of the previous fiscal year and an increase of 14.6
percent over the fourth quarter of fiscal year 2011. During the
first quarter, the Company completed the installation of software
pursuant to its first commercial contract with Saudi Arabia's
largest mobile carrier and signed a license engagement with a
second mobile carrier valued at $214,000. Although the installation
of software pursuant to the second engagement was nearly completed
during the first quarter, the Company will not begin to recognize
its revenue until the second quarter. Both engagements include
annual, recurring maintenance and subscriber revenue components.
Voiceserve anticipates revenue growth to accelerate during the
remainder of the year as its list of commercial contracts continues
to increase.
The Company reported a net loss of $(1.1) million or $(0.03) per
basic share, for the first quarter, which includes $46,000 of
expenses related to the capital raises completed during the first
quarter and non-cash, mark-to-market pricing of its common stock
derivatives and non-cash restricted stock-based compensation
totaling of $1,019,000. Exclusive of these items, the Company
generated a net loss of $(69,000). This compares to a net income of
$126,000 for the first quarter of fiscal year 2011, and a net loss
of $(263,000) or $(0.01) per basic share for the fourth quarter of
fiscal year 2011.
For the three months ended June 30, 2011, Voiceserve's gross
profit on revenue was $436,000, yielding gross margins of 37
percent. This compares to average gross margin of 58 percent during
the previous fiscal year and 40 percent in the prior sequential
fourth quarter. The Company's cost-of-goods-sold is primarily
comprised of staff expenses of its technical group, which includes
research and development costs. During the quarter, the Company
added engineers and sales-engineers to its technical staff, which
increased the costs. As revenue generated from the additional staff
is recognized, the Company expects its gross margin to
increase.
Sales, general and administrative (SG&A) costs for the three
months ended June 30, 2011 totaled $1.1 million, inclusive of
$46,000 of capital raise expenses and non-cash, stock-based
compensation of $568,000. Excluding these expenses, SG&A was
$505,000. SG&A for the comparable period of the previous fiscal
year was $617,000, which included stock based compensation of
$21,000, and SG&A during the fourth quarter of 2011 was
$703,000, which included $11,000 in stock based compensation.
Excluding stock based compensation, SG&A for the three months
ended June 30, 2011 decreased $45,000 compared to the same period
of the previous fiscal, and decreased by $141,000 from the fourth
quarter of the previous fiscal year. Voiceserve's cost structure is
primarily centered on its technical support and development
operations located in Poland. The Company closely manages its costs
to ensure efficiency and expects its general and administrative
costs to remain close to current levels, excluding non-operating
expenses such as stock and derivative mark-to-market pricing.
At June 30, 2011, the Company had cash and cash equivalents of
$455,000, accounts receivable of $96,000, and prepaid expenses of
$88,000. The Company's current liabilities of approximately $1.4
million are comprised of accounts payable of $310,000, deferred
software license fees and other of $209,000, and $817,000
pertaining to the liability for common stock purchase warrants.
Voiceserve continues to carry no long term debt. The Company's
stockholder's equity totaled $1.3 million at June 30, 2011.
During the first quarter 2012, 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, engineering and marketing
effort and for general business purposes. As of June 30, 2011,
Voiceserve had approximately 45 million shares of common stock
outstanding and approximately 50.7 million shares fully diluted.
The aggregate proceeds if all options and warrants were to be
exercised would approximate $2.2 million.
Commenting on the Company's progress, Michael Bibelman,
Voiceserve's CEO, said, "During the first quarter of fiscal 2012 we
recognized that to effectively compete in the commercial side of
the telecom industry we needed to expand our sales and engineering
effort. The small capital raise that was completed during the
period enabled us to add highly qualified professionals that we
believe were needed to support commercial rollouts and
proposals."
Mr. Bibelman continued, "We also completed one commercial
project and a substantial portion of a second one during the
quarter. We had expected to complete our second large enterprise
project during the first quarter, but additional requirements by
our clients extended the process beyond the quarter's end and, as a
result, we were not able to recognize its revenue during the first
quarter."
"We remain confident in our projections for fiscal year 2012 of
$9 million in revenue and $0.08 of earnings per share." added
Alexander Ellinson, Voiceserve's Chairman. "There are many
catalysts that are positively impacting our market, the least of
which is the economic unrest weighing on most countries. We think
the pace at which the market is moving towards low cost, high
quality VoIP is accelerating. We believe that demand across all
segments of the market is building, and Voiceserve intends to
aggressively pursue all levels of application."
Voiceserve has scheduled a conference call to discuss the
Company's financial results for the first quarter of 2011.
Conference Call Details:
Date/Time: Tuesday, August 16, 2011 - 10:00 a.m.
(ET)
Telephone Number: 800-868-1837
International Dial-In Number: 404-920-6440
Participant Pass code: 972268#
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 www.voipswitch.com.
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 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
VOICESERVE, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
Three Months Ended June 30,
-------------------------------
2011 2010
-------------------------------
Operating revenues:
Software license fees and support $ 1,172,654 $ 1,004,097
Communications airtime and devices 2 69,863
-------------------------------
Total operating revenues 1,172,656 1,073,960
-------------------------------
Cost of operating revenues:
Software license fees and support 736,766 415,221
Communications airtime and devices - 37,701
-------------------------------
Total cost of operating revenues 736,766 452,922
-------------------------------
Gross profit (loss) 435,890 621,038
-------------------------------
Operating expenses:
Selling, general and administrative
expenses, including stock-based
compensation of $567,645; and $21,064,
respectively 1,118,526 616,884
-------------------------------
Total operating expenses 1,118,526 616,884
-------------------------------
Income (loss) from operations (682,636) 4,154
Income from revaluation of liability for
common stock purchase warrants (450,954) 121,854
Interest income 20 -
Interest expense (10) (499)
-------------------------------
Income (loss) before income taxes (1,133,580) 125,509
Income taxes (benefit) - -
-------------------------------
Net income (loss) $ (1,133,580) $ 125,509
===============================
Net income (loss) per share - basic and
diluted $ (0.03) $ 0.00
===============================
Weighted average number of shares outstanding
- basic and diluted 40,289,425 33,536,297
-------------------------------
VOICESERVE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, 2011 March 31, 2010
-------------------------------
Assets (unaudited)
Current assets:
Cash and cash equivalents $ 455,031 $ 141,739
Accounts receivable, net of allowance for
doubtful accounts of $8,804 and $6,735,
respectively 96,120 48,769
Prepaid expenses and other current assets 87,855 82,823
-------------------------------
Total current assets 639,006 273,331
Property and equipment, net of accumulated
depreciation of $67,547 and $66,878
respectively 9,450 10,045
Intangible assets, net of accumulated
amortization of $795,417 and $737,917,
respectively 2,067,624 2,125,124
-------------------------------
Total assets $ 2,716,080 $ 2,408,500
===============================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 309,773 $ 348,494
Accrued expenses payable - 11,464
Deferred software license fees 208,539 188,197
Loans payable to related parties 38,259 38,236
-------------------------------
Total current liabilities 556,571 586,390
Liability for common stock purchase warrants 817,290 152,214
-------------------------------
Total liabilities 1,373,861 738,604
-------------------------------
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
44,585,198 and 38,354,429 shares,
respectively 44,585 38,354
Additional paid-in capital 6,285,643 5,482,281
Deficit (4,899,792) (3,76,212)
Accumulated other comprehensive income
(loss) (88,217) (84,527)
-------------------------------
Total stockholders' equity 1,342,219 1,669,896
-------------------------------
Total liabilities and stockholders' equity $ 2,716,080 $ 2,408,500
===============================
Contacts: Investor Contact: Grannus Financial Advisors, Inc.
Yvonne L. Zappulla Managing Director 212-681-4108
Yvonne@GrannusFinancial.com Voiceserve, Inc. Alexander Ellinson
President & Chairman +44 208 136 6000 alex@voipswitch.com
www.voiceserve.com
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