Voiceserve Reports Financial Results for its Fiscal Third Quarter

VoiceServe, Inc., a low-cost, next-generation Internet Telephonysoftware and service provider, reported financial results for itsthird quarter and nine month period ended December 31, 2010.

In a release on February 15, the company noted earnings details:

The Company reported revenues in its fiscal third quarter of $1.3million. This compares to revenue of $985,000 for the same period inits previous fiscal year and $1.0 million in the second quarter ofits current fiscal year, representing increases of 28 percent and 22percents of the prior periods, respectively. The Company reported anet loss for its third quarter of the current fiscal year of$(42,000), compared to losses of $(48,000) and $(592,000) for thethird quarter of the prior fiscal year and the second quarter of thecurrent fiscal year, respectively.

Revenue for the nine month period in the current fiscal year was$3.4 million which compares to $2.4 million for the same period ofthe prior fiscal year. The Company reported a net loss of $(510,000)or $0.02 per basic share for the first nine months of fiscal year2011. This compares to a net loss of $(550,000) or $0.02 per basicshare for the same period in fiscal year 2010.

The Company's gross margin for the current fiscal quarter was 46percent compared to 65 percent for the third quarter of the previousfiscal year. For the first nine months the Company's gross marginwas 50 percent in the current fiscal year and 66 percent in theprevious fiscal year. The lower gross margins experienced during thecurrent fiscal year reflect management's decision to deemphasize itsVoIP services offering to focus on its core higher margin softwarebusiness, which resulted in negative gross margin for the serviceline of business as the Company expensed communication air timecosts, coupled with costs associated with breaking into newgeographic markets, specifically North and Latin America. TheCompany expects its gross margin to return to levels more reflectiveof a software company as its sales efforts gain momentum in thesemarkets during the current calendar year.

Sales, general and administrative (SG&A) costs during the firstnine months of fiscal 2011 were $1,724,116, inclusive of stock basedcompensation, compared $1,409,897 for the nine month period of theprevious fiscal year, also inclusive of stock based compensation.Increased SG&A for the current fiscal year reflects increasedmarketing and Internet advertising investment, increased sales andsales-engineers professionals, the added expense of Directors andOfficers insurance, which the company purchased in the later part ofthe second quarter. Higher marketing costs are directly associatedwith management's decision to increase its participation intelecommunications industry conferences, which has historicallygenerated considerable sales leads and provided crucial exposure tosenior telecommunications professionals and associations. Voiceservealso hired several sales and engineer professionals to support itsgeographic expansion into North and Latin America and to furtherdevelop its video on demand offering, which it plans to introduce inthe third or fourth quarter of the current fiscal years.

Cash and cash equivalents as of December 31, 2010 were $337,000and the Company has no long term debt.

"Our participation in telecom conferences around the world isgreatly enhancing Voiceserve's visibility in targeted markets. Salesleads generated from these annual conventions are qualified, savingour sales force valuable time and shortening our sales cycles," saidMichael Bibelman, Voiceserve's CEO. The benefit from our increasedsales force hired during the second quarter is beginning to developtraction, which can be seen in our quarter-over-quarter revenueincrease of 22 percent. As we achieve a critical mass in our saleseffort to effectively sell into the Americas market, and furtherpenetrate existing customer bases in the Middle East and Europe, weexpect to maintain this sales momentum for the foreseeable future.Further supporting healthy revenue growth will be our video-on-demand offering. We have developed a robust software package thatdelivers on-demand movies to VoIP users and are well on our way tobuilding access to an extensive library of movies that will servethe viewing needs of customers in any country and language. Weexpect to begin offering Voiceserve's video-on-demand during thecurrent fiscal quarter."

Alex Ellinson, Voiceserve's Chairman, added, "With the increasingdeployment of WIFI technology globally, smart phones such asBlackberries and iPhones are becoming a very popular form ofcommunication thus avoiding GSM or other mobile networks.Voiceserve's Voipswitch software for most mobile phones is the mostadvanced on the market. Our software caters to nearly all the smartphones currently on the market. Voiceserve is one of the onlycompanies globally that VoIp-enables nearly all the mobile unitscirculating through retailers. Through the trade shows our companyis getting recognition from the large carriers for its suite ofproducts and advanced software. We are rapidly developing areputation for offering the most consistent and effective suite ofnext generation VoIP software solutions for smart phones. December2010, marked a turn in our business. Our capabilities are beingdiscovered daily by telecom industry leaders and large corporationsdemonstrating serious interest in partnership and licensing aportion, if not all, of our VoIP capabilities. The next severalmonths should prove interesting for not only is our traditionalsales effort growing, but it is becoming clear that there areseveral opportunities to establish our first corporate licensingagreements in the near future."

More Information:

voipswitch.com

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