TUSTIN, Calif., May 17, 2005 (PRIMEZONE) -- VillageEDOCS (OTCBB:VEDO) announced today its financial results for the quarter ended March 31, 2005.
"We are excited to report revenue of $1,411,982 for the first quarter of 2005. While our operating companies continue to achieve growth, we are also pleased with the activities of the holding company during the first quarter. The Company converted $3.68 million of notes payable and accrued interest into 40,332,669 shares of common stock. While the conversion resulted in a substantial reduction of debt, and will help our operating results going forward, it did result in a one-time interest charge of $187,887 during the first quarter. We are making progress toward the conversion of an additional $771,000 in debt during the second quarter. We continued our acquisition strategy during the quarter, working toward the purchase of Resolutions, which closed on April 15, 2005, adding e-forms and imaging and archive capabilities to our suite of solutions. We pursued capital formation opportunities, which lead to obtaining $800,000 from Barron Partners LP and securing a relationship that included funding to acquire Resolutions and provides for active pursuit of our ongoing acquisition plan. MessageVision ("MVI") contributed $773,620 in revenue and $90,691 in operating income for the quarter. The electronic document delivery service operated by MVI has achieved an operating income for five consecutive quarters," said Mr. Mason Conner, President and CEO of VillageEDOCS.
Mr. Conner continued, "At Tailored Business Systems ("TBS"), we continued our strategy of investment in long-term sustainable growth, including reinforcing leadership by promoting Lynn Clark to Chief Operating Officer. In addition, Resolutions will provide services that previously have been outsourced to other vendors. Historically, TBS reports the smallest percentage of annual revenue from the first quarter and the greatest percentage from the fourth quarter. This is because the printing business, which accounts for roughly 40% of revenue, is significantly more active in the second half of the year. One of TBS' goals this year is to expand recurring printing revenue streams to minimize seasonal sensitivity by the first quarter of 2006. For the first quarter of 2005, TBS contributed $638,362 in revenue but reported an operating loss of $207,545 for the quarter.
VillageEDOCS' net sales for the three months ended March 31, 2005 were $1,411,982, a 54% increase over net sales for the prior year quarter of $915,445. The increase of $496,537 in the 2005 quarter resulted from an increase of $171,451 in revenue from MVI (which resulted from growth in the number of clients) as well as an increase of $325,086 in revenue of TBS (which resulted from reporting a full quarter of revenue from TBS in the 2005 period as compared with approximately one and one-half months in the 2004 period).
Gross profit for the three months ended March 31, 2005 increased 51% to $860,496 as compared to $571,152 for the prior year quarter. The increase in the 2005 quarter of $289,344 resulted from increases of $184,801 and $104,543 from MVI and TBS, respectively. Gross profit margin for the 2005 quarter was 61% as compared to 62% for the 2004 quarter.
Operating expenses for the three months ended March 31, 2005 increased by 61% to $1,156,393 from the $718,635 reported in the three months ended March 31, 2004. Of the total increase of $437,758, $115,670 and $355,881 are attributable to increases in operating expenses of MVI and TBS, respectively, as offset by a decrease of $33,793 in operating expenses of corporate.
During the three months ended March 31, 2005, corporate incurred $179,043 in operating expenses, a decrease of $33,793 from the $212,836 reported in the 2004 quarter as a result of reduced consulting fees.
During the three months ended March 31, 2005, MVI incurred $427,578 in operating expenses, an increase of 37% over the $311,908 reported in the 2004 quarter. Product and technology development increased $3,183 to $94,256 from the $91,073 reported in the prior year quarter. Sales and marketing increased by $21,617 to $187,606 from the $165,989 reported in the prior year quarter as a result of staff increases. General and administrative increased by $91,404 to $116,342 from the $24,938 reported in the prior year quarter as a result of staff increases. Depreciation and amortization expense decreased $534 to $29,374 from the $29,908 reported in the 2004 quarter.
During the three months ended March 31, 2005, TBS incurred $549,772 in operating expenses, an increase of 183% over the $193,891 reported in the 2004 period. The increases in Product and technology development, Sales and marketing, General and administrative, and Depreciation and amortization expenses to $95,702, $111,108, 320,776, and $22,186, respectively, are attributable to comparing three full months in the 2005 period to one and one-half months in the 2004 period.
As a result of the foregoing, the Company reported an operating loss for the three months ended March 31, 2005 of $295,897, compared to an operating loss of $147,483 for the three months ended March 31, 2004. The overall operating loss in the 2005 quarter was comprised of operating losses of $179,043 and $207,545 from corporate and TBS, respectively, as offset by operating income from MVI of $90,691. The overall operating loss in the 2004 quarter was comprised of operating income of $21,560 and $43,793 from MVI and TBS, respectively, as offset by an operating loss from corporate of $212,836.
Interest expense for the quarter ended March 31, 2005 increased by 185% to $300,040 from the $105,276 reported in the prior year quarter due to charges of $187,887 related to the beneficial conversion feature associated with borrowings from prior years and the conversion to equity of those borrowings.
Net loss for the three months ended March 31, 2005 was $600,137, or $0.01 per share, compared to a net loss of $261,917, or $0.01 per share, for the three months ended March 31, 2004 on weighted average shares of 59,363,429 and 33,543,178, respectively. The overall net loss in the 2005 quarter was comprised of net losses of $474,658 and $208,478 from corporate and TBS, respectively, as offset by net income from MVI of $82,999. The overall net loss in the 2004 quarter was comprised of net losses of $240,928 and $55,053 from corporate and MVI, respectively, as offset by net income from TBS of $34,064.
About VillageEDOCS
VillageEDOCS, through our MessageVision subsidiary, is a leading provider of comprehensive business-to-business business information delivery services and products for organizations with mission-critical needs, including major corporations, government agencies and non-profit organizations. Through our Tailored Business Systems subsidiary, we provide accounting and billing solutions for county and local governments. Through our Resolutions subsidiary, we provide products for document management, archiving, document imaging, imaging software, document scanning, e-mail archiving, document imaging software, electronic forms, and document archiving. For further information, visit our website at www.villageedocs.com.
Cautionary Statement Regarding Forward-Looking Information
All statements in this press release that do not directly and exclusively relate to historical facts constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements represent the Company's plans, intentions, expectations and belief and are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected or expressed herein. These include uncertainties in the market, competition, legal, regulatory initiatives, success of marketing efforts, availability, terms and deployment of capital, and other risks detailed in the Company's SEC reports, of which many are beyond the control of the Company. The Company assumes no obligation to update or alter the information in this news release. Investors are cautioned not to put undue reliance on any forward-looking statements. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in Section 21E of the Exchange Act.