SOURCE: VillageEDOCS Inc.

April 19, 2006 11:08 ET

VillageEDOCS' 2005 Revenues up 46% From 2004 and Gross Profit up 57%

TUSTIN, CA -- (MARKET WIRE) -- April 19, 2006 -- VillageEDOCS (OTC BB: VEDO) announced today its financial results for 2005.

"We are very pleased to report record revenue of $8,768,446 and income from operations of $125,186 for 2005," said Mason Conner, President and CEO of VillageEDOCS.

Mr. Conner continued, "While we are pleased that our operating companies have reported net sales of approximately $8.7 million for 2005 and continue to achieve growth, we are also very proud of the progress we have made in improving our balance sheet during 2005 by dramatically reducing debt, acquiring another subsidiary, securing new capital, and improving our cash position by 66%."

In 2005, we accomplished several strategic objectives which include:

--  Investment Banking Relationship with Barron Partners, LP worth up to
    $6 million (included $800,000 for Resolution acquisition and operating
    capital).
    
--  Balance Sheet Improvement by securing the conversion to common stock
    of approximately $5.4 million in promissory notes, and repaying an
    additional $0.2 million in debt.  Our remaining notes payable debt consists
    of $330,000 in acquisition-related notes with either multi-year or
    performance-based contractual repayment schedules, as well as approximately
    $160,000 in convertible notes;
    
--  Organic Growth in 2005.  We increased net revenue in our
    MessageVision, Inc. ("MVI") and Tailored Business Systems, Inc. ("TBS")
    operating units by 15% and 13%, respectively, over 2004 net revenue (TBS
    2004 net revenue from February 17, 2004, the date of acquisition through
    December 31, 2004);
    
--  Second consecutive year of income and positive cash flows from
    operating activities;
    
--  Growth through acquisition by acquiring Resolutions, a company with
    strategic products and services, including adding approximately $1.9
    million in revenue during 2005;
    
--  Sustained acquisition strategy by executing a definitive agreement
    with GoSolutions;
    
--  Enhanced corporate governance with two additional directors joining
    our board of directors in July 2005.
    
We continue to pursue the benefits of scale that our past acquisitions have created, sharing disciplines and skill sets of key employees across multiple business units.

TBS generated 43% of the Company's 2005 net revenue. MVI generated 35% of the Company's 2005 net revenue, as compared to 2004, when TBS and MVI generated 55% and 45% of the Company's revenue, respectively. Resolutions generated 22% of the Company's 2005 net revenue between April 1, 2005 (the effective date of acquisition) and December 31, 2005.

The increase in net revenue of $2,754,177 in 2005 resulted from an increase of $407,568, in revenue from MVI (which resulted primarily from higher sales volume to existing clients) as well as an increase of $450,824 in revenue of TBS (which resulted from reporting a full twelve months of revenue from TBS in 2005 as compared with approximately ten and one-half months in 2004). In addition, the Company reported $1,895,785 in revenue from Resolutions from the effective date of the acquisition in April 2005.

MVI contributed $3,093,450 in revenue and $750,390 in operating income for 2005. The electronic document delivery service operated by MVI has achieved an operating income for eight consecutive quarters.

For 2005, TBS contributed $3,779,211 in revenue and reported an operating loss of $(936). TBS increased its personnel costs in several departments in connection with an initiative to improve infrastructure in 2005 to support forecasted revenue increases.

In its first partial year as a subsidiary of VillageEDOCS, e-forms and imaging and archiving provider Resolutions contributed $1,895,785 in revenue and reported an operating income of $409,593.

Gross profit for 2005 increased 57% to $5,709,130 as compared to $3,646,480 for 2004. The increase in 2005 of $2,062,650 resulted from increases of $408,471 and $351,500 from MVI and TBS, respectively, and the addition of $1,302,679 from Resolutions. Gross profit margin for 2005 was 65% as compared to 61% for 2004.

During 2005, the Company recorded significant amounts of non-cash, non-operating income and expenses, including $325,000 in other expenses, income of $130,903 related to recording derivative liabilities at fair value, and $8,074,489 in interest expense, substantially all of which was non-cash and related to amortization of beneficial conversion features, amortization of debt issue costs, amortization of the fair value of warrants, and the fair value of common stock issued in connection with induced conversions of promissory notes.

Accordingly, net loss for 2005 was $8,144,928, or $0.10 per share, compared to a net loss of $767,913, or $0.02 per share for 2004 (restated) on weighted average shares of 82,728,108 and 35,321,760, respectively. The overall net loss in 2005 was comprised of net income of $778,923 from MVI as offset by net losses of $1,161,493, $6,076,850, and $1,685,928 from TBS, Resolutions, and corporate, respectively.

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. Statements made in this press release, including, without limitation, those relating to our belief about the benefits the Company has derived, or may derive, from pursuing its acquisition strategy or signing a definitive merger agreement with GoSolutions, our expectation as to the potential value of the investment banking relationship with Barron Partners, LP, and our belief that the Company's balance sheet has improved as a result of the conversion of notes payable debt to shares of common stock, are forward-looking statements. These statements, and other forward-looking statements in this press release, 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, without limitation, risks associated with acquisitions such as the inability to assimilate and integrate new operations and retain key personnel, the risk that we may be unable to successfully close the planned acquisition of GoSolutions, uncertainties in the market, competition, legal, regulatory initiatives, success of marketing efforts, availability, terms and deployment of capital, personnel risks, and other risks detailed in the Company's SEC reports, of which many are beyond the control of the Company. Trading in the Company's common stock is limited, and marketability of the stock is restricted by penny stock regulations and the fact that our common stock is traded on the OTCBB. The Company does not presently qualify, and may never qualify, to be listed or quoted on any exchange or other market. The Company assumes no obligation to update or alter the information in this press 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.

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