SOURCE: VillageEDOCS Inc.

May 23, 2006 08:30 ET

VillageEDOCS' Revenues for First Quarter of 2006 Up 46% From 2005 and Gross Profit Up 59%

TUSTIN, CA -- (MARKET WIRE) -- May 23, 2006 -- VillageEDOCS (OTCBB: VEDO) announced today its financial results for the first quarter of 2006.

"We are happy to report revenue of $2,067,839 for the first quarter of 2006," said Mason Conner, President and CEO of VillageEDOCS.

Mr. Conner continued, "Our Tailored Business Systems subsidiary improved over the 2005 quarter, reporting a modest $17,221 income from operations compared to a $207,545 loss from operations in the 2005 quarter on revenue that was up 39%. In addition our MessageVision subsidiary improved income from operations by 99% over the 2005 quarter. We are pleased that our operating companies continue to grow, and we are looking forward to building on these results for the remainder of 2006 by improving operating income at our MessageVision, TBS, and Resolutions subsidiaries. Additionally, we expect our recent acquisition of GoSolutions, Inc. to have a significant and positive effect on 2006 revenue and income from operations. GoSolutions' 2005 unaudited income from operations was $714,996 on net revenue of $6,996,534."

Thus far during 2006, we accomplished several strategic objectives which include:

--  Acquisition of GoSolutions, Inc., a company with strategic products
    and services
--  Organic Growth during the first quarter.  We increased net revenue in
    our Tailored Business Systems, Inc. ("TBS") operating unit by 39% which,
    together with the revenue of Resolutions (acquired April 1, 2005),
    contributed to a 46% increase in consolidated revenue;
--  Reduced net loss for the quarter ended March 31, 2006 by 61% compared
    to the 2005 quarter.
    
For the three months ended March 31, 2006, Tailored Business Systems ("TBS") generated 43% of the Company's net revenue, MessageVision, Inc. ("MVI") generated 36% of the Company's net revenue, and Resolutions generated 21% of the Company's net revenue. During the three months ended March 31, 2005, TBS and MVI generated 45% and 55% of the Company's net revenue, respectively. Resolutions was acquired effective April 1, 2005 and, accordingly, did not contribute to the Company's net revenue for the first quarter of 2005.

The increase of $655,857 in the 2006 quarter resulted from an increase of $249,409 (39%) in revenue from TBS that resulted from new printing opportunities as well as the addition of $441,436 in sales from Resolutions, as offset by a $34,988 (5%) decrease in revenue from MVI that resulted from a decrease in sales staff.

MVI contributed $738,632 in revenue and $182,377 in operating income for the three months ended March 31, 2006. The electronic document delivery service operated by MVI has achieved an operating income for nine consecutive quarters.

For the first quarter of 2006, TBS contributed $887,771 in revenue and $17,221 in operating income (includes $37,345 in depreciation and amortization expense). As discussed above, TBS improved both revenue and income from operations as compared to the first quarter of 2005.

Resolutions contributed $441,436 in revenue for the first quarter of 2006 and reported an operating loss of $21,802 (includes $36,918 in depreciation and amortization expense).

Gross profit margin for the first quarter of 2006 was 66% as compared to 61% for the 2005 quarter.

During the first quarter of 2006, the Company recorded $80,200 in compensation expense in connection with the vesting of employee incentive stock options. Non-operating interest expense was down substantially during the 2006 quarter ($23,308) as compared to the 2005 quarter ($391,121) due to the conversion of approximately $5 million in debt during 2005. In addition, during 2006 we have not recorded, and do not expect to record, any expenses related to derivative liabilities.

Net loss for the first quarter of 2006 was $273,389, or $0 per share, compared to a net loss of $695,135, or $0.01 per share for 2005 (restated) on weighted average shares of 99,813,513 and 59,363,429, respectively. The overall net loss in the first quarter of 2006 was comprised of net income of $181,353 and $17,221 from MVI and TBS, respectively as offset by net losses of $449,814 and $22,149 from corporate and Resolutions, respectively.

About VillageEDOCS

VillageEDOCS, through its 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 its Tailored Business Systems subsidiary, VillageEDOCS provides accounting and billing solutions for county and local governments. Through its Resolutions subsidiary, VillageEDOCS provides products for document management, document imaging, electronic forms, document archiving, and e-mail archiving. Through its GoSolutions subsidiary, VillageEDOCS provides enhanced voice and data delivery services. 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 from acquiring GoSolutions, our expectations regarding operating results for the second, third and fourth quarters of 2006, are forward-looking statements, and our belief that we will not record any derivative liabilities during 2006. 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, including GoSolutions, such as the inability to assimilate and integrate new operations and retain key personnel, 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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