Company News

FOR IMMEDIATE RELEASE

VillageEDOCS Announces First Quarter 2009 Results - Revenues Increase 18% Over Last Year

SANTA ANA, CA, May 18, 2009—VillageEDOCS, Inc. (OTCBB:VEDO), a Solution as a Service company, which is the largest segment of the Software as a Service (SaaS) market, today announced its financial results for the first quarter of 2009.

First Quarter 2009 Highlights:

"We are pleased to report our results for the first quarter of 2009. We achieved revenue growth in the first quarter over last year, reduced our expenses as a percentage of revenue and continued to maintain high gross margins in light of a challenging economic environment," said Mr. Mason Conner, CEO of VillageEDOCS, Inc. "We continue to focus on sales from higher margin products and controlling expenses."

First Quarter 2009 Results

Net revenue increased 18% year-over-year to $3.8 million for the three months ended March 31, 2009. The increase was primarily attributable to the addition of QSI which was acquired in 2008, as well as increased sales from GSI which increased 12% over the first quarter of 2008. The expansion in sales at GSI was due to increases in user subscription fees, which were partially offset by decreases in revenue from corporate clients. Revenue decreased 9% at TBS due to decreases in revenue from printing, software and hardware sales. In keeping with its strategic goals, the Company focused on higher margin products by promoting online, usage-based services thereby increasing revenue from online and support services for TBS. Revenue decreased 3% at MVI due to a decrease in inbound revenue as a result of customer attrition.

Gross profit in the first quarter of 2009 was $2.3 million, an increase of 22% over the same period a year ago. Gross margin was 60%, an increase compared to gross margin of 58% for the first quarter of 2008. The increase was attributable to a reduction in cost of sales as a percentage of revenue and the addition of QSI. Although cost of sales increased to $1.5 million from $1.4 million in the first quarter of 2008, as a percentage of sales cost of sales decreased to 40% from 42% in the same period a year ago.

Operating expenses in the first quarter of 2009 were $2.7 million, up 15% from $2.4 million in the first quarter of 2008. The increase was mainly the result of higher selling, general and administrative expenses, which were primarily attributable to the addition of QSI. As a percentage of revenue, operating expenses were down 2% from the same period last year. This was principally attributed to decreased expenses by Corporate, TBS & MVI.

Net loss for the first quarter of 2009 was $0.4 million, or $0.00 per diluted share, compared to net loss of $0.5 million, or $0.00 per diluted share, in the first quarter of 2008. Diluted earnings per share was calculated using a weighted average share count of 180.3 million in the first quarter of 2009, compared to 150.2 million a year ago.

Adjusted earnings for the first quarter of 2009 increased to $13,883 from a loss of $30,078 for the same period in 2008.

Financial Condition

As of March 31, 2009, VillageEDOCS had $0.4 million in cash and cash equivalents and $1.9 million in debt. Stockholders' equity at March 31, 2009, was $7.7 million.

Recent Events

On May 11, 2009, the Company announced that it secured additional financing from a large shareholder in the amount of $430,000. The financing was in the form of an unsecured note and has a term of thirty-six (36) months. The proceeds from the financing were used to retire an existing credit line with a financial institution.

Business Outlook

"We are confident about the prospects for our business in 2009 and will continue to focus on growing our customer base and cross-selling our product suite to our existing customers. We will continue to increase our market share through new product development and continued integration of our product lines for our MessageVision Platform as well as making strategic acquisitions that continue to support our growth," said Mr. Mason Conner, CEO of VillageEDOCS, and Inc.

About VillageEDOCS, Inc.

VillageEDOCS (VEDO) provides the MessageVision Platform (MVP). The MessageVision Platform is a SaaS offering that ships business information electronically and manages it by capturing, forming and delivering information using business process management and communication. MVP is a combination of unified communications and business process management solutions blended into a single, scalable platform; eliminating the need for capital expenditures, operational costs and broad technology risks. MVP provides a single source for a wide range of business information management and communication applications on a pay-as-you-go financial model. For further information on VillageEDOCS, visit our website at www.villageedocs.com.

Forward-Looking Statements

This press release, together with other statements and information publicly disseminated by the Company, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements, which are based on certain assumptions and describe the Company's future plans, strategies and expectations, are generally identifiable by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project" or similar expressions. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the Company's control and which could materially affect actual results, performances or achievements. Factors that may cause actual results to differ materially from current expectations include the risk factors discussed in the Company’s filings with the Securities and Exchange Commission. Except as otherwise required by the federal securities laws, the Company disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Trading in the Company's common stock is limited, and marketability of the stock is restricted by penny stock regulations and the fact that the 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.

Non-GAAP Financial Measure: Adjusted Earnings

We believe “Adjusted Earnings,” which is a non-GAAP financial measure, provides useful information to investors and management by excluding certain income, expenses, and gains and losses that may not be indicative of our core operating and financial results. We believe that “Adjusted Earnings” is a useful performance measure because certain items included in the calculation of net income (loss) may either mask or exaggerate trends in our ongoing operating performance. We expect to use “Adjusted Earnings” on an ongoing basis to track and assess our financial performance. You, however, should not consider “Adjusted Earnings” in isolation or as a substitute for net income (loss) or any other measure for determining our operating performance that is calculated in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP,” “GAAP”). “Adjusted Earnings” is not necessarily comparable to similarly titled measures employed by other companies. We expect future Adjusted Earnings to vary significantly from anticipated future net income (loss) due to depreciation, amortization, interest, tax, equity compensation, and stock option vesting expenses during 2009 and 2010.