VillageEDOCS Reports Q1 Revenues Up Modestly; Emphasis on Cost Controls Reduces Quarterly Loss and Debt

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 financial results for the quarter ended March 31, 2008.

2008 First Quarter Highlights:

--  Consolidated net revenue of $3,277,985 for first quarter of 2008, up
    1% from $3,258,549 in comparable quarter; Resolutions business unit was
    sold in Dec '07 and is not included in 2007 revenue figure;
--  Total operating expenses decreased 11% versus prior year quarter, with
    operating expenses at Corporate level decreasing  25%;
--  Consolidated operating expenses during the 2008 quarter were 72% of
    sales versus 81%  in Q1 '07;
--  Positive net income achieved at each of the operating units,
    particularly GSI unit which saw a 70% increase in net income to $100,148
    versus  $58,951 for the first three months of 2007;
--  Borrowings on lines of credit during the quarter reduced to $65,000 in
    Q1 '08, down from $350,000 in Q1 '07.
    

"We are pleased with our first quarter results for 2008. Although we sold our Resolutions business unit in 2007, which resulted in lower consolidated revenues, we are particularly satisfied with the significant sales increase of our TBS business unit, which showed a 9% increase over the same period a year ago," said Mason Conner, President and Chief Executive Officer of VillageEDOCS, Inc.

"We intend to continue our focus on obtaining stronger internal growth from sales of higher margin products and services at each of our operating subsidiaries, as well as by continuing to acquire companies that consistently generate net income and positive cash flows. We believe that this strategy offers the best opportunity for our operations to generate positive operating income and cash flows from operations and to achieve positive net income for the Company as a whole," Mr. Conner said. "Our acquisition strategy has two objectives -- to acquire enterprises that fulfill our identified strategic technological core competencies and to acquire companies that assist us in penetrating our target market segments of financial services, healthcare, manufacturing, and local government."

For the first quarter ended March 31, 2008, VillageEDOCS had consolidated net revenue of $3,277,985 a 1% increase over net revenue for 2007 of $3,258,549. Revenue increased 9% at TBS due to increases in revenue from services and printing. These increases were partially offset by decreases in software sales which resulted in part from the Company's strategy to promote online, usage-based services rather than single unit product sales. Revenue increased 1% at GSI due to increases in revenue from user subscription agreements and professional service fees revenue, which were offset by decreases in sales to corporate clients. Revenue decreased 11% at MVI due to a decrease in inbound revenue as a result of mortgage industry customer attrition and, to a lesser extent, a reduction in supplemental services revenue.

Net loss for the three months ended March 31, 2008 was $494,835, or $0.00 per share, compared to a net loss of $502,762, or $0.00 per share, for the three months ended March 31, 2007 on weighted average shares of 150,218,437 and 147,409,940, respectively. Consolidated operating expenses during the 2008 quarter were 72% of sales compared to 81% of sales in the 2007 quarter.

Included in the first quarter 2008 net loss was $251,153 of loss from non-cash depreciation and amortization charges and non-cash stock option vesting charges (2007: $463,066). Adjusted Earnings (as defined below) of $7,337 for the three months ended March 31, 2008, compares with Adjusted Earnings of $(65,354) in the same period a year ago (see reconciliation that follows).

During the first quarter of 2008, total operating expenses were $2,357,652, a decrease of $282,427 from the prior year period. The overall decrease resulted from decreases at each of the Company's operating units plus a 25% reduction in operating expenses of the holding company. Consolidated operating expenses during the first quarter of 2008 were 72% of sales compared to 81% of sales in the 2007 quarter.

About VillageEDOCS, Inc.

VillageEDOCS is focused on the Content, Communication and Collaboration segment of the Software as a Service (SaaS) market. Through its MessageVision (MVI) subsidiary, VillageEDOCS is a leading provider of comprehensive 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 (TBS) subsidiary, VillageEDOCS provides accounting and billing solutions for county and local governments. Through its GoSolutions (GSI) subsidiary, VillageEDOCS provides enhanced voice and data delivery services. For further information, visit the Company's website at www.villageedocs.com.

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 principals 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) because depreciation, amortization, interest, tax, equity compensation, and stock option vesting expenses during 2008 and 2009 are expected to be at least as material as they were during 2007.

                    VillageEDOCS, Inc. and Subsidiaries

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EARNINGS (unaudited)



                                                      Three Months Ended
                                                          March 31,
                                                       2008        2007
                                                    ----------  ----------
    GAAP Net Loss                                   $ (494,835) $ (502,762)

(a) Depreciation and amortization, including
     amortization of intangible assets (including $0
     and $33,920 from discontinued operations)         181,645     236,491

(b) Non-cash stock option vesting expense
     pursuant to SFAS 123(R)                            69,508     226,575

(c) Interest expense, net of interest income
     (including $0 and $347 from discontinued
     operations)                                        66,248      28,182

(d) Other income                                       (51,592)     (7,421)

(e) (Benefit) provision for income taxes                27,377       4,110

(f) Discontinued operations, net of interest,
     taxes, depreciation and amortization                    -     (96,698)

(g) Non recurring termination charges in
     workforce restructuring                           146,087           -

(h) Amortization of non-cash portion of debt
     issuance cost and debt discount                    37,415       3,669

(i) Estimated fair value of common stock and
     warrants issued for services                       25,484      42,500
                                                    ----------  ----------
    Adjusted Earnings                               $    7,337  $  (65,354)
                                                    ==========  ==========


(a) Depreciation and amortization, including amortization of intangible
    assets, is reported in Depreciation and amortization, which is a
    component of income (loss) from continuing operations.

(b) Non-cash stock option vesting expense resulting from the adoption of
    SFAS 123(R) is reported in General and administrative, which is a
    component of income (loss) from continuing operations.

(c) Interest expense, net of interest income is not reported as a component
    of income (loss) from continuing operations.

(d) Other (income) expense is not reported as a component of income (loss)
    from continuing operations.

(e) Provision (benefit) for income taxes is not reported as a component
    of income (loss) from continuing operations.

(f) Discontinued operations and related is not a component of income
    (loss) from continuing operations.

(g) Non recurring termination charges incurred in workforce restructuring
    is reported in General and administrative, which is a component of
    income (loss) from continuing operations.

(h) Amortization of non-cash portion of debt issuance cost and debt
    discount is not reported as a component of income (loss) from
    continuing operations.

(i) Estimated fair value of common stock and warrants issued for services
    is reported in General and administrative, which is a component of
    income (loss) from continuing operations.

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 new management personnel or consultants, and our expectations regarding future operating results, including such for the remainder of 2008, 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 complete a transaction or 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.

VillageEDOCS, Inc. and subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)

                                              Three Months Ended March 31,
                                                  2008           2007
                                              -------------  -------------
Net sales                                     $   3,277,985  $   3,258,549
Cost of sales                                     1,373,135      1,193,406
                                              -------------  -------------
   Gross profit                                   1,904,850      2,065,143
                                              -------------  -------------
Operating expenses:
  Product and technology
    Development                                     405,933        476,799
  Sales and marketing                               444,948        498,399
  General and administrative                      1,325,126      1,462,310
  Depreciation and amortization                     181,645        202,571
                                              -------------  -------------
    Total operating expenses                      2,357,652      2,640,079
                                              -------------  -------------
    Loss from operations                           (452,802)      (574,936)

Interest expense, net of interest income            (66,248)       (27,835)
Other income, net                                    51,592          7,421
                                              -------------  -------------
    Loss before provision for
     income taxes                                  (467,458)      (595,350)

Provision for income taxes                          (27,377)        (4,110)
                                              -------------  -------------
    Loss from continuing operations           $    (494,835) $    (599,460)

Income from discontinued operations                       -  $      96,698
                                              -------------  -------------
    Net loss                                  $    (494,835) $    (502,762)
                                              =============  =============

Basic and diluted loss available to
 common stockholders per common share
    Loss from continuing operations           $           -  $           -
    Income from discontinued operations       $           -  $           -
                                              -------------  -------------
    Loss per share                            $           -  $           -
                                              =============  =============

Weighted average shares outstanding -
 basic and diluted                              150,218,437    147,409,940
                                              =============  =============

See accompanying notes to unaudited condensed consolidated financial
statements.