WHITE PLAINS, N.Y. - July 22, 2008 Pervasip Corp., a leading provider of wholesale Voice over Internet Protocol (VoIP) broadband telephone services, today released financial results for the second quarter ended May 31, 2008.

Following are highlights of the report:  

Revenues increases 197% year-over-year

Customer count rises 49%

Company achieves gross profit as excess capacity is utilized and economies of scale emerge

SG&A expenses rise much more slowly (by 17%) than revenues

Net loss narrows

 

"We are very pleased with today's financial report, which shows how our wholesale strategy is beginning to produce rapid top-line growth," said Pervasip CEO Paul H. Riss. "Along with generating sharply higher revenue from increased network usage and higher customer count, we are also keeping overhead costs well under control and thereby opening a clear path to profitability. With only a small portion of our available facilities utilized at this point, we have plenty of room for new customer acquisition and revenue growth without needing substantial new investment. On our current course, further increases in revenues will have an increasingly direct impact on the bottom line," concluded Mr. Riss.

Revenues for the second quarter ended May 31, 2008 totaled $634,648, up 197% from $213,389 in the second quarter of 2007. The rise was due both to increased customer count and higher volume of use by existing customers using the Company's wholly-owned Vox Communications subsidiary to provide VoIP services. As of May 31, 2008, Vox was billing 67 wholesale customers, up 49% from 45 customers on May 31, 2007.

Gross profit for the second quarter of 2008 was $19,262, compared to a gross loss of ($17,579) a year earlier. The shift from loss to profit reflected the increased utilization of Vox's switching facilities by its wholesale customers, a trend leading to better coverage of fixed costs and a lower ratio of variable costs due to economies of scale. The Company said it expects this trend to continue as sales increase and capacity utilization, now estimated at 10%, rises.

Selling, general and administrative (SG&A) expenses for the second quarter of 2008 rose 17% to $786,854 from $675,498 a year earlier. The increase was due largely to higher personnel costs and marketing expenses. As a percentage of revenues, SG&A expenses fell substantially year-over-year, to 124% from 317%.

Net loss for the quarter ended May 31, 2008 was ($489,991), or ($0.02) per fully diluted share, compared to ($729,466), or ($0.03) per fully diluted share, in the second quarter of 2007. Excluding discontinued operations, the net loss in the year-earlier period was ($582,446), or ($0.02) per fully diluted share.

The year-over-year narrowing of net loss was due in part to non-operating factors such as a positive year-over-year change (to $621,979 from $450,074) in the valuation of the Company's warrants. Operating loss increased slightly year-over-year, to ($892,333) in the second quarter of 2008 from ($830,930) in the second quarter of 2007.

Six-month Revenues Rise 161%

For the six-month period ended May 31, 2008, revenues totaled $1,065,352, up 161% from $408,506 in the first six months of the 2007 fiscal year. As with the second-quarter increase, the rise was due both to new customers and increased usage by existing customers. Net loss for the first six months of fiscal 2008 was ($4,280,192), or ($0.17) per fully diluted share, compared to a loss of ($2,729,925), or ($0.11) per fully diluted share, in the first six months of fiscal 2007. Excluding discontinued operations, the net loss in the year-earlier period was ($2,547,808).

Loss from operations in the two periods rose slightly, to ($1,735,913) in the six months ending May 31, 2008 from ($1,703,120) a year earlier. The increase in net loss was due largely to a change in the valuation of the Company’s warrants, to ($2,092,117) in the first six months of fiscal 2008 from ($510,148) a year earlier.

To be added to Pervasip's investor list, please contact Haris Tajyar at htajyar@irintl.com or 818-382-9702.

About Pervasip

Pervasip Corp., through its wholly-owned subsidiary VoX Communications, delivers wholesale Voice over IP (VoIP) broadband telephone services for the residential and small business markets. Leveraging a nationwide VoIP network and internally-developed proprietary software and product features, VoX offers a private label digital voice program sold to cable operators, carriers, CLECs, ISPs and resellers. The Company differentiates itself through a unique combination of high quality voice services, flexible back office capabilities and automated provisioning systems that enable a quick turn-up for service providers at attractive margins. VoX offers a feature-rich, low-cost, high-quality alternative to traditional phone services. In addition the Company offers carrier-type services for voice origination and termination, as well as 800 and other IP-based services. For more information, please visit www.voxcorp.net and www.pervasip.com.

Forward-looking statements: This release contains forward-looking statements that involve risks and uncertainties. Pervasip's actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause such a difference include, among others, certain risks and uncertainties over which the company may have no control. For further discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see the discussions contained in Pervasip’s Annual Report on Form 10-KSB for the year ended November 30, 2007 and any subsequent SEC filings.

Pervasip Corp. and Subsidiaries Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
		For the Six Months Ended								For the Three Months Ended
		May 31, 2008				May 31, 2007				May 31, 2008				May 31, 2007
Revenues		$	1,065,352			$	408,506			$	634,648			$	213,389
Costs and expenses:
Costs of services			1,068,436				535,535				615,386				230,968
Selling, general and administrative			1,486,111				1,340,739				786,854				675,498
Depreciation and amortization			246,718				235,352				124,741				137,853
Total costs and expenses			2,801,265				2,111,626				1,526,981				1,044,319
Loss from operations			(1,735,913	)			(1,703,120	)			(892,333	)			(830,930	)
Other income (expense):
Interest expense			(464,563	)			(355,903	)			(221,085	)			(212,183	)
Interest and other income			12,401				21,363				1,448				10,593
Change in warrant valuation			(2,092,117	)			(510,148	)			621,979				450,074
Total other income (expense)			(2,544,279	)			(844,688	)			402,342				248,484
Loss from continuing operations			(4,280,192	)			(2,547,808	)			(489,991	)			(582,446	)
Loss from discontinued operations			-				(182,117	)			-				(147,020	)
Net loss			(4,280,192	)			(2,729,925	)			(489,991	)			(729,466	)
Other comprehensive loss – unrealized loss on marketable securities			(24,000	)			(1,820	)			(9,000	)			(364	)
Comprehensive loss		$	(4,304,192	)		$	(2,731,745	)		$	(498,991	)		$	(729,830	)
Basic loss per share:
Loss from continuing operations		$	(0.17	)		$	(0.11	)		$	(0.02	)		$	(0.02	)
Loss from discontinued operations			0.00				(0.01	)			0.00				(0.01	)
Net loss		$	(0.17	)		$	(0.12	)		$	(0.02	)		$	(0.03	)
Shares used in computation of basic and diluted loss per share			25,835,458				22,447,744				25,835,458				22,459,282

Pervasip Corp. and Subsidiaries Condensed Consolidated Balance Sheet
		May 31, 2008
		(Unaudited)
Assets
Current assets:
Cash and cash equivalents		$	26,664
Restricted Cash			146,970
Accounts receivable, net			140,810
Prepaid expenses and other current assets			68,106
Total current assets			382,550
Property plant and equipment, net			722,294
Deferred finance costs, net			664,240
Deferred debt discount			535,672
Carrier deposit			300,000
Other assets			143,980
Total assets		$	2,748,736
Liabilities and Stockholders’ Equity Deficiency
Current liabilities
Current maturities of long-term debt and capital lease obligations		$	88,716
Accounts payable and accrued expenses			2,016,784
Total current liabilities			2,105,500
Long-term debt and capital lease obligations, less current maturities			2,736,182
Accrued pension obligation			820,805
Warrant liabilities			7,522,061
Total liabilities			13,184,548
Stockholders’ equity deficiency
Preferred stock, $.10 par value; 1 million authorized, none issued and outstanding			-
Common stock $.10 par value, 150,000,000 shares authorized, 25,835,458 shares issued			2,583,546
Capital in excess of par value			27,832,100
Deficit			(40,827,458	)
Accumulated other comprehensive loss, unrealized loss on securities			(24,000	)
Total stockholders’ equity deficiency			(10,435,812	)
Total liabilities and stockholders’ equity deficiency		$	2,748,736

Contact:

Investor Relations International
Haris Tajyar, Managing Partner, 818-382-9702
htajyar@irintl.com
or
Pervasip Corp.
Paul H. Riss, Chief Executive Officer, 914-620-1500
phriss@voxcorp.net