COUNTERPATH, CORP. 
By Company Reports Record Revenues
VANCOUVER, March 10 /PRNewswire-FirstCall/ - CounterPath Corporation ("CounterPath" or the "Company") (OTCBB: CPAH) (TSXV: CCV), an award-winning provider of desktop and mobile VoIP software products and solutions, today announced the financial and operating results for its third quarter of fiscal year 2011. CounterPath's fiscal year runs May 1 to April 30.
Financial and operating highlights for the third quarter ended January 31, 2011, include:
-- Record quarterly revenue of $3.0 million, a 122-percent
increase year over year and an 18-percent increase over the
second quarter of fiscal year 2011.
-- A non-GAAP operating loss of $0.4 million compared to a
non-GAAP operating loss of $1.2 million for the third quarter
ended January 31, 2010, and a non-GAAP operating loss of $0.7
million for the second quarter ended October 31, 2010.
-- A net loss of $0.5 million ($0.01 per share) compared to a net
loss of $1.7 million ($0.06 per share) for the third quarter
ended January 31, 2010.
-- The launch of Bria Android Edition, an enterprise-grade VoIP
application that is a highly secure, standards-based softphone
that works over both 3G and Wi-Fi networks, has full SIP
compliance, allows multi-call management, signaling and call
encryption, and enables enterprise-class security.
-- The launch of two service provider customers for branded iPhone
offerings -- one in the Middle East and one in Asia.
-- The initiation of a product build-out for a Tier One service
provider encompassing desktop, web and mobile softphones that
is expected to launch later this year.
-- Release of Messaging Convergence Gateway (MCG) 2.0 that
provides wireline operators the ability to extend their VoIP
and messaging services "over the top" of mobile networks.
-- Subsequent to the quarter end, the naming of CounterPath as one
of the TSX Venture Top 50® companies for 2011, an annual
ranking of strong performing companies listed on the TSX
Venture Exchange.
"Our sales continued to be strong this quarter, reflecting increasing demand for our desktop and mobile VoIP softphone products," said CounterPath President and CEO Donovan Jones. "With three consecutive quarters of revenue growth and careful management of our costs, our margin growth has resulted in a significantly improved bottom line year over year."
"We're seeing the momentum behind mobile operating systems and platforms pick up speed, driven by the success of Apple and Google Android devices; according to Frost & Sullivan, mobile VoIP revenue will reach approximately $30 billion by 2015, up from $606 million in 2008," Jones added. "With the recent introduction of our mobile VoIP applications, CounterPath is positioned well to take advantage of this rapidly growing market."
The Company also announced the resignations of two members of its Board of Directors, Mark Bruk, a former CEO of CounterPath, and Greg Pelling, also a former CEO of CounterPath. Both resignations are part of a Board transition plan. The Company intends to announce its nominations to the Board of Directors prior to the next annual meeting of shareholders. The Company would like to thank Mr. Bruk and Mr. Pelling for their considerable time and effort, and wishes them well in their future endeavors.
Financial Results
(All amounts in U.S. dollars and in accordance with accounting
principles generally accepted in the United States ("GAAP") unless
otherwise specified.)
Revenue was $3.0 million for the quarter ended January 31, 2011 compared to $1.4 million for the same quarter last year. Software revenue for the quarter ended January 31, 2011 was $1.5 million compared to $1.0 million for the same quarter last year. Service revenue for the quarter ended January 31, 2011 was $1.5 million compared to $0.3 million for same quarter last year.
Operating expenses for the quarter ended January 31, 2011 were $3.7 million compared to $3.1 million for the same quarter last year. Operating expenses for the current quarter included a non-cash expense of $0.2 million for amortization of intangible assets and a non-cash stock-based compensation expense of $0.1 million.
Sales and marketing expenses were $0.8 million for the quarter ended January 31, 2011 compared to $0.6 million for same quarter last year. For the quarter ended January 31, 2011, research and development expenses were $1.2 million and general and administrative expenses were $1.0 million, compared to $0.8 million and $0.9 million, respectively, for the same quarter last year.
The net loss for the quarter ended January 31, 2011 was $0.5 million, or a loss of $0.01 per share, compared to a net loss of $1.7 million, or a loss of $0.06 per share, for the quarter ended January 31, 2010.
At January 31, 2011, the Company had $1.7 million in cash, compared to $1.6 million at April 30, 2010. At January 31, 2011, the Company's working capital was $1.4 million, compared to $1.2 million at April 30, 2010.
Subsequent to the quarter, on March 10, 2011, the Company granted 44,052 deferred share units, including 22,026 to an officer of the Company pursuant to its deferred share unit plan. Each deferred share unit provides the holder thereof the right to exchange the unit, once vested, into one share of common stock of the Company under the terms and conditions of the plan. The deferred share units vest as to 1/3 of the deferred share units on the first, second and third anniversary of the date of the grant, at which time the deferred share units are fully vested.
About CounterPath
CounterPath Corporation is an award-winning provider of innovative
desktop and mobile VoIP software products and solutions. The Company's
product suite includes SIP-based softphones, server applications and
Fixed Mobile Convergence (FMC) solutions that enable service providers,
enterprises and Original Equipment Manufacturers (OEM) to
cost-effectively integrate voice, video, presence and Instant Messaging
(IM) applications into their VoIP offerings and extend functionality
across both fixed and mobile networks.
CounterPath's customers include some of the world's largest telecommunications service providers and network equipment providers including AT&T, Verizon, BT (British Telecommunications PLC), mobilkom Austria, Avaya, Cisco Systems, Metaswitch Networks and Mitel.
For more information please visit www.counterpath.com.
Non-GAAP Financial Measures
This news release contains "non-GAAP financial measures". The non-GAAP
financial measures in this news release consist of non-GAAP operating
expenses which exclude non-cash stock-based compensation, amortization
and impairment of intangible asset charges relative to operating
expenses and operating losses calculated in accordance with GAAP.
Non-GAAP financial measures should not be considered as a substitute
for, or superior to, measures of financial performance prepared in
accordance with GAAP. CounterPath utilizes both GAAP and non-GAAP
financial measures to assess what it believes to be its core operating
performance and to evaluate and manage its internal business and assist
in making financial operating decisions. CounterPath believes that the
inclusion of non-GAAP financial measures, together with GAAP measures,
provides investors with an alternative presentation useful to
investors' understanding of CounterPath's core operating results and
trends.
Reconciliation to GAAP
Three MonthsEnded
January 31,
2011 2010
(Unaudited)
Non-GAAP operating loss $ (362,564) $ (1,191,767)
Less:
Stock-based compensation 109,811 336,796
Amortization of 214,646 221,968
intangible assets
Loss from operations $ (687,021) $ (1,750,531)
Forward-Looking Statements
This news release contains "forward-looking statements". Statements in
this news release, which are not purely historical, are forward-looking
statements and include any statements regarding beliefs, plans,
expectations or intentions regarding the future, such as the following:
(1) the initiation of a product build-out for a Tier One service
provider encompassing desktop, web and mobile softphones that is
expected to launch later this year; and (2) with the recent
introduction of our mobile VoIP applications, CounterPath is positioned
well to take advantage of this rapidly growing market.
It is important to note that actual outcomes and the Company's actual results could differ materially from those in such forward-looking statements. Actual results could differ from those projected in any forward-looking statements due to numerous factors. Such factors include, among others: (1) the failure to develop new and innovative products using the Company's technologies, (2) the Company's ability to remain competitive as other parties develop and release competitive products, (3) the Company's ability to retain the employees necessary to continue research and development of current and new products, (4) the success by the Company of the sales of its current and new products, (5) the impact of technology changes on the Company's products and on the VoIP industry, (6) the compatibility of the Company's products with new computer operating systems, (7) the rate of adoption by service providers and the general public of VoIP as a replacement for regular and cellular phone service, (8) general economic conditions as they affect CounterPath and its current and prospective customers, including a continued downturn in general economic conditions internationally, (9) the ability of the Company to control costs operating, general administrative and other expenses, and (10) insufficient investor interest in the Company's securities which may impact on the Company's ability to raise additional financing as required. Readers should also refer to the risk disclosures outlined in the Company's quarterly reports on Form 10-Q, annual reports on Form 10-K and the Company's other disclosure documents filed from time-to-time with the Securities and Exchange Commission at www.sec.gov and the Company's interim and annual filings and other disclosure documents filed from time-to-time on SEDAR at www.sedar.com.
Disclaimer: Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
COUNTERPATH CORPORATION
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
(Stated in U.S. Dollars)
January31, April 30,
2011 2010
Assets (Unaudited) Restated
Current assets:
Cash $ 1,710,007 $ 1,556,813
Accounts receivable (net
of allowance for doubtful 2,787,531 2,345,633
accounts of 29,982 129,285
$1,212,100 and 155,452 221,041
$1,116,119, respectively)
Investment tax credits
recoverable
Other current assets
Total current assets 4,682,972 4,252,772
Deposits 152,316 101,994
Equipment 99,245 111,150
Intangible assets (net of
accumulated amortization of 1,035,351 1,674,359
$4,882,932 and 8,782,209 8,740,025
$4,249,895, respectively) 47,522 58,817
Goodwill
Other assets
Total Assets $ 14,799,615 $ 14,939,117
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable and $ 2,275,694 $ 2,313,688
accrued liabilities 842,635 655,361
Unearned revenue 2,018 5,127
Customer deposits 148,561 120,963
Accrued warranty
Total current 3,268,908 3,095,139
liabilities
Deferred lease inducements 2,938 4,677
Convertible debentures 1,280,584 -
Unrecognized tax benefit 98,575 98,575
Total liabilities 4,651,005 3,198,391
Stockholders' equity:
Preferred stock, $0.001 par
value
Authorized: 100,000,000
Issued and outstanding: - -
January 31, 2011 - 1;
April 30, 2010 - 1
Common stock, $0.001 par
value
Authorized: 83,076,900
Issued and outstanding:
January 31, 2011 - 33,362 33,016
33,361,901; April 30,
2010 - 33,015,627
Additional paid-in capital 53,222,408 51,902,471
Accumulated deficit (42,548,595) (39,781,079)
Accumulated other (558,565) (413,682)
comprehensive loss - currency
translation adjustment
Total stockholders' equity 10,148,610 11,740,726
Liabilities and Stockholders' $ 14,799,615 $ 14,939,117
Equity
COUNTERPATH CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(Stated in U.S. Dollars)
(Unaudited)
Three MonthsEnded Nine MonthsEnded
January31, January 31,
2011 2010 2011 2010
Restated Restated
Revenue:
Software $ 1,489,825 $ 1,030,004 $ 5,060,294 $ 3,623,173
Service 1,532,277 333,414 2,749,056 1,691,309
Total 3,022,102 1,363,418 7,809,350 5,314,482
revenue
Operating
expenses:
Cost of sales
(includes
depreciation
of $15,835 and
$4,911 and
amortization
of intangible
assets of
$633,038 and
$647,559 for
nine months
ended
January 31,
2011 and 2010
respectively)
Sales and
marketing
Research and
development 724,309 757,273 2,168,993 2,084,385
General and 841,230 644,212 2,607,177 2,093,768
administrative 1,157,581 797,162 3,317,343 2,621,884
Restructuring 986,003 915,302 3,033,564 2,810,605
costs - - - 44,912
Total 3,709,123 3,113,949 11,127,077 9,655,554
operating
expenses
Loss from (687,021) (1,750,531) (3,317,727) (4,341,072)
operations
Interest and
other income
(expense), net:
Interest and 96,505 53,239 191,293 114,813
other income (42,152) (685) (44,905) (2,356)
Interest and 141,408 (46,516) 157,108 (468,277)
other expense - - 246,715 -
Foreign
exchange gain
(loss)
Gain on
settlement of
debt
Net loss for the $ (491,260) $ (1,744,493) $ (2,767,516) $ (4,696,892)
period
Other
comprehensive
income (loss):
Foreign 55,697 71,716 (144,883) 1,756,113
currency
translation
adjustments
Comprehensive $ (435,563) $ (1,672,777) $ (2,912,399) $ (2,940,779)
loss
Net loss per
share:
Basic and $ (0.01) $ (0.06) $ (0.08) $ (0.15)
diluted
Weighted 33,206,905 30,710,069 33,128,861 30,395,799
average common
shares
outstanding:
SOURCE CounterPath Corporation
