COUNTERPATH, CORP. 
By Growth in revenue and margins driven by increased adoption of mobile applications
VANCOUVER, March 12, 2012 /PRNewswire/ - CounterPath Corporation ("CounterPath" or the "Company") (TSX-V: CCV) (OTCBB: CPAH), an award-winning provider of desktop and mobile VoIP software products and solutions, today announced the financial and operating results for the three months ended January 31, 2012.
Financial and operating highlights include:
-- Record revenue of $3.5 million, an increase of 15% compared to
revenue of $3.0 million for the third quarter ended January 31,
2011.
-- Non-GAAP gross profit increased to 87% of revenue compared to
83% for the same quarter last year.
-- Non-GAAP operating income of $0.04 million compared to a
non-GAAP operating loss of $0.4 million for the same quarter
last year.
-- Net loss of $0.1 million, or $0.00 per share, compared to a net
loss of $0.5 million, or ($0.01) per share for the same quarter
last year.
-- Three 2011 INTERNET TELEPHONY Product of the Year Awards by
TMC, a global, integrated media company, for CounterPath's Bria
iPhone Edition, Bria iPad Edition and Bria Android Edition
mobile softphones.
-- Subsequent to the quarter, the launch by Canada's largest
wireless provider of the Rogers One NumberTM Service using
CounterPath technology to enable Canadians to use their
wireless numbers to enable single-number reachability by talk
and text whether they are using their mobile devices or
computers.
"Sales and margins were strong again this quarter, particularly from our mobile applications, despite it being a seasonally softer period, and we achieved positive operating income reflecting the inflection point we are at in our growth," said Donovan Jones, President and Chief Executive Officer. "Our strategy of augmenting our industry leading desktop softphone with our iPhone, iPad and Android mobile applications is proving sound. The market is getting stronger for our mobile applications as smartphone sales continue to grow and now outpace sales of PCs (Canalys). We are seeing significant interest from global service providers who are increasingly looking to deploy softphone applications to compete with the over-the-top threats such as Skype," continued Jones.
Financial Results
(All amounts in U.S. dollars and in accordance with accounting principles generally accepted in the United States ("GAAP") unless otherwise specified.)
For the quarter ended January 31, 2012, revenue was $3.5 million compared to $3.0 million for the same quarter last year. Software revenue was $1.9 million, compared to $1.5 million for the same quarter last year, and service revenue was $1.6 million, compared to $1.5 million for same quarter last year. Increased sales reflect greater sales of products to original equipment manufacturers, as well as increased sales of mobile applications.
Operating expenses for the quarter ended January 31, 2012 were $3.8 million compared to $3.7 million for the same quarter last year. Operating expenses for the quarter included a non-cash expense of $0.2 million for amortization of intangible assets and a non-cash stock-based compensation expense of $0.2 million.
Sales and marketing expenses were $1.0 million for the quarter ended January 31, 2012 compared to $0.8 million for same quarter last year. For the quarter ended January 31, 2012, research and development expenses were $1.2 million and general and administrative expenses were $0.9 million, compared to $1.2 million and $1.0 million, respectively, for the same quarter last year.
The net loss for the quarter ended January 31, 2012 was $0.1 million, or $0.00 per share, compared to a net loss of $0.5 million, or a loss of $0.01 per share, for the quarter ended January 31, 2011. The net loss included a non-cash gain of $0.2 million for the change of fair value of derivative liability attributable to warrants issued to investors in the June 14, 2011 financing.
At January 31, 2012, the Company had $8.1 million in cash, compared to $1.7 million at April 30, 2011. At January 31, 2012, the Company's working capital was $7.5 million, compared to $1.4 million at April 30, 2011.
About CounterPath
CounterPath's SIP-based VoIP softphones are changing the face of
telecommunications. An industry and user favorite, Bria softphones for
desktop and mobile devices, together with the company's server
applications and Fixed Mobile Convergence (FMC) solutions, enable
service providers, OEMs and enterprises large and small around the
globe to offer a seamless and unified communications experience across
both fixed and mobile networks. Standards-based, cost-effective and
reliable, CounterPath's award-winning solutions power the voice and
video calling, messaging, and presence offerings of customers such as
Alcatel-Lucent, AT&T, Verizon, BT, Mobilkom Austria, Rogers, Avaya,
BroadSoft, Cisco Systems, GENBAND, Metaswitch Networks, Mitel and NEC.
For more information, 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 gross
profit and non-GAAP income (loss) from operations which exclude
non-cash stock-based compensation and amortization of intangible asset
charges relative to gross profit and income (loss) from operations
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
(Unaudited)
Three Months Ended Nine Months Ended
January 31, January 31,
2012 2011 2012 2011
Non-GAAP gross
profit:
Revenue $ 3,485,871 $ 3,022,102 $ 9,718,458 $ 7,809,350
Less:
Cost of 670,687 724,309 2,179,033 2,168,993
sales
GAAP gross $ 2,815,184 $ 2,297,793 $ 7,539,425 $ 5,640,357
profit
Percentage 81% 76% 78% 72%
of revenue
GAAP gross $ 2,815,184 $ 2,297,793 $ 7,539,425 $ 5,640,357
profit
Plus:
8,835 8,971 26,754 19,312
Stock-based
compensation
199,561 214,646 683,735 633,038
Amortization
of intangible
assets
Non-GAAP $ 3,023,580 $ 2,521,410 $ 8,249,914 $ 6,292,707
gross profit
Percentage 87% 83% 85% 81%
of revenue
Three Months Ended Nine Months Ended
January 31, January 31,
2012 2011 2012 2011
Non-GAAP
income
(loss) from
operations:
GAAP loss $ (319,989) $ (687,021) $ (1,499,849) $ (3,317,727)
from
operations
Plus:
158,649 109,811 532,832 691,595
Stock-based
compensation
199,561 214,646 683,735 633,038
Amortization
of
intangible
assets
Non-GAAP $ 38,221 $ (362,564) $ (283,282) $ (1,993,094)
income
(loss) from
operations
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 market is getting stronger for our mobile applications as smartphone sales continue to grow and now outpace sales of PCs(1).
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) general economic conditions as they affect CounterPath and its current and prospective customers, including a continued downturn in general economic conditions internationally, (2) the Company's ability to remain competitive as other better financed parties develop and release competitive products, the Company's ability to control its operating expenses, which may adversely affect its financial condition, (3) a decline in our stock price or insufficient investor interest in the Company's securities which may impact on the Company's ability to raise additional financing as required, (4) the impact of intellectual property litigation that could materially and adversely affect our business, (5) the success by the Company of the sales of its current and new products, (6) the impact of technology changes on the Company's products and on our industry, (7) the failure to develop new and innovative products using the Company's technologies, (8) the potential dilution to shareholders or overhang on our share price of our outstanding stock options and warrants. Readers should also refer to the risk disclosures outlined in the Company's quarterly reports on Form 10-Q or Form 10-Q/A, or in the annual reports on Form 10-K or Form 10-K/A, 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)
January 31, April 30,
2012 2011
Assets (Unaudited)
Current assets:
Cash $ 8,141,839 $ 1,707,397
Accounts receivable (net of 4,092,358 3,018,188
allowance for doubtful
accounts of $244,576 and
$49,883, respectively)
Prepaid expenses and deposits 104,246 110,412
Total current assets 12,338,443 4,835,997
Deposits 62,146 159,433
Equipment 16,872 59,574
Intangible assets (net of 141,063 859,664
accumulated amortization of
$5,787,305 and $5,103,570,
respectively)
Goodwill 8,752,329 9,247,993
Other assets 46,193 48,308
Total Assets $ 21,357,046 $ 15,210,969
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable and accrued $ 2,095,965 $ 2,340,897
liabilities
Derivative liability 674,909 -
Unearned revenue 1,175,527 958,626
Customer deposits 807,316 2,018
Accrued warranty 98,668 146,868
Total current liabilities 4,852,385 3,448,409
Deferred lease inducements 59,620 2,474
Convertible debentures - 1,305,002
Unrecognized tax benefit 98,575 98,575
Total liabilities 5,010,580 4,854,460
Stockholders' equity:
Preferred stock, $0.001 par
value
Authorized: 100,000,000
Issued and outstanding: - -
January 31, 2012 - 1; April
30, 2011 - 1
Common stock, $0.001 par value
Authorized: 83,076,900
Issued and outstanding:
January 31, 2012 - 39,909 33,440
39,908,297; April 30, 2011
- 33,439,906
Additional paid-in capital 60,786,052 53,420,601
Accumulated deficit (44,199,891) (43,323,410)
Accumulated other comprehensive (279,604) 225,878
income (loss) - currency
translation adjustment
Total stockholders' equity 16,346,466 10,356,509
Liabilities and Stockholders' $ 21,357,046 $ 15,210,969
Equity
COUNTERPATH CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(Stated in U.S. Dollars)
(Unaudited)
Three Months Ended Nine Months Ended
January 31, January 31,
2012 2011 2012 2011
Revenue:
Software $ 1,856,867 $ 1,489,825 $ 5,568,778 $ 5,060,294
Service 1,629,004 1,532,277 4,149,680 2,749,056
Total 3,485,871 3,022,102 9,718,458 7,809,350
revenue
Operating
expenses:
Cost of sales 670,687 724,309 2,179,033 2,168,993
(includes
depreciation
of $17,363
(2011 -
$15,835) and
amortization
of intangible
assets of
$683,735 (2011
- $633,038))
Sales and 1,033,938 841,230 2,777,204 2,607,177
marketing
Research and 1,231,789 1,157,581 3,338,317 3,317,343
development
General and 869,446 986,003 2,923,753 3,033,564
administrative
Total 3,805,860 3,709,123 11,218,307 11,127,077
operating
expenses
Loss from (319,989) (687,021) (1,499,849) (3,317,727)
operations
Interest and
other income
(expense), net:
Interest and 45,509 96,505 144,345 191,293
other income
Interest (428) (42,152) (172,112) (44,905)
expense
Change in fair 208,504 - 636,232 -
value of
derivative
liability
Gain on - - - 246,715
settlement of
debt
Foreign 3,592 141,408 14,903 157,108
exchange gain
Net loss for the $ (62,812) $ (491,260) $ (876,481) $ (2,767,516)
period
Other
comprehensive
income (loss):
Foreign (87,644) 55,697 (505,482) (144,883)
currency
translation
adjustments
Comprehensive $ (150,456) $ (435,563) $ (1,381,963) $ (2,912,399)
loss
Net loss per
share:
Basic and $ (0.00) $ (0.01) $ (0.02) $ (0.08)
diluted
Weighted 39,876,373 33,206,905 38,420,132 33,128,861
average common
shares
outstanding:
SOURCE CounterPath Corporation
