COUNTERPATH REPORTS SECOND QUARTER FISCAL 2011 FINANCIAL RESULTS
VANCOUVER, Dec. 15 /CNW/ - CounterPath Corporation ("CounterPath" or the "Company") (OTCBB: CPAH; TSX-V: CCV), an award-winning provider of desktop and mobile VoIP software products and solutions, today announced the financial and operating results for the second quarter of fiscal year 2011.
Financial and operating highlights for the second quarter ended October 31, 2010 include:
- Revenue for the second quarter ended October 31, 2010 of $2.6 million
compared to revenue of $2.2 million for the first quarter ended July
31, 2010, and $1.9 million for the second quarter ended October 31,
2009.
- A non-GAAP operating loss of $0.7 million for the second quarter
compared to non-GAAP operating loss of $1.4 million for the second
quarter ended October 31, 2009.
- A net loss for the second quarter of $0.8 million ($0.03 per share)
compared to a net loss of $1.7 million ($0.6 per share) for the
second quarter ended October 31, 2009.
- The entering into of a long-term strategic agreement with Metaswitch
Networks, exposing CounterPath's and Metaswitch's joint solution to
Metaswitch's approximately 250 service provider customers. The
agreement leverages CounterPath's entire product suite comprised of
desktop and mobile softphones and convergence servers.
- The introduction of NEC's Smart Mobile Client, a sophisticated
CounterPath solution for Fixed-Mobile Convergence (FMC) that extends
the functionality and capabilities of NEC communication servers to
market-leading smartphones. This solution is based on CounterPath's
Enterprise Mobility Gateway and mobile client offering.
- The expansion of CounterPath's portfolio of patents and exclusive
license protections for CounterPath's FMC technologies with the
granting of a patent for assigning single-number identity across
multiple devices and networks and a patent for presence detection
across fixed and mobile networks.
- The launch of the full featured Bria iPhone Edition 1.1 with
multitasking, full SIP compliance, superior call quality to circuit-
switched wireline and wireless voice, one-touch access to voicemail,
Bluetooth support, multi-call management, and signaling and call
encryption, enabling enterprise-class security.
- The closing of a $1.5 million private placement providing additional
capital resources to fund operations.
"The market continues to improve for our products and our sales were strong this quarter, up 35% over the same quarter last year", stated Donovan Jones, President and CEO, CounterPath. "We are seeing growth across all product lines providing support for a comment by NetworkWorld which recently reported that 70% of companies are increasing their deployment of softphones. The next phase of our strategy entails leveraging our OEM sales channels to reach a broader service provider and enterprise market. The announced efforts with Avaya, BroadSoft, Genesys, Metaswitch and NEC provide a solid foundation for this next growth period. In addition, we plan to increase sales of our recently launched iPhone and Android mobile phone applications by following the white label and customizable model that we have used successfully with our desktop softphone applications."
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 October 31, 2010, revenue was $2.6 million compared to $1.9 million for the same quarter last year. Software revenue for the quarter ended October 31, 2010 was $1.8 million compared to $1.5 million for the same quarter last year. Service revenue for the quarter ended October 31, 2010 was $0.8 million compared to $0.4 million for same quarter last year.
Operating expenses for the quarter ended October 31, 2010 were $3.7 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 $0.3 million.
Sales and marketing expenses were $0.9 million for the quarter ended October 31, 2010 compared to $0.7 million for same quarter last year. For the quarter ended October 31, 2010, research and development expenses were $1.1 million and general and administrative expenses were $1.1 million, compared to $1.0 million and $1.3 million, respectively, for the same quarter last year.
The net loss for the quarter ended October 31, 2010 was $0.8 million, or a loss of $0.03 per share, compared to a net loss of $1.7 million, or a loss of $0.06 per share, for the quarter ended October 31, 2009.
At October 31, 2010, the Company had $2.2 million in cash, compared to $1.6 million at April 30, 2010. At October 31, 2010, the Company's working capital was $1.6 million, compared to $1.2 million at April 30, 2010.
Subsequent to the end of the quarter, on December 14, 2010, the Company granted 40,000 stock options each to two non-employee directors pursuant to its stock option plan. Each stock option entitles the holder thereof the right to purchase one share of common stock at $1.90 per share under the terms and conditions of the plan. The options vest in the amount of 12.5% on the date which is six months from the date of grant and then beginning in the seventh month at 1/42 per month for 42 months, at which time the options 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 losses which exclude non-cash stock-based compensation and amortization of intangible asset charges relative to 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 Months Ended
October 31,
------------------------------
2010 2009
-------------- --------------
Restated
(Unaudited)
Non-GAAP operating loss $ (685,418) $ (1,359,902)
Less:
Stock-based compensation 281,299 190,787
Amortization of intangible assets 209,920 218,144
-------------- --------------
Loss from operations (GAAP) $ (1,176,637) $ (1,768,833)
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 continues to improve for our products; (2) the next phase of our strategy entails leveraging our OEM sales channels to reach a broader service provider and enterprise market; and (3) we plan to increase sales of our recently launched iPhone and Android mobile phone applications by following the white label and customizable model that we have used successfully with our desktop softphone applications.
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 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.
(TABLES TO FOLLOW)
COUNTERPATH CORPORATION
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
(Stated in U.S. Dollars)
October 31, April 30,
2010 2010
------------- -------------
Assets (Unaudited) Restated
Current assets:
Cash $ 2,184,011 $ 1,556,813
Accounts receivable (net of allowance
for doubtful accounts of $1,103,468
and $1,116,119, respectively) 2,311,842 2,345,633
Investment tax credits recoverable 29,445 129,285
Other current assets 179,419 221,041
------------- -------------
Total current assets 4,704,717 4,252,772
Deposits 100,943 101,994
Equipment 113,782 111,150
Intangible assets (net of accumulated
amortization of $4,668,285 and
$4,249,895, respectively) 1,173,519 1,674,359
Goodwill 8,625,777 8,740,025
Other assets 43,910 58,817
------------- -------------
Total Assets $ 14,762,648 $ 14,939,117
------------- -------------
------------- -------------
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 2,211,092 $ 2,313,688
Unearned revenue 766,912 655,361
Customer deposits 2,018 5,127
Accrued warranty 136,325 120,963
------------- -------------
Total current liabilities 3,116,347 3,095,139
Deferred lease inducements 3,462 4,677
Convertible debentures 1,249,264 -
Unrecognized tax benefit 98,575 98,575
------------- -------------
Total liabilities 4,467,648 3,198,391
Stockholders' equity:
Preferred stock, $0.001 par value
Authorized: 100,000,000
Issued and outstanding: October 31,
2010 - 1; April 30, 2010 - 1 - -
Common stock, $0.001 par value
Authorized: 83,076,900
Issued and outstanding:
October 31, 2010 -33,149,969; April 30,
2010 - 33,015,627 33,150 33,016
Additional paid-in capital 52,933,447 51,902,471
Accumulated deficit (42,057,335) (39,781,079)
Accumulated other comprehensive loss -
currency translation adjustment (614,262) (413,682)
------------- -------------
Total stockholders' equity 10,295,000 11,740,726
------------- -------------
Liabilities and Stockholders' Equity $ 14,762,648 $ 14,939,117
------------- -------------
------------- -------------
COUNTERPATH CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(Stated in U.S. Dollars)
(Unaudited)
Three Months Ended Six Months Ended
October 31, October 31,
------------ ------------ ------------ -------------
2010 2009 2010 2009
------------ ------------ ------------ -------------
Restated Restated
Revenue:
Software $ 1,751,317 $ 1,451,826 $ 3,570,469 $ 2,593,169
Service 816,346 448,781 1,216,779 1,357,895
------------ ------------ ------------ -------------
Total revenue 2,567,663 1,900,607 4,787,248 3,951,064
Operating expenses:
Cost of sales
(includes
depreciation of
$9,654 and
$2,925 and
amortization of
intangible
assets of
$418,392 and
$425,591 for
six months ended
October 31, 2010
and 2009
respectively) 695,822 701,391 1,444,684 1,327,112
Sales and marketing 900,264 690,551 1,765,947 1,449,556
Research and
development 1,096,115 1,004,594 2,159,762 1,824,722
General and
administrative 1,052,099 1,272,904 2,047,561 1,895,303
Restructuring
costs - - - 44,912
------------ ------------ ------------ -------------
Total operating
expenses 3,744,300 3,669,440 7,417,954 6,541,605
------------ ------------ ------------ -------------
Loss from
operations (1,176,637) (1,768,833) (2,630,706) (2,590,541)
Interest and other
income (expense),
net:
Interest income 42,709 33,816 94,788 61,574
Interest expense (2,532) (5) (2,753) (1,671)
Foreign exchange
gain (loss) 43,746 7,952 15,700 (421,761)
Gain on settlement
of debt 246,715 - 246,715 -
------------ ------------ ------------ -------------
Net loss for the
period $ (845,999) $ (1,727,070) $ (2,276,256) $ (2,952,399)
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------
Other
comprehensive
income (loss):
Foreign
currency
translation
adjustments 16,429 254,725 (200,580) 1,684,397
------------ ------------ ------------ -------------
Comprehensive
loss $ (829,570) $ (1,472,345) $ (2,476,836) $ (1,268,002)
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------
Net loss per
share:
Basic and
diluted $ (0.03) $ (0.06) $ (0.07) $ (0.10)
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------
Weighted average
common shares
outstanding: 33,113,474 29,526,663 33,089,839 29,247,497
For further information: David Karp, Chief Financial Officer, CounterPath Corporation, +1.604.320.3344 ext 1114, [email protected]
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