CounterPath Reports First Quarter Fiscal 2014 Financial Results

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Sept. 12, 2013) - CounterPath Corporation (NASDAQ:CPAH)(TSX:CCV) ("CounterPath" or the "Company"), an award-winning provider of desktop and mobile VoIP software products and solutions, today announced the financial and operating results for its first quarter ended July 31, 2013 of fiscal 2014.

First Quarter Financial Highlights

• Quarterly revenue of $2.9 million compared to revenue of $4.4 million for the first quarter of fiscal 2013.
• GAAP and Non-GAAP gross margin of 81%.
• Non-GAAP loss from operations of $1.0 million compared to non-GAAP income from operations of $0.4 million for the first quarter of fiscal 2013.
• Net loss of $1.2 million or ($0.03) per share compared to net income of $0.9 million or $0.02 per share for the first quarter of fiscal 2013.
• Non-GAAP net loss of $0.9 million or ($0.02) per share compared to non-GAAP net income of $0.5 million or $0.01 per share for the first quarter of fiscal 2013.
• Cash of $11.3 million as of July 31, 2013.

"The first quarter is typically a seasonally slower sales period for CounterPath. In this case, the year-over-year comparison is exacerbated by what was an exceptionally strong first quarter last year," stated Donovan Jones, President and Chief Executive Officer. "We recently made additions to our sales team in Europe and North America that will enhance our direct to enterprise and service provider efforts, while our recent agreements with companies like TeleDynamics and World Telecom Group (WTG) will provide access to an enormous value-added reseller network for the Enterprise market. These efforts, combined with a strong new business pipeline, product differentiation, solid balance sheet and an expanding unified communications market, position CounterPath well for growth."

Recent Business Highlights

• Announced the launch of Bria BlackBerry® Edition, the SIP-based softphone app customized for the BlackBerry® 10 platform.
• Announced distribution agreements with TeleDynamics, WTG and Interwork Technologies, leading unified communications solutions channels which together represent more than 10,000 value added resellers (VARs) across North America.
• Announced a new API for the Bria for Windows desktop product line which gives developers a platform to build and customize applications that provide access to, and control over, Bria's robust unified communications solutions.

Financial Outlook

For fiscal 2014, CounterPath expects an increase in revenue over the prior year based on rising market demand, new customer wins and follow-on sales from current customers, many of which are at the early stages of their deployment timelines. The Company expects to increase its sales and marketing resources to support sales growth in all of its key markets. Historically, CounterPath has experienced quarter-to-quarter fluctuations in revenue based largely on seasonality and the timing of larger customer deployments.

Conference Call Information

CounterPath will host an investor conference call and live webcast today at 11:00 a.m. ET to discuss its financial results for the first quarter ended July 31, 2013. To access the conference call by telephone, dial 647-427-7450 or 1-888-231-8191. Please connect approximately 15 minutes prior to the beginning of the call to ensure participation. A question and answer session for analysts and institutional investors will follow management's presentation.

A live audio webcast of the conference call will be available at www.cnw.ca. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived for 30 days.

A taped rebroadcast will be available to listeners until 12 a.m. ET on September 19, 2013. To access the rebroadcast, please dial 416-849-0833 or 1-855-859-2056 and enter passcode 44810695, followed by the number sign.

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, outlook, expectations or intentions regarding the future such as the following: (1) For fiscal 2014, CounterPath expects an increase in revenue over the prior year, based on rising market demand, new customer wins and follow-on sales from current customers, many of which are at the early stages of their deployment timelines; and (2) The Company expects to increase its sales and marketing resources to support sales growth in all of its key markets.

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 variability in CounterPath's sales from reporting period to reporting period due to extended sales cycles as a result of selling CounterPath's products through channel partners or the length of time of deployment of CounterPath's products by its customers, (3) the Company's ability to manage its operating expenses, which may adversely affect its financial condition, (4) a decline in the Company's 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, (5) the Company's ability to remain competitive as other better financed competitors develop and release competitive products, (6) the impact of intellectual property litigation that could materially and adversely affect CounterPath's business, (7) the success by the Company of the sales of its current and new products, (8) the impact of technology changes on the Company's products and industry, (9) the failure to develop new and innovative products using the Company's technologies, and (10) the potential dilution to shareholders or overhang on the Company's share price of its 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.

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, NTT and NEC.

For more information please visit www.counterpath.com.

COUNTERPATH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Stated in U.S. Dollars)

				July 31,	April 30,
				2013	2013
Assets				(Unaudited)
	Current assets:
		Cash and cash equivalents		$ 11,251,366	$ 11,229,595
		Accounts receivable (net of allowance for doubtful accounts of $128,158 and $456,051, respectively)		3,821,445	4,640,620
		Prepaid expenses and deposits		139,778	139,591
		Total current assets		15,212,589	16,009,806
	Deposits			123,077	125,160
	Equipment			134,495	167,986
	Intangible assets (net of accumulated amortization of $5,929,285 and $5,929,285, respectively)			−	−
	Derivative instruments			2,760	9,830
	Goodwill			8,548,439	8,660,930
	Other assets			93,685	82,165
Total Assets				$ 24,115,045	$ 25,055,877
Liabilities and Stockholders' Equity
	Current liabilities:
		Accounts payable and accrued liabilities		$ 2,473,731	$ 2,363,311
		Derivative instruments		−	93,057
		Unearned revenue		1,579,651	1,442,511
		Customer deposits		9,553	9,553
		Accrued warranty		82,815	91,151
			Total current liabilities	4,145,750	3,999,583
	Deferred lease inducements			29,717	30,110
	Unrecognized tax benefit			98,575	98,575
			Total liabilities	4,274,042	4,128,268
	Stockholders' equity:
	Preferred stock, $0.001 par value
		Authorized: 100,000,000
		Issued and outstanding: July 31, 2013 - nil; April 30, 2013 - 1		-	-
	Common stock, $0.001 par value
		Authorized: 83,076,900
		Issued :
		July 31, 2013 - 41,945,655; April 30, 2013 - 41,958,350		41,946	41,959
		Treasury stock		(19)	(79)
	Additional paid-in capital			66,459,017	66,191,140
	Accumulated deficit			(46,199,782)	(44,974,491)
	Accumulated other comprehensive income - currency translation adjustment			(460,159)	(330,920)
		Total stockholders' equity		19,841,003	20,927,609
Liabilities and Stockholders' Equity				$ 24,115,045	$ 25,055,877

COUNTERPATH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(Stated in U.S. Dollars)
(Unaudited)

			Three Months Ended
			July 31,
			2013	2012
Revenue:
	Software		$ 1,647,520	$ 2,528,056
	Service		1,211,967	1,859,712
		Total revenue	2,859,487	4,387,768
Operating expenses:
	Cost of sales (includes depreciation of $22,799 (2012 - $5,310) and amortization of intangible assets of nil (2012 - $9,908))		557,455	559,793
	Sales and marketing		1,213,483	1,055,035
	Research and development		1,413,075	1,361,012
	General and administrative		1,013,530	1,379,319
		Total operating expenses	4,197,543	4,355,159
Income (loss) from operations			(1,338,056)	32,609
Interest and other income (expense), net:
	Interest and other income		27,485	43,853
	Interest expense		(771)	(470)
	Foreign exchange gain (loss)		64	6,418
	Fair value adjustment on derivative instruments		85,987	785,128
Net income (loss) for the period			$ (1,225,291)	$ 867,538
Net income (loss) per share:
	Basic and diluted		$ (0.03)	$ 0.02
	Weighted average common shares outstanding:
	Basic and Diluted		41,934,880	40,727,122

Non-GAAP Financial Measures

This news release contains "non-GAAP financial measures". The non-GAAP financial measures in this news release may include non-GAAP gross margin 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. The non-GAAP financial measures may also include non-GAAP net income (loss) which excludes non-cash stock-based compensation, amortization of intangible assets and fair value adjustment on derivative instruments charges relative to income (loss) 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)

Non-GAAP gross margin:			Three Months Ended
			July 31,
			2013	2012
	Revenue		$ 2,859,487	$ 4,387,768
		Less:
		Cost of sales	557,455	559,793
	GAAP gross profit		$ 2,302,032	$ 3,827,975
	Percentage of revenue (GAAP gross margin)		81%	87%
	GAAP gross profit		$ 2,302,032	$ 3,827,975
		Plus:
		Stock-based compensation	8,553	8,839
		Amortization of intangible assets	-	9,908
	Non-GAAP gross profit		$ 2,310,585	$ 3,846,722
	Percentage of revenue (non-GAAP gross margin)		81%	88%

Non-GAAP income (loss) from operations:		Three Months Ended
		July 31,
		2013	2012
	GAAP income (loss) from operations	$ (1,338,056)	$ 32,609
	Plus:
	Stock-based compensation	374,550	396,770
	Amortization of intangible assets	-	9,908
	Non-GAAP income (loss) from operations	$ (963,506)	$ 439,287

Non-GAAP net income (loss):		Three Months Ended
		July 31,
		2013	2012
	GAAP net income (loss)	$ (1,225,291)	$ 867,538
	Plus:
	Stock-based compensation	374,550	396,770
	Amortization of intangible assets	-	9,908
	Fair value adjustment on derivative instruments	(85,987)	(785,128)
	Non-GAAP net income (loss)	$ (936,728)	$ 489,088
	GAAP net income (loss) per share - basic and diluted	$ (0.03)	$ 0.02
	Non-GAAP net Income (loss) per share - basic and diluted	$ (0.02)	$ 0.01