CounterPath Corporation
NASDAQ : CPAH
TSX : CCV

CounterPath Corporation

September 11, 2014 08:30 ET

CounterPath Reports First Quarter Fiscal 2015 Financial Results

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Sept. 11, 2014) - CounterPath Corporation ("CounterPath" or the "Company") (NASDAQ:CPAH)(TSX:CCV), 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, 2014 of fiscal 2015.

First Quarter Financial Highlights

  • Quarterly revenue of $3.0 million, up 6% compared to revenue of $2.9 million for the first quarter of fiscal 2014.
  • Gross margin of 80%.
  • Non-GAAP loss from operations of $1.1 million compared to non-GAAP loss from operations of $1.0 million for the first quarter of fiscal 2014.
  • Net loss of $1.1 million or ($0.02) per share compared to net loss of $1.2 million or ($0.03) per share for the first quarter of fiscal 2014.
  • Non-GAAP net loss of $0.7 million or ($0.02) per share compared to non-GAAP net loss of $0.9 million or ($0.02) per share for the first quarter of fiscal 2014.
  • Cash of $6.9 million as of July 31, 2014.

"CounterPath returned to year-on-year growth in the first quarter of fiscal 2015, demonstrating the effectiveness of our new sales strategy and our ability to accelerate the sales cycle with key clients," said Donovan Jones, President and Chief Executive Officer. "We are seeing strong demand for our products, especially from large enterprises in the financial services, call center, government and industrial sectors, and renewed interest from operators in Europe. We have recently expanded our direct sales teams in Europe and Latin America, and bolstered our sales channel by signing an agreement with a large equipment vendor that has strong relationships with operators around the globe. We believe the investments we are making in our sales force and technology platform, coupled with a strong pipeline of new opportunities will enable us to achieve our business plan."

Recent Business Highlights

  • Announced the Stretto Platform™, CounterPath's flexible and modular server solution for provisioning, network convergence, messaging, reporting, and troubleshooting applications.
  • Demonstrated Bria Client Technology for Virtualized Desktops at VMworld 2014 US, providing enterprises using the Teradici PCoIP solution with a preview of the CounterPath Bria Virtualized Edition product for Desktop-as-a-Service (DaaS) and Virtual Desktop Infrastructure (VDI) deployments.
  • Provided update on the purchases of the Company's common shares through the normal course issuer bid (NCIB) which was announced on March 17, 2014, and announced plans to initiate purchases of the Company's common shares through the facilities of the NASDAQ.
  • Announced a contract and strategic channel agreement with a large network equipment provider with plans to market and sell CounterPath's OTT communications solutions to operators worldwide.
  • Announced the general availability of the Bria 4.1 Windows desktop client with optional screen share and Outlook add-ins.
  • Received patent from the U.S. Patent and Trademark office (No. US 8,763,081) titled 'Network Based Authentication', enabling operators to offer seamless VoIP experience, and increasing our total patent portfolio to 19 patents granted, and six patents pending.

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, Avaya, BroadSoft, BT, Cisco Systems, GENBAND, Metaswitch Networks, Mitel, NEC, Network Norway, Rogers and Verizon.

For more information please visit www.counterpath.com.

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) We believe the investments we are making in our sales force and technology platform, coupled with a strong pipeline of new opportunities will enable us to achieve our business plan.

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 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, (2) the Company's ability to manage its operating expenses, which may adversely affect its financial condition, (3) 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 or cause a delisting from a stock exchange on which our common stock trades, (4) the Company's ability to remain competitive as other better financed competitors develop and release competitive products, (5) the impact of intellectual property litigation that could materially and adversely affect CounterPath's business, (6) the success by the Company of the sales of its current and new products, (7) the impact of technology changes on the Company's products and industry, (8) the failure to develop new and innovative products using the Company's technologies, and (9) the potential dilution to shareholders or overhang on the Company's share price of its outstanding stock options. 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.

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

July 31, April 30,
2014 2014
Assets (Unaudited)
Current assets:
Cash and cash equivalents $ 6,852,017 $ 7,172,798
Accounts receivable (net of allowance for doubtful accounts of $327,681 and $240,681, respectively) 2,883,455 3,401,491
Prepaid expenses and deposits 166,475 161,627
Total current assets 9,901,947 10,735,916
Deposits 119,534 125,267
Equipment 162,778 154,293
Goodwill 8,083,556 8,018,578
Other assets 114,100 102,836
Total Assets $ 18,381,915 $ 19,136,890
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 2,429,211 $ 2,326,763
Unearned revenue 1,689,742 1,625,826
Customer deposits 9,553 9,553
Accrued warranty 72,618 69,159
Total current liabilities 4,201,124 4,031,301
Deferred lease inducements 59,778
Unrecognized tax benefit 25,631 25,631
Total liabilities 4,286,533 4,056,932
Stockholders' equity:
Preferred stock, $0.001 par value
Authorized: 100,000,000
Issued and outstanding: July 31, 2014 - nil; April 30, 2014 - nil - -
Common stock, $0.001 par value
Authorized: 100,000,000
Issued:
July 31, 2014 - 42,586,267; April 30, 2014 - 42,599,869 42,587 42,600
Treasury stock (48) (16)
Additional paid-in capital 67,223,526 66,910,540
Accumulated deficit (51,952,411) (50,889,038)
Accumulated other comprehensive income (loss) - currency translation adjustment (1,218,272) (984,128)
Total stockholders' equity 14,095,382 15,079,958
Liabilities and Stockholders' Equity $ 18,381,915 $ 19,136,890

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

Three Months Ended
July 31,
2014 2013
Revenue:
Software $ 1,873,948 $ 1,647,520
Service 1,153,223 1,211,967
Total revenue 3,027,171 2,859,487
Operating expenses:
Cost of sales (includes depreciation of $23,855 (2013 - $22,799)) 618,054 557,455
Sales and marketing 1,137,768 1,213,483
Research and development 1,496,206 1,413,075
General and administrative 1,203,511 1,013,530
Total operating expenses 4,455,539 4,197,543
Income (loss) from operations (1,428,368) (1,338,056)
Interest and other income (expense), net:
Interest and other income 8,049 27,485
Interest expense (355) (771)
Fair value adjustment on derivative instruments - 85,987
Foreign exchange gain (loss) 357,301 64
Net income (loss) for the period $ (1,063,373) $ (1,225,291)
Net income (loss) per share:
Basic and diluted $ (0.02) $ (0.03)
Weighted average common shares outstanding:
Basic and diluted 42,592,851 41,934,880

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 income (loss) from operations which excludes non-cash stock-based compensation relative to 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 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 income (loss) from operations:

Three Months Ended
July 31,
2014 2013
GAAP income (loss) from operations $ (1,428,368) $ (1,338,056)
Plus:
Stock-based compensation 368,612 374,550
Non-GAAP income (loss) from operations $ (1,059,756) $ (963,506)

Non-GAAP net income (loss):

Three Months Ended
July 31,
2014 2013
GAAP net income (loss) $ (1,063,373) $ (1,225,291)
Plus:
Stock-based compensation 368,612 374,550
Fair value adjustment on derivative instruments - (85,987)
Non-GAAP net income (loss) $ (694,761) $ (936,728)
GAAP net income (loss) per share - basic and diluted $ (0.02) $ (0.03)
Non-GAAP net income (loss) per share - basic and diluted $ (0.02) $ (0.02)

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