CounterPath Reports First Quarter Fiscal 2009 Financial Results
VANCOUVER, Sept. 15 -- CounterPath Corporation (TSX-V: CCV; OTCBB: CPAH), a leading provider of desktop and mobile VoIP software products and solutions, today announced financial and operating results for the first quarter ended July 31, 2008.
Financial and operating highlights for the quarter include:
- Revenues of $2.6 million for the quarter ended July 31, 2008 compared
to $1.2 million for the quarter ended July 31, 2007, an increase of
113%.
- Launching of the Vonage Companion(TM) by Vonage. Powered by
CounterPath, the Vonage Companion is a next generation Vonage
SoftPhone client that allows the residential or home office user to
access their home number from any desktop or laptop PC connected to a
high speed Internet connection, enabling them to communicate as if
they are at home.
- Successful Beta deliveries of our Enterprise Mobility Client and
Gateway to two of our OEM customers both with commercial launches
expected towards the end of the calendar year. The Enterprise Mobility
Gateway extends the functionality of an enterprise's PBX (telephone
system) out to a mobile handset such as those offered by RIM
(Blackberry(TM)) and Nokia.
- Completing a multiyear agreement with a tier one European carrier for
our multimedia softphone solution, which has now been deployed with
more than 15 tier one carriers in Europe and North America.
- Raising $3.7 million in capital as the first closing under a private
placement.
"Overall business activities in the quarter met with management expectations," stated Donovan Jones President and CEO, CounterPath. "We are also beginning to see customer traction from the acquisitions we made in the mobile space with a number of deployments and paid trials in Europe with major carriers for the Network Convergence Gateway. The company is expecting early market acceptance from the Enterprise Mobility Client and Gateway products with our OEM partners. CounterPath is one of the few vendors worldwide with engineering and product strength across both the desktop and mobile communications software space. We are pleased with the revenue growth of over 100% year over year. We are looking for continued success from our customers and partners as the market for software-based communications begins to ramp up, evidenced by a significantly increasing deployment of our applications. CounterPath has a clear technology lead in its sector and a strong management team. We continue to take market share away from the smaller vendors. This, added to a growing customer funnel, is allowing the company to attract additional capital to take advantage of market opportunities. We have recently taken $4 million in annualized operating costs out of the consolidated company and will continue to manage our costs in delivering on the operating plan. Overall, I believe the CounterPath business strategy is optimum and I look forward to the coming quarters."
Financial Results
(All amounts in U.S. dollars and in accordance with accounting principles generally accepted in the United States ("GAAP") unless otherwise specified. Consolidated financial results include the financial results of NewHeights Software Corporation from August 2, 2007 and the financial results for FirstHand Technologies Inc. and BridgePort Networks, Inc., from February 1, 2008)
For the first quarter ended July 31, 2008, revenue was $2.6 million compared to $1.2 million for the quarter ended July 31, 2007. Software revenue for the quarter ended July 31, 2008 was $1.8 million compared to $0.8 million for the previous year. Service revenue for the quarter ended July 31, 2008 was $0.8 million compared to $0.5 million for the quarter ended July 31, 2007.
Operating expenses for the quarter ended July 31, 2008 were $8.3 million compared to $2.3 million for the same period in 2007. Inclusive in operating expenses of $8.3 million were non-cash expenses of $1 million. The increase in operating expenses was primarily due to the addition of cash and non-cash operating expenses related to the acquisition of NewHeights, FirstHand and BridgePort. Operating expenses for the quarter ended July 31, 2008 include a non-cash charge of $0.5 million from amortization of intangible assets acquired from NewHeights, FirstHand and BridgePort and a non-cash $0.5 million stock-based compensation expense. Sales and marketing expenses were $1.5 million for the quarter ended July 31, 2008 compared to $0.5 million for the quarter ended July 31, 2007. For the quarter ended July 31, 2008, research and development expenses were $3.0 million and general and administrative expenses were $2.2 million, compared to $0.8 million and $0.7 million, respectively, for the same quarter last year. Restructuring charges were $0.2 million for the quarter (2007 - $nil) relating to employee rationalization following the acquisitions of FirstHand and BridgePort.
The net loss for the quarter ended July 31, 2008 was $5.9 million, or a loss of $0.23 per share, compared to a net loss of $1.2 million, or a loss of $0.15 per share for the quarter ended July 31, 2007.
At July 31, 2008, the Company had $5.8 million in cash, compared to $6.2Â million at April 30, 2008. On July 31, 2008, the Company issued 2,433,439 units at a price of $1.50 (CDN$1.54) per unit for gross proceeds of $3,660,379 (CDN$3,747,497) through a non-brokered private placement announced on July 30, 2008. Each unit consists of one share of common stock in the capital of CounterPath and one-half of one non-transferable common share purchase warrant. Each whole warrant shall entitle the holder thereof to purchase one share of common stock in the capital of CounterPath for a period of two years commencing from July 31, 2008 at an exercise price of US$2.25 per warrant share. At July 31, 2008, the Company's working capital was $6.9 million, compared to $7.6 million at April 30, 2008. The shares and warrants are subject to a four-month hold period in Canada expiring on December 1, 2008.
The shares and warrants issued in the private placement were not and will not be registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of United States Securities Act of 1933.
About CounterPath
CounterPath Corporation is a leading 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), Deutsche Telekom, Cisco Systems, Mitel and Nortel.
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, expectations or intentions regarding the future.
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 successfully integrate the businesses of CounterPath, FirstHand Technologies and BridgePort Networks, (2) the failure to develop new and innovative products using the Company's and FirstHand's and BridgePort's technologies, (3) the Company's ability to remain competitive as other parties develop and release competitive products, (4) the Company's ability to retain the employees necessary to continue research and development of current and new products, (5) the success by the Company of the sales of its current and new products, (6) the impact of competitive products on the sales of the Company's products, (7) the impact of technology changes on the Company's products and on the VoIP industry, (8) the compatibility of the Company's products with new computer operating systems, (9) the rate of adoption by service providers and the general public of VoIP as a replacement for regular and cellular phone service, (10) general economic conditions as they affect CounterPath and its prospective customers, (11) the ability of the Company to control costs operating, general administrative and other expenses, and (12) 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-QSB and Form 10-Q, annual reports on Form 10-KSB and the Company's other disclosure documents filed from time-to-time with the Securities and Exchange Commission.
Disclaimer: The TSX Venture Exchange does not accept responsibility for
the adequacy or accuracy of this release.
COUNTERPATH CORPORATION
(Formerly CounterPath Solutions, Inc.)
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
(Stated in U.S. Dollars)
July 31, April 30,
2008 2008
-------------- --------------
Assets (Unaudited)
Current assets:
Cash $ 5,769,185 $ 6,223,613
Accounts receivable (net of
allowance for doubtful accounts of
$537,050 and $407,050, respectively) 6,123,630 5,409,658
Investment tax credits recoverable - 1,061,133
Prepaid expenses and deposits 535,048 646,679
-------------- --------------
Total current assets 12,427,863 13,341,083
Deposits 165,775 103,017
Equipment 504,798 736,854
Intangible assets (net of accumulated
amortization of $1,909,838 and
$1,364,365) 7,853,480 8,534,666
Goodwill 8,586,228 8,674,990
Other assets 103,839 177,749
-------------- --------------
Total Assets $ 29,641,983 $ 31,568,359
-------------- --------------
-------------- --------------
Liabilities and Stockholders' Equity
(Capital Deficit)
Current liabilities:
Accounts payable and accrued
liabilities $ 4,041,904 $ 4,529,201
Unearned revenue 1,228,076 936,343
Customer deposits 70,834 85,283
Warranty accrual 150,330 144,347
-------------- --------------
Total current liabilities 5,491,144 5,695,174
Deferred Lease Inducements 73,977 97,734
Unrecognized tax benefit 98,575 98,575
-------------- --------------
Total liabilities 5,663,696 5,891,483
Stockholders' equity (capital deficit):
Preferred stock, $0.001 par value
Authorized: 100,000,000
Issued and outstanding:
July 31, 2008 - 1; April 30,
2007 - Nil - -
Common stock, $0.001 par value
Authorized: 83,076,900
Issued and outstanding:
July 31, 2008 - 28,355,236; April 30,
2007 - 7,588,197 28,355 25,921
Additional paid-in capital 47,533,178 43,398,849
Accumulated deficit (24,335,285) (18,479,483)
Accumulated other comprehensive income
(loss) - currency translation
adjustment 752,039 731,589
-------------- --------------
Total stockholders' equity 23,978,287 25,676,876
-------------- --------------
Liabilities and Stockholders' Equity $ 29,641,983 $ 31,568,359
-------------- --------------
-------------- --------------
COUNTERPATH CORPORATION
(Formerly CounterPath Solutions, Inc.)
CONDENSED INTERIM CONSOLIDATED STATEMENTS
OF OPERATIONS AND COMPREHENSIVE LOSS
(Stated in U.S. Dollars)
(Unaudited)
Three Months Ended
July 31,
------------------------------
2008 2007
-------------- --------------
Revenue:
Software $ 1,848,305 $ 769,008
Service 764,455 457,783
Total revenue 2,612,760 1,226,791
Operating expenses:
Cost of sales (includes depreciation
of $21,484 and $38,541 and
amortization of intangible assets of
$545,473 and $nil) 1,377,843 361,158
Sales and marketing 1,481,951 454,883
Research and development 3,017,412 766,468
General and administrative 2,228,127 724,527
Restructuring costs 190,961 -
-------------- --------------
Total operating expenses 8,296,294 2,307,036
-------------- --------------
Loss from operations (5,683,534) (1,080,245)
Interest and other income (expense), net
Interest income 18,068 15,524
Interest expense (7,295) (140,576)
Foreign exchange loss (183,041) -
-------------- --------------
Net loss for the period (5,855,802) (1,205,297)
-------------- --------------
-------------- --------------
Other comprehensive income (loss):
Foreign currency translation
adjustments 20,450 (5,940)
-------------- --------------
Comprehensive loss $ (5,835,352) $ (1,211,237)
-------------- --------------
-------------- --------------
Net loss per share:
Basic and diluted $ (0.23) $ (0.15)
-------------- --------------
-------------- --------------
Weighted average common shares
outstanding: 25,948,247 7,588,197
