CounterPath Reports Fiscal 2009 Second Quarter Financial Results
VANCOUVER, Dec. 15 -- CounterPath Corporation (OTCBB: CPAH; TSX-V: CCV), a leading provider of desktop and mobile VoIP software products and solutions, today announced financial and operating results for the second quarter ended October 31, 2008.
Financial and operating highlights for the quarter include:
- Record quarterly revenues of $3.0 million for the quarter ended October
31, 2008 compared to $2.4 million for the quarter ended October 31,
2007 and $2.6 million for the previous quarter ended July 31, 2008, an
increase of 23% and 15%, respectively.
- An anticipated reduction in costs and operating expenses of over
$5 million per year.
- Increased access to the capital markets with the commencement of
trading of CounterPath common shares on the TSX Venture Exchange on
August 25, 2008 under the symbol CCV.
- Subsequent to the quarter end, the commercial launch of a
functionally-rich enterprise mobile client and gateway by Nortel
Networks. The enterprise mobility gateway extends the functionality of
an enterprise's PBX (telephone system) out to a mobile handset,
including those offered by RIM (Blackberry(TM)), Nokia and handsets
running Windows Mobile.
"Despite a difficult and uncertain economic environment, we have significantly reduced our operating costs while achieving record revenues, bringing the company closer to our objective of profitability," stated Donovan Jones, President and CEO CounterPath Corporation. "Enterprises are under more pressure than ever to seek solutions which reduce costs while increasing productivity. The products from CounterPath are designed to address these requirements by converging voice, video, messaging and presence on multiple devices, across multiple platforms, over both fixed and mobile networks. Our mobile applications are beginning to be deployed by our customers in increasing quantities as the market for VoIP and mobile applications gains momentum. The company is well positioned to address a wide variety of sophisticated technical requirements and able to generate significant advantages for the system end users. We remain one of the few companies with engineering and product strength across the desktop and mobile communications space," stated 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. Consolidated financial results include the financial results of NewHeights Software Corporation ("NewHeights") from August 2, 2007 and the financial results for FirstHand Technologies Inc. ("FirstHand") and Bridgeport Networks, Inc. ("BridgePort"), from February 1, 2008)
For the quarter ended October 31, 2008, revenue was $3.0 million compared to $2.4 million for the quarter ended October 31, 2007. Software revenue for the quarter ended October 31, 2008 was $2.1 million compared to $2.0 million for the same quarter in the previous year. Service revenue for the quarter ended October 31, 2008 was $0.9 million compared to $0.4 million for the quarter ended October 31, 2007.
Operating expenses for the quarter ended October 31, 2008 were $6.7 million compared to $5.5 million for the same period in 2007. The increase in operating expenses was primarily due to the addition of cash and non-cash operating expenses related to the acquisition of FirstHand and BridgePort. Operating expenses for the quarter ended October 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 $0.3 million stock-based compensation expense. Sales and marketing expenses were $1.2 million for the quarter ended October 31, 2008 compared to $1.1 million for the quarter ended October 31, 2007. For the quarter ended October 31, 2008, research and development expenses were $2.1 million and general and administrative expenses were $1.6 million, compared to $1.6 million and $1.8 million, respectively, for the same quarter last year. During the quarter ended October 31, 2008, the Company downsized its workforce by approximately 39% primarily as a result of the integration of its acquisitions of FirstHand and BridgePort. The related restructuring charge was $0.7 million for the quarter (2007 - $0.2 million).
The net loss for the quarter ended October 31, 2008 was $3.5 million, or a loss of $0.12 per share, compared to a net loss of $3.5 million, or a loss of $0.17 per share, for the quarter ended October 31, 2007.
At October 31, 2008, the Company had $3.2 million in cash, compared to $6.2 million at April 30, 2008. At October 31, 2008, the Company's working capital was $4.2 million, compared to $7.6 million at April 30, 2008.
On December 15, 2008, the Company granted incentive stock options to the Chief Financial Officer and the Chief Technology Officer and a number of employees of the Company for the purchase of a total of 732,000 common shares of the Company, pursuant to its stock option plan. The options are exercisable on or before December 15, 2013, at a price of $0.44 (CDN$0.55) per common share.
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, such as the following: (1) an anticipated reduction in costs and operating expenses of over $5 million per year.
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 and BridgePort, (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 and the Company's interim and annual filings and other disclosure documents filed from time-to-time on SEDAR.
Disclaimer: The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
COUNTERPATH CORPORATION
(Formerly CounterPath Solutions, Inc.)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Stated in U.S. Dollars)
October 31, April 30,
2008 2008
------------- -------------
Assets (Unaudited)
Current assets:
Cash $ 3,244,741 $ 6,223,613
Accounts receivable (net of allowance
for doubtful accounts of $562,580 and
$407,050, respectively) 5,605,362 5,409,658
Investment tax credits recoverable - 1,061,133
Prepaid expenses and deposits 442,348 646,679
------------- -------------
Total current assets 9,292,451 13,341,083
Deposits 154,855 103,017
Equipment 368,663 736,854
Intangible assets (net of accumulated
amortization of $2,420,009 and $1,364,365) 5,923,815 8,534,666
Goodwill 7,273,247 8,674,990
Other assets 100,942 177,749
------------- -------------
Total Assets $ 23,113,973 $ 31,568,359
------------- -------------
------------- -------------
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 3,888,637 $ 4,529,201
Unearned revenue 1,065,406 936,343
Customer deposits 5,917 85,283
Warranty accrual 156,787 144,347
------------- -------------
Total current liabilities 5,116,747 5,695,174
Deferred lease inducements 60,724 97,734
Unrecognized tax benefit 98,575 98,575
------------- -------------
Total liabilities 5,276,046 5,891,483
------------- -------------
Stockholders' equity:
Preferred stock, $0.001 par value
Authorized: 100,000,000
Issued and outstanding:
October 31, 2008 - 1;
April 30, 2008 - 1
Common stock, $0.001 par value
Authorized: 415,384,500
Issued and outstanding:
October 31, 2008 - 28,502,638;
April 30, 2008 - 25,921,797 28,502 25,921
Additional paid-in capital 47,969,056 43,398,849
Accumulated deficit (27,859,359) (18,479,483)
Accumulated other comprehensive income
(loss) - currency translation adjustment (2,300,272) 731,589
------------- -------------
Total stockholders' equity 17,837,927 25,676,876
------------- -------------
Liabilities and Stockholders' Equity $ 23,113,973 $ 31,568,359
------------- -------------
------------- -------------
COUNTERPATH CORPORATION
(Formerly CounterPath Solutions, Inc.)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Stated in U.S. Dollars)
(Unaudited)
Three Months Ended Six Months Ended
October 31, October 31,
--------------------------- ---------------------------
2008 2007 2008 2007
------------- ------------- ------------- -------------
Revenue:
Software $ 2,113,617 $ 2,042,133 $ 3,961,922 $ 2,811,141
Service 903,213 402,578 1,667,668 860,361
------------- ------------- ------------- -------------
Total revenue 3,016,830 2,444,711 5,629,590 3,671,502
------------- ------------- ------------- -------------
Operating expenses:
Cost of sales
(includes
depreciation
of $36,862 and
$73,273 and
amortization of
intangible assets
of $1,055,644
and $295,231) 1,086,203 701,371 2,464,046 1,062,529
Sales and
marketing 1,186,713 1,112,119 2,668,664 1,567,002
Research and
development 2,103,685 1,633,445 5,121,097 2,399,912
General and
administrative 1,559,672 1,831,642 3,787,799 2,556,168
Restructuring
costs 742,035 182,107 932,996 182,107
------------- ------------- ------------- -------------
Total operating
expenses 6,678,308 5,460,684 14,974,602 7,767,718
------------- ------------- ------------- -------------
Loss from
operations (3,661,478) (3,015,973) (9,345,012) (4,096,216)
Interest and other
income (expense),
net
Interest income 32,198 33,554 50,266 49,078
Interest expense (3,140) (547,975) (10,435) (688,552)
Foreign exchange
gain (loss) 108,346 53,516 (74,695) 53,516
------------- ------------- ------------- -------------
Net loss for
the period $ (3,524,074) $ (3,476,878) $ (9,379,876) $ (4,682,174)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Other comprehensive
income (loss):
Foreign currency
translation
adjustments (3,052,311) 1,694,235 (3,031,861) (5,940)
------------- ------------- ------------- -------------
Comprehensive
loss $ (6,576,385) $ (1,782,643) $(12,411,737) $ (4,688,114)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net loss
per share:
Basic and
diluted $ (0.12) $ (0.19) $ (0.35) $ (0.37)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Weighted average
common shares
outstanding: 28,682,680 17,900,447 26,441,072 12,744,322
