CounterPath Reports Third Quarter Fiscal 2009 Financial Results
VANCOUVER, March 12 -- CounterPath Corporation ("CounterPath" or the "Company") (TSX-V: CCV, OTCBB: CPAH), a leading provider of desktop and mobile VoIP software products and solutions, today announced financial results for the third quarter of fiscal year 2009, which ended January 31, 2009.
Financial and operating highlights for the quarter include:
- Revenue for the third quarter of $2.0 million compared to
$2.6 million for the third quarter ended January 31, 2008, and
$3.0 million for the previous quarter ended October 31, 2008.
- Aggressive cost reduction primarily through employee rationalization,
resulting in a reduction of operating expenses from a peak of
$8.3 million for the first quarter ended July 31, 2008 to
$4.3 million for the third quarter ended January 31, 2009. Excluding
non-cash stock-based compensation and acquisition related
amortization of intangible asset charges of $0.7 million, the non-
GAAP operating expenses for the third quarter were $3.6 million.
- A net loss for the third quarter of $2.2 million, or a loss of
$0.08 per share based on 28.5 million weighted average shares
outstanding. Excluding non-cash stock-based compensation and
amortization of intangible asset charges of $0.7 million, the non-
GAAP net loss for the third quarter was $1.5 million.
- A cash position of $3.4 million at January 31, 2009, up from
$3.2 million at the end of the previous quarter, October 31, 2008.
"Our third quarter financial results reflect the decrease in bookings from key OEM customers in the quarter as a direct result of the global economic downturn," said Donovan Jones, President and Chief Executive Officer, CounterPath Corporation. "In the current economic downturn, CounterPath is following a well developed plan to strengthen our business through more efficient operations in an effort to drive profitability. The steps that we have taken are necessary to meet current business trends and position the company well for when the environment improves. While it is unclear how long the global downturn will last, we have the right strategy, the right value proposition and our customer pipeline is growing. We will continue to invest in our core desktop softphone offerings as well as strategic growth areas such as mobile, plug-ins and fixed mobile convergence."
CounterPath also announced today that it is reducing the exercise price of 1,282,711 employee incentive stock options to $0.47 (CDN$0.60) common share for all of its employees and contractors holding stock options, other than for its officers and directors. This initiative is intended to provide more incentive to and retain employees and contractors of CounterPath. The affected stock options had a weighted average exercise price of $2.17. No other terms of the stock options were changed.
CounterPath also announced today that: (i) it entered into a settlement agreement with a former officer of the Company whereby CounterPath agreed to pay a total of $385,951 (CDN$495,000) over 45 months at a rate of CDN$11,000 per month; and (ii) the Company exercised its right to pay another former officer CDN$142,500 of remaining severance by way of the issuance of 279,412 common shares of the Company, issued at a price of CDN$0.51 per share, in full satisfaction of all amounts owing under the settlement agreement dated October 31, 2008.
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 January 31, 2009, revenue was $2.0 million compared to $2.6 million for the quarter ended January 31, 2008. Software revenue for the quarter ended January 31, 2009 was $1.3 million compared to $1.7 million for the same quarter in the previous year due in part to lower sales to the Company's OEM channels. Service revenue for the quarter ended January 31, 2009 was $0.7 million compared to $0.9 million for the quarter ended January 31, 2008.
Operating expenses for the quarter ended January 31, 2009 were $4.3 million compared to $4.9 million for the same period in 2008. The decrease in operating expenses was primarily due to the employee rationalization, offset by increased operating expenses due to the acquisitions of FirstHand and BridgePort on February 1, 2008. Operating expenses for the quarter ended January 31, 2009 include a non-cash charge of $460,000 from amortization of intangible assets acquired from NewHeights, FirstHand and BridgePort and a non-cash $260,000 stock-based compensation expense. Sales and marketing expenses were $0.8 million for the quarter ended January 31, 2009 compared to $1.0 million for the quarter ended January 31, 2008. For the quarter ended January 31, 2009, research and development expenses were $1.1 million and general and administrative expenses were $1.5 million, compared to $1.5 million and $1.6 million, respectively, for the same quarter last year.
The net loss for the quarter ended January 31, 2009 was $2.2 million, or a loss of $0.08 per share, compared to a net loss of $2.2 million, or a loss of $0.12 per share, for the quarter ended January 31, 2008.
At January 31, 2009, the Company had $3.4 million in cash, compared to $6.2 million at April 30, 2008. At January 31, 2009, the Company's working capital was $2.6 million, compared to $7.6 million at April 30, 2008.
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.
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 expenses and non-GAAP net loss, which exclude non-cash stock-based compensation and acquisition related amortization of intangible asset charges relative to operating expenses and net loss, respectively, 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. Additionally, CounterPath believes that the inclusion of non-GAAP measures, together with GAAP measures, provides investors with an additional dimension of comparability to similar companies. However, investors should be aware that non-GAAP financial measures utilized by other companies are not likely to be comparable in most cases to the non-GAAP financials measures used by CounterPath.
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) In the current economic downturn, CounterPath is following a well developed plan to strengthen our business through more efficient operations in an effort to drive profitability; (2) The steps that we have taken are necessary to meet current business trends and position the company well for when the environment improves; and (3) While it is unclear how long the global downturn will last, we have the right strategy, the right value proposition and our customer pipeline is growing
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 current and 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.
(TABLES TO FOLLOW)
COUNTERPATH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Stated in U.S. Dollars)
January 31, April 30,
2009 2008
------------- -------------
Assets (Unaudited)
Current assets:
Cash $ 3,384,110 $ 6,223,613
Accounts receivable (net of allowance for
doubtful accounts of $851,494 and
$407,050, respectively) 3,293,720 5,409,658
Investment tax credits recoverable - 1,061,133
Prepaid expenses and deposits 339,259 646,679
------------- -------------
Total current assets 7,017,089 13,341,083
Deposits 112,797 103,017
Equipment 272,764 736,854
Intangible assets (net of accumulated
amortization of $2,878,879 and $1,364,365) 5,387,794 8,534,666
Goodwill 7,201,885 8,674,990
Other assets 98,124 177,749
------------- -------------
Total Assets $ 20,090,453 $ 31,568,359
------------- -------------
------------- -------------
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 3,341,396 $ 4,529,201
Unearned revenue 873,319 936,343
Customer deposits 10,675 85,283
Warranty accrual 143,890 144,347
------------- -------------
Total current liabilities 4,369,280 5,695,174
Deferred lease inducements 47,471 97,734
Unrecognized tax benefit 98,575 98,575
------------- -------------
Total liabilities 4,515,326 5,891,483
------------- -------------
Stockholders' equity:
Preferred stock, $0.001 par value
Authorized: 100,000,000
Issued and outstanding: January 31, 2009 -
1; April 30, 2008 - 1
Common stock, $0.001 par value
Authorized: 83,076,900
Issued and outstanding:
January 31, 2009 - 28,552,638;
April 30, 2008 - 25,921,797 28,552 25,921
Additional paid-in capital 48,226,138 43,398,849
Accumulated deficit (30,096,884) (18,479,483)
Accumulated other comprehensive income (loss)
- currency translation adjustment (2,582,679) 731,589
------------- -------------
Total stockholders' equity 15,575,127 25,676,876
------------- -------------
Liabilities and Stockholders' Equity $ 20,090,453 $ 31,568,359
------------- -------------
------------- -------------
COUNTERPATH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS
(Stated in U.S. Dollars)
(Unaudited)
Three Months Ended Nine Months Ended
January 31, January 31,
--------------------------- ---------------------------
2009 2008 2009 2008
------------- ------------- ------------- -------------
Revenue:
Software $ 1,305,303 $ 1,698,829 $ 5,267,225 $ 4,509,969
Service 724,758 935,934 2,392,426 1,796,295
------------- ------------- ------------- -------------
Total revenue 2,030,061 2,634,763 7,659,651 6,306,264
------------- ------------- ------------- -------------
Operating expenses:
Cost of sales
(includes
depreciation of
$48,490 and
$107,381 and
amortization of
intangible assets
of $1,514,515 and
$599,162) 863,573 771,178 3,327,619 1,833,707
Sales and marketing 762,398 1,016,758 3,431,062 2,583,761
Research and
development 1,142,497 1,545,630 6,263,594 3,945,543
General and
administrative 1,524,559 1,589,055 5,312,358 4,145,223
Restructuring
costs 26,268 - 959,264 182,107
------------- ------------- ------------- -------------
Total operating
expenses 4,319,295 4,922,621 19,293,897 12,690,341
------------- ------------- ------------- -------------
Loss from
operations (2,289,234) (2,287,858) (11,634,246) (6,384,077)
Interest and other
income (expense),
net
Interest income 33,627 87,707 83,893 136,786
Interest expense (1,278) (1,258) (11,713) (689,810)
Foreign exchange
gain (loss) 19,360 4,709 (55,335) 58,226
------------- ------------- ------------- -------------
Net loss for
the period $ (2,237,525) $ (2,196,700) $(11,617,401) $ (6,878,875)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Other
comprehensive
loss:
Foreign currency
translation
adjustments (282,407) (522,573) (3,314,268) 1,165,722
------------- ------------- ------------- -------------
Comprehensive
loss $ (2,519,932) $ (2,719,273) $(14,931,669) $ (5,713,153)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net loss per
share:
Basic and
diluted $ (0.08) $ (0.12) $ (0.42) $ (0.46)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Weighted average
common shares
outstanding: 28,542,855 18,987,949 27,721,110 14,825,531
