CounterPath Reports Fiscal 2009 Financial Results
VANCOUVER, July 27 -- CounterPath Corporation ("CounterPath" or the "Company") (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 fiscal year ended April 30, 2009.
Financial and operating highlights for the year include:
- Record revenues of $9.8 million for fiscal 2009 compared to
$9.1 million for fiscal 2008.
- Aggressive cost reduction throughout the year. Excluding non-cash,
stock-based compensation, amortization and impairment of intangible
asset charges and onetime restructuring costs, non-GAAP operating
expenses fell from a peak of $7.1 million for the first quarter ended
July 31, 2008 to $2.7 million for the fourth quarter ended April 30,
2009.
- A net loss for the fiscal year ended 2009 of $15.8 million ($0.57 per
share) compared to a net loss of $12.5 million ($0.70 per share) for
fiscal year 2008.
- Integration of FirstHand Technologies Inc. and BridgePort Networks,
Inc. broadening the Company's focus beyond the consumer VoIP market
to include mobility markets.
- The successful introduction of softphone and mobility products:
Bria 2.5, Messaging Convergence Gateway (MCG) and Bria for
BroadWorks, a strategic partner solution.
"Economic activity slowed beyond our expectations in the middle part of the year and we acted quickly to reduce our cost structure and mitigate the impact," said Donovan Jones, President and CEO, CounterPath. "Despite the slowdown, we grew revenue by 8% to just under $10 million in a market that saw telecom spending contract significantly. Our costs have been brought more in line with revenues and as the market recovers we are poised to capitalize on the operational improvements, integrated technologies, and investments that we have made over the past year. We continue to execute on our strategy of building market leadership with our desktop softphone and leveraging that leadership into the mobile space."
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 fiscal year ended April 30, 2009, revenue was $9.8 million compared to $9.1 million for fiscal 2008. Software revenue for the fiscal year ended April 30, 2009 was $6.9 million compared to $6.4 million for the previous year. Service revenue for the fiscal year ended April 30, 2009 was $2.9 million compared to $2.7 million for fiscal 2008.
Operating expenses for the fiscal year ended April 30, 2009 were $26.2 million compared to $20.9 million for fiscal 2008. The increase in operating expenses was primarily due to the addition of cash and non-cash operating expenses related to the acquisitions of FirstHand and BridgePort in February 2008. Operating expenses for the fiscal year ended April 30, 2009 include a non-cash charge of $2.0 million for amortization of intangible assets acquired from NewHeights, FirstHand and BridgePort, compared to $1.4 million in fiscal 2008. In addition, during the fourth quarter of fiscal 2009, the Company wrote-down its intangible assets by $2.8 million to $2.2 million, determining that the carrying value of such assets acquired in the acquisitions of NewHeights and FirstHand exceeded their fair value. The carrying value of goodwill was not affected. Other non-cash charges included a non-cash $1.4 million stock-based compensation expense for fiscal year ended April 30, 2009 compared to $1.6 million in fiscal 2008.
Sales and marketing expenses were $4.1 million for the fiscal year ended April 30, 2009 compared to $3.9 million for the previous year. For the fiscal year ended April 30, 2009, research and development expenses were $7.1 million and general and administrative expenses were $6.5 million, compared to $6.9 million and $6.4 million, respectively, for the previous year.
The net loss for the fiscal year ended April 30, 2009 was $15.8 million, or a loss of $0.57 per share, compared to a net loss of $12.5 million, or a loss of $0.70 per share for fiscal 2008.
At April 30, 2009, the Company had $2.9 million in cash, compared to $6.2 million at April 30, 2008. At April 30, 2009, the Company's working capital was $1.6 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, which exclude non-cash stock-based compensation, amortization and impairment of intangible asset charges and restructuring costs relative to operating expenses 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.
Reconciliation to GAAP
Three months ended,
------------------------------
(Unaudited) April 30, 2009 July 31, 2008
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Non-GAAP operating expenses $2,716,496 $7,051,872
Add:
Stock-based compensation 366,779 507,988
Amortization of intangible assets 496,316 545,473
Impairment of intangible assets 2,755,333 -
Restructuring costs 606,083 190,961
--------------- --------------
Operating expenses (GAAP) $6,941,007 $8,296,294
--------------- --------------
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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) Our costs have been brought more in line with revenues and as the market recovers we are poised to capitalize on the operational improvements, integrated technologies, and investments that we have made over the past 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 develop new and innovative products using the Company's technologies, (2) the Company's ability to remain competitive as other parties develop and release competitive products, (3) the Company's ability to retain the employees necessary to continue research and development of current and new products, (4) the success by the Company of the sales of its current and new products, (5) the impact of technology changes on the Company's products and on the VoIP industry, (6) the compatibility of the Company's products with new computer operating systems, (7) the rate of adoption by service providers and the general public of VoIP as a replacement for regular and cellular phone service, (8) general economic conditions as they affect CounterPath and its current and prospective customers, including a continued downturn in general economic conditions internationally, (9) the ability of the Company to control costs operating, general administrative and other expenses, and (10) 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-Q, annual reports on Form 10-K 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.
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)
April 30, April 30,
2009 2008
------------ ------------
Assets
Current assets:
Cash $ 2,931,932 $ 6,223,613
Accounts receivable (net of allowance
for doubtful accounts of $755,114
(2008 - $407,050)) 2,524,220 5,409,658
Investment tax credits recoverable 143,334 1,061,133
Prepaid expenses and deposits 310,274 646,679
------------ ------------
Total current assets 5,909,760 13,341,083
Deposits 114,267 103,017
Equipment 258,442 736,854
Intangible assets (net of accumulated
amortization of $3,375,195
(2008 - $1,364,365)) 2,201,894 8,534,666
Goodwill 7,262,701 8,674,990
Other assets 92,101 177,749
------------ ------------
Total Assets $ 15,839,165 $ 31,568,359
------------ ------------
------------ ------------
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued
liabilities $ 3,488,001 $ 4,529,201
Unearned revenue 708,455 936,343
Customer deposits 9,443 85,283
Accrued warranty 137,378 144,347
------------ ------------
Total current liabilities 4,343,277 5,695,174
Deferred lease inducements 55,016 97,734
Unrecognized tax benefit 98,575 98,575
------------ ------------
Total liabilities 4,496,868 5,891,483
------------ ------------
Stockholders' equity:
Preferred stock, $0.001 par value
Authorized: 100,000,000
Issued and outstanding: April 30, 2009 -
1; April 30, 2008 - 1 - -
Common stock, $0.001 par value
Authorized: 83,076,900
Issued and outstanding: April 30, 2009 -
28,832,050; April 30, 2008 - 25,921,797 28,831 25,921
Additional paid-in capital 48,718,444 43,398,849
Accumulated deficit (34,318,195) (18,479,483)
Accumulated other comprehensive income
(loss) - currency translation adjustment (3,086,783) 731,589
------------ ------------
Total stockholders' equity 11,342,297 25,676,876
------------ ------------
Liabilities and Stockholders' Equity $ 15,839,165 $ 31,568,359
------------ ------------
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COUNTERPATH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Stated in U.S. Dollars)
Years Ended
April 30,
---------------------------
2009 2008
------------ ------------
Revenue:
Software $ 6,868,980 $ 6,437,192
Service 2,964,121 2,649,708
------------ ------------
Total revenue 9,833,101 9,086,900
------------ ------------
Operating expenses:
Cost of sales (includes depreciation
of $50,743 (2008 - $136,274) and
amortization of intangible assets of
$2,010,830 (2008 - $1,364,365)) 4,183,626 3,089,073
Sales and marketing 4,147,626 3,945,290
Research and development 7,075,640 6,863,235
General and administrative 6,507,332 6,440,493
Impairment of intangible assets 2,755,333 -
Restructuring costs 1,565,347 558,394
------------ ------------
Total operating expenses 26,234,904 20,896,485
------------ ------------
Loss from operations (16,401,803) (11,809,585)
Interest and other income (expense), net
Interest income 107,931 125,970
Interest expense (11,676) (695,961)
Foreign exchange gain (loss) 466,836 (155,343)
------------ ------------
Net loss for the year (15,838,712) (12,534,919)
Other comprehensive income (loss):
Foreign currency translation
adjustments (3,818,372) 812,169
------------ ------------
Comprehensive loss $(19,657,084) $(11,722,750)
------------ ------------
------------ ------------
Net loss per share:
Basic and diluted $ (0.57) $ (0.70)
------------ ------------
------------ ------------
Weighted average common shares
outstanding: 27,886,194 17,808,027
