CounterPath Reports Third Quarter Fiscal 2013 Financial Results

CounterPath Reports Third Quarter Fiscal 2013 Financial Results 
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 03/14/13 --
CounterPath Corporation (TSX:CCV)(NASDAQ:CPAH) ("CounterPath" or the
"Company") (http://www.counterpath.com/), an award-winning
(http://www.counterpath.com/awards) provider of desktop and mobile
VoIP software products and solutions, today announced the financial
and operating results for its fiscal 2013 third quarter ended January
31, 2013. 


 
Third Quarter Financial Highlights
 
--  Quarterly revenue of $3.3 million, down 6% year-over-year. Revenue year-
    to-date of $11.2 million, up 15% year-over-year. 
 
--  GAAP and non-GAAP gross margin of 84%. 
 
--  Net loss of $0.2 million or $0.00 per share, compared to a net loss of
    $0.1 million or $0.00 per share for the third quarter of fiscal 2012. 
 
--  Non-GAAP net loss of $0.5 million or $0.01 per share, compared to a non-
    GAAP net income of $0.1 million or $0.00 per share for the third quarter
    of fiscal 2012. 
 
--  Increase in cash and cash equivalents to $12.8 million as of January 31,
    2013, up from $11.7 million as of October 31, 2012. 

 
"The market trends driving demand for our technology continue to
signal future growth, and we are seeing this reflected in a healthy
pipeline of new opportunities with carrier customers and
enterprises," stated Donovan Jones, President and Chief Executive
Officer. "Our wins with Altibox, Network Norway and Optima Telekom
announced during the quarter are indicative of the demand for
innovative solutions that increase offerings and value to customers
of service providers and provide IT managers the ability to manage
costs and improve efficiencies for a growing mobile workforce. While
some sales have taken longer to complete, we are very encouraged by
the new business activity and are optimistic this will translate into
growth in the coming quarters, including our fourth quarter, which is
seasonally a stronger quarter." 


 
Recent Operational Highlights
 
--  Announced a joint solution with Acme Packet, based on Acme Packet's Net-
    Net session border controller and CounterPath's Bria softphone. The
    solution is the first to leverage Acme Packet's implementation of an
    emerging standard known as Tunneled Service Contr
ol Function (TSCF),
    which delivers a secure and high quality alternative for real-time,
    over-the-top (OTT) communications targeted at service providers looking
    to extend service footprint and increase subscriber base. 
 
--  Secured a licensing deal through a channel partner with a North American
    cable operator, to launch CounterPath's client and provisioning software
    for smartphones and tablets over Wi-Fi to extend the cable operator's
    home phone offering. 
 
--  Demonstrated and operated an end-to-end network solution called "Bria
    play" at the 2013 Mobile World Congress enabling a community of
    journalists, analysts and select carriers, enterprises and OEMs to
    experience the high quality audio and video offered by our products,
    wrapped in an easy, intuitive on-boarding experience. 
 
--  Announced Bria mobile softphone to be the core technology behind Optima
    Telekom's, Croatia's second largest telecommunications provider, new OTT
    VoIP service. "Tornado" enables Optima Telekom subscribers to stay
    connected with friends, family or colleagues whether they are in Croatia
    or abroad as users are able to call any fixed or mobile number device at
    a fixed rate thus reducing costly roaming charges and unnecessary
    billing surprises. 
 
--  The granting of patent No. US 8,335,187 which outlines the process by
    which a Network Convergence Gateway (NCG) detects and monitors a mobile
    subscriber's location and automatically routes calls to either a packet-
    based (IP) endpoint or the traditional circuit switched entity. 

 
Conference Call Information 
CounterPath will host an investor conference call and live webcast
today at 11:00 a.m. ET to discuss its financial results for the
quarter ended January 31, 2013. To access the conference call by
telephone, dial 647-427-7450 or 1-888-231-8191. Please connect
approximately 15 minutes prior to the beginning of the call to ensure
participation. A question and answer session for analysts and
institutional investors will follow management's presentation. 
A live audio webcast of the conference call will be available at
www.cnw.ca. Please connect at least 15 minutes prior to the
conference call to ensure adequate time for any software download
that may be required to join the webcast. The webcast will be
archived for 30 days. 
A rebroadcast will be available to listeners until 12:00 a.m. ET on
March 21, 2013. To access the rebroadcast, please dial 416-849-0833
or 1-855-859-2056 and enter passcode 17534634, followed by the number
sign. 
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: while some sales have taken longer to complete, we
are very encouraged by the new business activity and are optimistic
this will translate into growth in the coming quarters, including our
fourth quarter which is seasonally a stronger quarter. 
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) general economic conditions as they affect
CounterPath and its current and prospective customers, including a
continued downturn in general economic conditions internationally,
(2) the variability in our sales from reporting period to reporting
period due to extended sales cycles as a result of selling our
products through channel partners or the length of time of deployment
of our products by our customers (3) the Company's ability to control
its operating expenses, which may adversely affect its financial
condition, (4) 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, (5) the
Company's ability to remain competitive as other better financed
parties develop and release competitive products, (6) the impact of
intellectual property litigation that could materially and adversely
affect our business, (7) the success by the Company of the sales of
its current and new products, (8) the impact of technology changes on
the Company's products and on our industry, (9) the failure to
develop new and innovative products using the Company's technologies,
(10) the potential dilution to shareholders or overhang on the
Company's share price of its outstanding stock options and warrants.
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. 
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, Verizon, BT, Mobilkom
Austria, Rogers, Avaya, BroadSoft, Cisco Systems, GENBAND, Metaswitch
Networks, Mitel and NEC. For more information please visit
www.counterpath.com. 


 
COUNTERPATH CORPORATION
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
(Stated in U.S. Dollars)
 
                                                    January 31,    April 30,
                                                          2013         2012
                                                   ------------------------
Assets                                              (Unaudited)             
  Current assets:                                                          
    Cash and cash equivalents                      $12,830,189  $ 8,154,139
    Accounts receivable (net of allowance for                              
     doubtful accounts of $391,840 and $334,294                            
     respectively)                                   3,857,824    4,014,472
    Prepaid expenses and deposits                      130,470      170,556
                                                   ------------------------
      Total current assets                          16,818,483   12,339,167
                                                                           
  Deposits                                             127,872       62,521
  Equipment                                            187,976      101,024
  Intangible assets (net of accumulated                                    
   amortization of $5,919,588 and $5,890,282,                              
   respectively)                                         9,697       38,853
  Derivative instruments                                78,435            -
  Goodwill                                           8,769,027    8,957,977
  Other assets                                          81,979       44,402
                                                   ------------------------
Total Assets                                       $26,073,469  $21,543,944
                                                   ------------------------
                                                   ------------------------
                                                                           
Liabilities and Stockholders' Equity                                       
  Current liabilities:                                                     
    Accounts payable and accrued liabilities       $ 2,272,713  $ 2,416,489
    Derivative instruments                             387,286    2,026,944
    Unearned revenue                                 2,280,778    1,308,174
    Customer deposits                                    9,553       13,872
    Accrued warranty                                    93,330       84,948
                                                   ------------------------
      Total current liabilities                      5,043,660    5,850,427
                                                                           
  Deferred lease inducements                            45,242       56,082
  Unrecognized tax benefit                              98,575       98,575
                                                   ------------------------
      Total liabilities                              5,187,477    6,005,084
                                                                           
  Stockholders' equity:                                                    
  Preferred stock, $0.001 par value                                        
    Authorized: 100,000,000                                                
    Issued and outstanding: January 31, 2013 - 1;                          
     April 30, 2012 - 1                                      -            -
  Common stock, $0.001 par value                                           
    Authorized: 83,076,900                                                 
    Issued and outstanding:                                                
    January 31, 2013 - 41,929,898; April 30, 2012                          
     - 39,960,479                                       41,930       39,961
  Additional paid-in capital                        66,120,550   61,025,529
  Accumulated deficit                              (45,076,063) (45,446,771)
  Accumulated other comprehensive income -                                 
   currency translation adjustment                    (200,425)     (79,859)
                                                   ------------------------
      Total stockholders' equity                    20,885,992   15,538,860
                                                   ------------------------
Liabilities and Stockholders' Equity               $26,073,469  $21,543,944
                                                   ------------------------
                                                   ------------------------
 
 
COUNTERPATH CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(Stated in U.S. Dollars)
(Unaudited)
 
                               Three Months Ended         Nine Months Ended
                                       January 31,               January 31,
                                2013         2012         2013         2012
                         --------------------------------------------------
Revenue:                                                                   
  Software               $ 2,117,042  $ 1,856,867  $ 6,456,913  $ 5,568,778
  Service                  1,149,046    1,629,004    4,759,730    4,149,680
                         --------------------------------------------------
    Total revenue          3,266,088    3,485,871   11,216,643    9,718,458
                         --------------------------------------------------
Operating expenses:                                                        
  Cost of sales                                                            
   (includes                                                               
   depreciation of                                                         
   $22,071 (2012 -                                                         
   $17,363) and                                                            
   amortization of                                                         
   intangible assets of                                                    
   $29,306 (2012 -                                                         
   $683,735))                537,433      670,687    1,723,232    2,179,033
  Sales and marketing      1,110,201    1,033,938    3,193,453    2,777,204
  Research and                                                             
   development             1,447,921    1,231,789    4,093,527    3,338,317
  General and                                               
               
   administrative            952,997      869,446    3,496,408    2,923,753
                         --------------------------------------------------
    Total operating                                                        
     expenses              4,048,552    3,805,860   12,506,620   11,218,307
                         --------------------------------------------------
Loss from operations        (782,464)    (319,989)  (1,289,977)  (1,499,849)
Interest and other                                                         
 income (expense), net:                                                    
  Interest and other                                                       
   income                     73,317       45,509      135,260      144,345
  Interest expense              (124)        (428)        (748)    (172,112)
  Foreign exchange gain                                                    
   (loss)                      6,110        3,592        1,573       14,903
  Fair value adjustment                                                    
   on derivative                                                           
   instruments               531,436      208,504    1,524,600      636,232
                         --------------------------------------------------
Net income (loss) for                                                      
 the period              $  (171,725) $   (62,812) $   370,708  $  (876,481)
                         --------------------------------------------------
                         --------------------------------------------------
                                                                           
Net income (loss) per                                                      
 share:                                                                    
  Basic and diluted      $      0.00  $      0.00  $      0.01  $     (0.02)
                                                                           
  Weighted average                                                         
   common shares                                                           
   outstanding:           41,836,341   39,876,373   41,385,413   38,420,132

 
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
gross margin and non-GAAP income (loss) from operations which exclude
non-cash stock-based compensation and amortization of intangible
asset charges relative to gross margin and 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, amortization of intangible assets
and fair value adjustment on derivative instruments charges relative
to net 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 gross margin:         Three Months Ended         Nine Months Ended
                                       January 31,               January 31,
                         --------------------------------------------------
                                2013         2012         2013         2012
                         --------------------------------------------------
                                                                           
  Revenue                $ 3,266,088  $ 3,485,871  $11,216,643  $ 9,718,458
    Less:                                                                  
    Cost of sales            537,433      670,687    1,723,232    2,179,033
                         --------------------------------------------------
  GAAP gross profit      $ 2,728,655  $ 2,815,184  $ 9,493,411  $ 7,539,425
                                                                           
  Percentage of revenue                                                    
   (gross margin)                84%          81%          85%          78%
                                                                           
  GAAP gross profit      $ 2,728,655  $ 2,815,184  $ 9,493,411  $ 7,539,425
    Plus:                                                                  
    Stock-based                                                            
     compensation              8,247        8,835       25,884       26,754
    Amortization of                                                        
     intangible assets         9,715      199,561       29,306      683,735
                         --------------------------------------------------
  Non-GAAP gross profit  $ 2,746,617  $ 3,023,580  $ 9,548,601  $ 8,249,914
                                                                           
  Percentage of revenue                                                    
   (non-GAAP gross                                                         
   margin)                       84%          87%          85%          85%
                                                                           
Non-GAAP income (loss)                                                     
 from operations:              Three Months Ended         Nine Months Ended
                                       January 31,               January 31,
                         --------------------------------------------------
                                2013         2012         2013         2012
                         --------------------------------------------------
                                                                           
  GAAP income (loss)                                                       
   from operations       $  (782,464) $  (319,989) $(1,289,977) $(1,499,849)
  Plus:                                                                    
  Stock-based                                                              
   compensation              200,733      158,649      812,108      532,832
  Amortization of                                                          
   intangible assets           9,715      199,561       29,306      683,735
                         --------------------------------------------------
  Non-GAAP income                                                          
   (loss) from                                                             
   operations            $  (572,016) $    38,221  $
  (448,563) $  (283,282)
                                                                           
Non-GAAP net income                                                        
 (loss):                       Three Months Ended         Nine Months Ended
                                       January 31,               January 31,
                         --------------------------------------------------
                                2013         2012         2013         2012
                         --------------------------------------------------
                                                                           
  GAAP net income                                                          
   (loss)                $  (171,725) $   (62,812) $   370,708  $  (876,481)
  Plus:                                                                    
  Stock-based                                                              
   compensation              200,733      158,649      812,108      532,832
  Amortization of                                                          
   intangible assets           9,715      199,561       29,306      683,735
  Fair value adjustment                                                    
   on derivative                                                           
   instruments              (531,436)    (208,504)  (1,524,600)    (636,232)
                         --------------------------------------------------
  Non-GAAP net income                                                      
   (loss)                $  (492,713) $    86,894  $  (312,478) $  (296,146)
                                                                           
                                                                           
  GAAP net income                                                          
   (loss) per share -                                                      
   basic & diluted       $      0.00  $      0.00  $      0.01  $     (0.02)
  Non-GAAP net income                                                      
   (loss) per share -                                                      
   basic & diluted       $     (0.01) $      0.00  $     (0.01) $     (0.01)

Contacts:
CounterPath Corporation
David Karp
Chief Financial Officer
(604) 628-9364
dkarp@counterpath.com
www.counterpath.com 
TMX Equicom
Philip Dale
(416) 815-0700 x253
pdale@tmxequicom.com