CounterPath Reports First Quarter Fiscal 2014 Financial Results

CounterPath Reports First Quarter Fiscal 2014 Financial Results 
VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 09/12/13 --
CounterPath Corporation (NASDAQ:CPAH)(TSX:CCV) ("CounterPath" or the
"Company"), an award-winning provider of desktop and mobile VoIP
software products and solutions, today announced the financial and
operating results for its first quarter ended July 31, 2013 of fiscal
2014. 
First Quarter Financial Highlights 


 
--  Quarterly revenue of $2.9 million compared to revenue of $4.4 million
    for the first quarter of fiscal 2013. 
--  GAAP and Non-GAAP gross margin of 81%. 
--  Non-GAAP loss from operations of $1.0 million compared to non-GAAP
    income from operations of $0.4 million for the first quarter of fiscal
    2013. 
--  Net loss of $1.2 million or ($0.03) per share compared to net income of
    $0.9 million or $0.02 per share for the first quarter of fiscal 2013. 
--  Non-GAAP net loss of $0.9 million or ($0.02) per share compared to non-
    GAAP net income of $0.5 million or $0.01 per share for the first quarter
    of fiscal 2013. 
--  Cash of $11.3 million as of July 31, 2013. 

 
"The first quarter is typically a seasonally slower sales period for
CounterPath. In this case, the year-over-year comparison is
exacerbated by what was an exceptionally strong first quarter last
year," stated Donovan Jones, President and Chief Executive Officer.
"We recently made additions to our sales team in Europe and North
America that will enhance our direct to enterprise and service
provider efforts, while our recent agreements with companies like
TeleDynamics and World Telecom Group (WTG) will provide access to an
enormous value-added reseller network for the Enterprise market.
These efforts, combined with a strong new business pipeline, product
differentiation, solid balance sheet and an expanding unified
communications market, position CounterPath well for growth." 
Recent Business Highlights 


 
--  Announced the launch of Bria BlackBerry(R) Edition, the SIP-based
    softphone app customized for the BlackBerry(R) 10 platform. 
--  Announced distribution agreements with TeleDynamics, WTG and Interwork
    Technologies, leading unified communications solutions channels which
    together represent more than 10,000 value added resellers (VARs) across
    North America. 
--  Announced a new API for the Bria for Windows desktop product line which
    gives developers a platform to build and customize applications that
    provide access to, and control over, Bria's robust unified
    communications solutions. 

 
Financial Outlook 
For fiscal 2014, CounterPath expects an increase in revenue over the
prior year based on rising market demand, new customer wins and
follow-on sales from current customers, many of which are at the
early stages of their deployment timelines. The Company expects to
increase its sales and marketing resources to support sales growth in
all of its key markets. Historically, CounterPath has experienced
quarter-to-quarter fluctuations in revenue based largely on
seasonality and the timing of larger customer deployments.  
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 first
quarter ended July 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 taped rebroadcast will be available to listeners until 12 a.m. ET
on September 19, 2013. To access the rebroadcast, please dial
416-849-0833 or 1-855-859-2056 and enter passcode 44810695, 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, outlook, expectations or intentions regarding the
future such as the following: (1) For fiscal 2014, CounterPath
expects an increase in revenue over the prior year, based on rising
market demand, new customer wins and follow-on sales from current
customers, many of which are at the early stages of their deployment
timelines; and (2) The Company expects to increase its sales and
marketing resources to support sales growth in all of its key
markets. 
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 CounterPath's sales from reporting period to
reporting period due to extended sales cycles as a result of selling
CounterPath's products through channel partners or the length of time
of deployment of CounterPath's products by its customers, (3) the
Company's ability to manage 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 competitors develop and
release competitive products, (6) the impact of intellectual property
litigation that could materially and adversely affect CounterPath's
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 industry, (9) the failure to develop new and
innovative products using the Company's technologies, and (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, Mobi
lkom
Austria, Rogers, Avaya, BroadSoft, Cisco Systems, GENBAND, Metaswitch
Networks, Mitel, NTT and NEC.  
For more information please visit www.counterpath.com. 
COUNTERPATH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS 
 (Stated in U.S. Dollars)  


 
                                                    July 31,      April 30,
                                                        2013           2013
                                             ------------------------------
Assets                                           (Unaudited)               
  Current assets:                                                          
    Cash and cash equivalents                   $ 11,251,366   $ 11,229,595
    Accounts receivable (net of allowance for                              
     doubtful accounts of $128,158 and                                     
     $456,051, respectively)                       3,821,445      4,640,620
    Prepaid expenses and deposits                    139,778        139,591
                                             ------------------------------
    Total current assets                          15,212,589     16,009,806
                                                                           
  Deposits                                           123,077        125,160
  Equipment                                          134,495        167,986
  Intangible assets (net of accumulated                                    
   amortization of $5,929,285 and $5,929,285,                              
   respectively)                                           -              -
  Derivative instruments                               2,760          9,830
  Goodwill                                         8,548,439      8,660,930
  Other assets                                        93,685         82,165
                                             ------------------------------
Total Assets                                    $ 24,115,045   $ 25,055,877
                                             ------------------------------
                                             ------------------------------
                                                                           
Liabilities and Stockholders' Equity                                       
  Current liabilities:                                                     
    Accounts payable and accrued liabilities     $ 2,473,731    $ 2,363,311
    Derivative instruments                                 -         93,057
    Unearned revenue                               1,579,651      1,442,511
    Customer deposits                                  9,553          9,553
    Accrued warranty                                  82,815         91,151
                                             ------------------------------
      Total current liabilities                    4,145,750      3,999,583
                                                                           
  Deferred lease inducements                          29,717         30,110
  Unrecognized tax benefit                            98,575         98,575
                                             ------------------------------
      Total liabilities                            4,274,042      4,128,268
                                                                           
  Stockholders' equity:                                                    
  Preferred stock, $0.001 par value                                        
    Authorized: 100,000,000                                                
    Issued and outstanding: July 31, 2013 -                                
     nil; April 30, 2013 - 1                               -              -
  Common stock, $0.001 par value                                           
    Authorized: 83,076,900                                                 
    Issued :                                                               
    July 31, 2013 - 41,945,655; April 30,                                  
     2013 - 41,958,350                                41,946         41,959
    Treasury stock                                      (19)           (79)
  Additional paid-in capital                      66,459,017     66,191,140
  Accumulated deficit                           (46,199,782)   (44,974,491)
  Accumulated other comprehensive income -                                 
   currency translation adjustment                 (460,159)      (330,920)
                                             ------------------------------
    Total stockholders' equity                    19,841,003     20,927,609
                                             ------------------------------
Liabilities and Stockholders' Equity            $ 24,115,045   $ 25,055,877
                                             ------------------------------
                                             ------------------------------

 
COUNTERPATH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS 
 (Stated in U.S. Dollars) 
(Unaudited) 


 
                                                   Three Months Ended      
                                                        July 31,           
                                                        2013           2012
                                             ------------------------------
Revenue:                                                                   
  Software                                       $ 1,647,520    $ 2,528,056
  Service                                          1,211,967      1,859,712
                                             ------------------------------
    Total revenue                                  2,859,487      4,387,768
                                             ------------------------------
Operating expenses:                                                        
  Cost of sales (includes depreciation of                                  
   $22,799 (2012 - $5,310) and amortization                                
   of intangible assets of nil (2012 -                                     
   $9,908))                                          557,455        559,793
  Sales and marketing                              1,213,483      1,055,035
  Research and development                         1,413,075      1,361,012
  General and administrative                       1,013,530      1,379,319
                                             ------------------------------
    Total operating expenses                       4,197,543      4,355,159
                                             ------------------------------
Income (loss) from operations                    (1,338,056)         32,609
Interest and other income (expense), net:                                  
  Interest and other income                           27,485         43,853
  Interest expense                                     (771)          (470)
  Foreign exchange gain (loss)                            64          6,418
  Fair value adjustment on derivative                                      
   instruments                                        85,987        785,128
                                             ------------------------------
Net income (loss) for the period               $ (1,225,291)      $ 867,538
                                             ------------------------------
                                             ------------------------------
                                                                           
Net income (loss) per share:                                               
  Basic and diluted                                 $ (0.03)         $ 0.02
                                                                           
  Weighted average common shares outstanding:                              
  Basic and Diluted                               41,934,880     40,727,122

 
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 profit 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 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      
                                                        July 31,           
                                             ------------------------------
                                                        2013           2012
                                             ------------------------------
                                                                           
                                                                           
  Revenue                                        $ 2,859,487    $ 4,387,768
    Less:                                                                  
    Cost of sales                                    557,455        559,793
                                             ------------------------------
  GAAP gross profit                              $ 2,302,032    $ 3,827,975
                                                                           
  Percentage of revenue (GAAP gross margin)              81%            87%
                                                                           
  GAAP gross profit                              $ 2,302,032    $ 3,827,975
    Plus:                                                                  
    Stock-based compensation                           8,553          8,839
    Amortization of intangible assets                      -          9,908
                                             ------------------------------
  Non-GAAP gross profit                          $ 2,310,585    $ 3,846,722
                                                                           
  Percentage of revenue (non-GAAP gross                                    
   margin)                                               81%            88%
Non-GAAP income (loss) from operations:            Three Months Ended      
                                                        July 31,           
                                                        2013           2012
                                             ------------------------------
                                                                           
                                                                           
  GAAP income (loss) from operations           $ (1,338,056)       $ 32,609
  Plus:                                                                    
  Stock-based compensation                           374,550        396,770
  Amortization of intangible assets                        -          9,908
                                             ------------------------------
  Non-GAAP income (loss) from operations         $ (963,506)      $ 439,287
Non-GAAP net income (loss):                        Three Months Ended      
                                                        July 31,           
                                                        2013           2012
                                             ------------------------------
                                                                           
                                                                           
  GAAP net income (loss)                       $ (1,225,291)      $ 867,538
  Plus:                                                                    
  Stock-based compensation                           374,550        396,770
  Amortization of intangible assets                        -          9,908
  Fair value adjustment on derivative                                      
   instruments                                      (85,987)      (785,128)
                                             ------------------------------
  Non-GAAP net income (loss)                     $ (936,728)      $ 489,088
                                                                           
                                                                           
  GAAP net income (loss) per share - basic                                 
   and diluted                                      $ (0.03)         $ 0.02
                                                                           
  Non-GAAP net Income (loss) per share -                                   
   basic and diluted                                $ (0.02)         $ 0.01

Contacts:
David Karp
Chief Financial Officer, CounterPath
dkarp@counterpath.com
(604) 628-9364 
Michael Moore
TMX Equicom
mmoore@tmxequicom.com
(619) 467-7067