CounterPath Reports Fourth Quarter and Fiscal 2014 Financial Results

CounterPath Reports Fourth Quarter and Fiscal 2014 Financial Results 
Company Records 41% Increase in Revenue over Previous Quarter 
VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 07/10/14 --  
CounterPath Corporation ("CounterPath" or the "Company") (NASDAQ:
CPAH)(TSX: CCV), an award-winning provider of desktop and mobile VoIP
software products and solutions, today announced the financial and
operating results for its fourth quarter and fiscal year ended April
30, 2014.  
Fourth Quarter Financial Highlights 


 
 
--  Quarterly revenue of $3.7 million, compared to revenue of $2.6 million
    for the previous quarter and $4.0 million for the fourth quarter of
    fiscal year 2013. 
 
--  GAAP gross margin of 84%. Non-GAAP gross margin of 85%. 
 
--  Non-GAAP loss from operations of $0.3 million compared to Non-GAAP
    income from operations of $0.04 million for the fourth quarter of fiscal
    year 2013. 
 
--  Net loss of $0.4 million, or $0.01 per share, compared to a net income
    of $0.1 million, or $0.00 per share, for the fourth quarter of fiscal
    year 2013. 
 
--  Non-GAAP net loss of $0.03 million, or $0.00 per share, compared to non-
    GAAP net income of $0.05 million, or $0.00 per share, for the fourth
    quarter of fiscal year 2013. 
 
--  Cash of $7.2 million as of April 30, 2014. 

Fiscal 2014 Financial Highlights 


 
 
--  Annual revenue of $11.7 million, compared to $15.2 million for fiscal
    2013. 
 
--  GAAP and non-GAAP gross margin of 81%. 
 
--  Non-GAAP loss from operations of $4.1 million compared to a non-GAAP
    loss from operations of $0.4 million last fiscal year. 
 
--  Net loss of $5.9 million, or $0.14 per share, compared to a net income
    of $0.5 million, $0.01 per share, last fiscal year. 
 
--  Non-GAAP net loss of $4.8 million or $0.11 per share, compared to a non-
    GAAP net loss of $0.3 million or $0.01 per share last fiscal year. 

Management Commentary 
"We posted strong sequential revenue growth in the fourth quarter as
we leveraged our market position and refined our sales strategy,"
said Donovan Jones, President and Chief Executive Officer. "This
year, we increased our focus on enterprise sales by expanding our
direct sales force, by launching our Master Distribution Program with
a network of over 30,000 Value Added Resellers and by entering the
Mobile Device Management Market. We also brought certain key deals
in-house, providing greater visibility and control over key reference
accounts, especially in Europe where we are experiencing a resurgence
of interest in our Operator OTT solutions. Looking ahead into fiscal
2015, we will continue to build our channel and further develop our
sales organization as we return to growth in key markets." 
Recent Business Highlights 


 
 
--  Announced new channel partner, MegaPath, a leading provider of managed
    data, voice, security and cloud services to small, medium and enterprise
    businesses. 
 
--  Announced plans to enter the Desktop as a Service (DaaS) and Virtual
    Desktop Integration (VDI) markets in partnership with Teradici to
    provide a unified communications solution for virtual workspaces. 
 
--  Strengthened intellectual property portfolio with award of US patent No.
    8,737,351 titled "Methods and Systems for Reducing MAC layer Handoff
    Latency in Wireless Networks". 
 
--  Enhanced product line with the launch of our Bria 4 softphone client
    with new and advanced unified communications features for enterprises,
    including streamlined messaging, full-screen video calling, screen
    sharing capabilities and Microsoft Outlook(R) integration. 
 
--  Announced that CounterPath was again named one of the Top 10 Mobile
    Technology companies in Canada by Branham Group in the 2014 Edition of
    the Branham300. 
 
--  Renewed our normal course issuer bid, positioning the company to
    continue repurchasing its shares on the open market and demonstrating
    management's ongoing belief that the shares are currently trading in a
    price range that does not adequately reflect their underlying value. 
 
--  Launched Bria Cloud, our cloud based subscription service for small to
    medium sized businesses, simplifying the sales and deployment processes
    for our partners and customers, while positioning the company to
    generate more recurring revenue in the future. 
 
--  Entered into a licensing and distribution agreement with Gryphon
    Networks, a provider of fully automated, integrated and real-time sales
    intelligence and marketing compliance solutions for dispersed sales and
    marketing organizations. 
 
--  Signed distribution agreement with channel partner ABP Technology, a
    leading value-added distributor of IP Telephony and unified
    communication solutions provider with over 10,000 value-added resellers
    in North America and Latin America. 

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
fourth quarter and fiscal year ended April 30, 2014. 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 July 20, 2014. To access the rebroadcast, please dial 416-849-0833
or 1-855-859-2056 and enter passcode 59001105, 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) Looking ahead into fiscal 2015, we
will continue to build our channel and further develop our sales
organization as we return to growth in 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) 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 our customers (2) the Company's ability to manage its
operating expenses, which may adversely affect its financial
condition, (3) 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, (4) the
Company's ability to remain competitive as other better financed
competitors develop and release competitive products, (5) the impact
of intellectual property litigation that could materially and
adversely affect our business, (6) the success by the Company of the
sales of its current and new products, (7) the impact of technology
changes on the Company's products and on our industry, (8) the
failure to develop new and innovative products using the Company's
technologies, (9) 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 CONSOLIDATED BALANCE SHEETS                    
                           (Stated in U.S. Dollars)                         
                                                   April 30,      April 30, 
                                                        2014           2013 
                                                ------------   ------------ 
 
Assets                                                                      
  Current assets:                                                           
    Cash                                       $   7,172,798  $  11,229,595 
    Accounts receivable (net of allowance for                               
     doubtful accounts of $240,681 (2013 -                                  
     $456,051))                                    3,401,491      4,640,620 
    Prepaid expenses and deposits                    161,627        139,591 
                                                ------------   ------------ 
    Total current assets                          10,735,916     16,009,806 
 
  Deposits                                           125,267        125,160 
  Equipment                                          154,293        167,986 
  Derivative instruments                                   -          9,830 
  Goodwill                                         8,018,578      8,660,930 
  Other assets                                       102,836         82,165 
                                                ------------   ------------ 
Total Assets                                   $  19,136,890  $  25,055,877 
                                                ------------   ------------ 
                                                ------------   ------------ 
 
Liabilities and Stockholders' Equity                                        
  Current liabilities:                                                      
    Accounts payable and accrued liabilities   $   2,326,763  $   2,363,311 
    Derivative instruments                                 -         93,057 
    Unearned revenue                               1,625,826      1,442,511 
    Customer deposits                                  9,553          9,553 
    Accrued warranty                                  69,159         91,151 
                                                ------------   ------------ 
    Total current liabilities                      4,031,301      3,999,583 
 
  Deferred lease inducements                               -         30,110 
  Unrecognized tax benefit                            25,631         98,575 
                                                ------------   ------------ 
    Total liabilities                              4,056,932      4,128,268 
                                                ------------   ------------ 
 
  Stockholders' equity:                                                     
  Preferred stock, $0.001 par value                                         
    Authorized: 100,000,000                                                 
    Issued and outstanding: April 30, 2014 -                                
     0; April 30, 2013 - 1                                 -              - 
  Common stock, $0.001 par value                                            
    Authorized: 100,000,000                                                 
    Issued:                                                                 
    April 30, 2014 - 42,599,869; April 30,                                  
     2013 - 41,958,350                                42,600         41,959 
  Treasury stock                                         (16)           (79)
  Additional paid-in capital                      66,910,540     66,191,140 
  Accumulated deficit                            (50,889,038)   (44,974,491)
  Accumulated other comprehensive income                                    
   (loss) - currency translation adjustment         (984,128)      (330,920)
                                                ------------   ------------ 
    Total stockholders' equity                    15,079,958     20,927,609 
                                                ------------   ------------ 
Liabilities and Stockholders' Equity           $  19,136,890  $  25,055,877 
                                                ------------   ------------ 
                                                ------------   ------------ 
 
                           COUNTERPATH CORPORATION                          
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS              
                          (Stated in U.S. Dollars)                          
 
                             (unaudited)                   (audited)        
                          Three Months Ended              Year Ended        
                              April 30,                   April 30,         
                      -------------------------   ------------------------- 
                          2014          2013          2014          2013    
                      -----------   -----------   -----------   ----------- 
Revenue:                                                                    
  Software           $  2,473,851  $  2,707,194  $  7,035,323  $  9,164,107 
  Service               1,197,912     1,316,086     4,646,625     6,075,816 
                      -----------   -----------   -----------   ----------- 
    Total revenue       3,671,763     4,023,280    11,681,948    15,239,923 
                      -----------   -----------   -----------   ----------- 
Operating expenses:                                                         
  Cost of sales                                                             
   (includes                                                                
   depreciation of                                                          
   $74,955 (2013 -                                                          
   $67,669) and                                                             
   amortization of                                                          
   intangible assets                                                        
   of $nil (2013 -                                                          
   $39,003))              572,265       553,545     2,231,222     2,276,777 
  Sales and                                                                 
   marketing            1,272,276     1,269,839     5,112,026     4,463,292 
  Research and                                                              
   development          1,430,479     1,410,401     5,508,516     5,503,928 
  General and                                                               
   administrative         911,434       955,806     4,033,984     4,452,214 
                      -----------   -----------   -----------   ----------- 
    Total operating                                                         
     expenses           4,186,454     4,189,591    16,885,748    16,696,211 
                      -----------   -----------   -----------   ----------- 
Loss from operations     (514,691)     (166,311)   (5,203,800)   (1,456,288)
Interest and other                                                          
 income (expense),                                                          
 net                                                                        
  Interest and other                                                        
   income                 (39,828)        6,131        64,630       141,391 
  Interest expense           (138)         (387)       (1,732)       (1,135)
  Foreign exchange                                                          
   gain (loss)            296,895           966      (670,570)        2,539 
  Fair value                                                                
   adjustment on                                                            
   derivative                                                               
   instruments            (99,458)      261,173       (87,339)    1,785,773 
                      -----------   -----------   -----------   ----------- 
Net income (loss)                                                           
 for the year before                                                        
 income taxes            (357,220)      101,572    (5,898,811)      472,280 
  Income tax expense            -             -       (15,736)            - 
                      -----------   -----------   -----------   ----------- 
Net income (loss)                                                           
 for the year        $   (357,220) $    101,572  $ (5,914,547) $    472,280 
                      -----------   ===========   ===========   =========== 
 
Net income (loss)                                                           
 per share:                                                                 
  Basic              $      (0.01) $       0.00  $      (0.14) $       0.01 
  Diluted            $      (0.01) $       0.00  $      (0.14) $      (0.01)
 
  Weighted average                                                          
   common shares                                                            
   outstanding:                                                             
  Basic                42,399,045    41,933,750    42,126,733    41,519,117 
  Diluted              42,399,045    44,387,217    42,126,733    41,637,025 

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
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 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) 


                             Three Months Ended       Twelve Months Ended   
                                  April 30,                April 30,        
                           ----------------------  ------------------------ 
                              2014        2013         2014         2013    
                           ----------  ----------  -----------  ----------- 
Non-GAAP gross margin:                                                      
 
 Revenue                  $ 3,671,763 $ 4,023,280 $ 11,681,948 $ 15,239,923 
   Less:                                                                    
   Cost of sales              572,265     553,545    2,231,222    2,276,777 
                           ----------  ----------  -----------  ----------- 
 GAAP gross profit        $ 3,099,498 $ 3,469,735 $  9,450,726 $ 12,963,146 
 
 Percentage of revenue                                                      
  (gross margin)                  84%         86%          81%          85% 
 
 GAAP gross profit        $ 3,099,498 $ 3,469,735 $  9,450,726 $ 12,963,146 
   Plus:                                                                    
   Stock-based                                                              
    compensation               17,488      14,360       62,515       33,577 
   Amortization of                                                          
    intangible assets                       9,697                    39,003 
                           ----------  ----------  -----------  ----------- 
 Non-GAAP gross profit    $ 3,116,986 $ 3,493,792 $  9,513,241 $ 13,035,726 
 
  Percentage of revenue                                                     
   (Non-GAAP gross                                                          
   margin)                        85%         87%          81%          86% 
 
                          Three Months Ended          Twelve Months Ended   
                              April 30,                   April 30,         
                      -------------------------   ------------------------- 
                          2014          2013          2014          2013    
                      -----------   -----------   -----------   ----------- 
Non-GAAP income                                                             
 (loss) from                                                                
 operations:                                                                
 
  GAAP income (loss)                                                        
   from operations   $   (514,691) $   (166,311) $ (5,203,800) $ (1,456,288)
  Plus:                                                                     
  Stock-based                                                               
   compensation           223,441       195,896     1,071,467     1,008,004 
  Amortization of                                                           
   intangible assets                      9,697                      39,003 
                    ------------- -------------   -----------   ----------- 
  Non-GAAP income                                                           
   (loss) from                                                              
   operations        $   (291,250) $     39,282  $ (4,132,333) $   (409,281)
 
                          Three Months Ended          Twelve Months Ended   
                              April 30,                   April 30,         
                      -------------------------   ------------------------- 
                          2014          2013          2014          2013    
                      -----------   -----------   -----------   ----------- 
Non-GAAP net income                                                         
 (loss):                                                                    
 
  GAAP net income                                                           
   (loss)            $   (357,220) $    101,572  $(5,914,547)  $    472,280 
  Plus:                                                                     
  Stock-based                                                               
   compensation           223,441       195,896     1,071,467     1,008,004 
  Amortization of                                                           
   intangible assets                      9,697                      39,003 
  Fair value                                                                
   adjustment on                                                            
   derivative                                                               
   instruments             99,458      (261,174)       87,339    (1,785,774)
                      -----------   -----------   -----------   ----------- 
  Non-GAAP net                                                              
   income (loss)     $    (34,321) $     45,991  $ (4,755,741) $   (266,487)
 
  GAAP net income                                                           
   (loss) per share:                                                        
    Basic            $      (0.01) $       0.00  $      (0.14) $       0.01 
    Diluted          $      (0.01) $       0.00  $      (0.14) $      (0.01)
 
  Non-GAAP net                                                              
   income (loss) per                                                        
   share:                                                                   
    Basic            $       0.00  $       0.00  $      (0.11) $      (0.01)
    Diluted          $       0.00  $       0.00  $      (0.11) $      (0.01)

  
Contacts:
CounterPath Corporation
David Karp
Chief Financial Officer
(604) 628-9364
dkarp@counterpath.com 
CounterPath Corporation
Steve Hards
Vice President Investor Relations
(604) 637-6498
shards@counterpath.com
www.counterpath.com
 
 
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