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Press release from Marketwire

CounterPath Reports Third Quarter Fiscal 2013 Financial Results

Thursday, March 14, 2013

CounterPath Reports Third Quarter Fiscal 2013 Financial Results08:45 EDT Thursday, March 14, 2013VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 14, 2013) - 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 HighlightsQuarterly 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 HighlightsAnnounced 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 Control 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 InformationCounterPath 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 StatementsThis 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 CounterPathCounterPath'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 30,20132012Assets(Unaudited)Current assets:Cash and cash equivalents$ 12,830,189$ 8,154,139Accounts receivable (net of allowance for doubtful accounts of $391,840 and $334,294 respectively)3,857,8244,014,472Prepaid expenses and deposits130,470170,556Total current assets16,818,48312,339,167Deposits127,87262,521Equipment187,976101,024Intangible assets (net of accumulated amortization of $5,919,588 and $5,890,282, respectively)9,69738,853Derivative instruments78,435-Goodwill8,769,0278,957,977Other assets81,97944,402Total Assets$ 26,073,469$ 21,543,944Liabilities and Stockholders' EquityCurrent liabilities:Accounts payable and accrued liabilities$ 2,272,713$ 2,416,489Derivative instruments387,2862,026,944Unearned revenue2,280,7781,308,174Customer deposits9,55313,872Accrued warranty93,33084,948Total current liabilities5,043,6605,850,427Deferred lease inducements45,24256,082Unrecognized tax benefit98,57598,575Total liabilities5,187,4776,005,084Stockholders' equity:Preferred stock, $0.001 par valueAuthorized: 100,000,000Issued and outstanding: January 31, 2013 - 1; April 30, 2012 - 1--Common stock, $0.001 par valueAuthorized: 83,076,900Issued and outstanding:January 31, 2013 - 41,929,898; April 30, 2012 - 39,960,47941,93039,961Additional paid-in capital66,120,55061,025,529Accumulated deficit(45,076,063)(45,446,771)Accumulated other comprehensive income - currency translation adjustment(200,425)(79,859)Total stockholders' equity20,885,99215,538,860Liabilities and Stockholders' Equity$ 26,073,469$ 21,543,944COUNTERPATH CORPORATION CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS(Stated in U.S. Dollars) (Unaudited)Three Months EndedNine Months EndedJanuary 31,January 31,2013201220132012Revenue:Software$ 2,117,042$ 1,856,867$ 6,456,913$ 5,568,778Service1,149,0461,629,0044,759,7304,149,680Total revenue3,266,0883,485,87111,216,6439,718,458Operating expenses:Cost of sales (includes depreciation of $22,071 (2012 - $17,363) and amortization of intangible assets of $29,306 (2012 - $683,735))537,433670,6871,723,2322,179,033Sales and marketing1,110,2011,033,9383,193,4532,777,204Research and development1,447,9211,231,7894,093,5273,338,317General and administrative952,997869,4463,496,4082,923,753Total operating expenses4,048,5523,805,86012,506,62011,218,307Loss from operations(782,464)(319,989)(1,289,977)(1,499,849)Interest and other income (expense), net:Interest and other income73,31745,509135,260144,345Interest expense(124)(428)(748)(172,112)Foreign exchange gain (loss)6,1103,5921,57314,903Fair value adjustment on derivative instruments531,436208,5041,524,600636,232Net income (loss) for the period$ (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:41,836,34139,876,37341,385,41338,420,132Non-GAAP Financial MeasuresThis 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 EndedNine Months EndedJanuary 31,January 31,2013201220132012Revenue$ 3,266,088$ 3,485,871$ 11,216,643$ 9,718,458Less:Cost of sales537,433670,6871,723,2322,179,033GAAP gross profit$ 2,728,655$ 2,815,184$ 9,493,411$ 7,539,425Percentage of revenue (gross margin)84%81%85%78%GAAP gross profit$ 2,728,655$ 2,815,184$ 9,493,411$ 7,539,425Plus:Stock-based compensation8,2478,83525,88426,754Amortization of intangible assets9,715199,56129,306683,735Non-GAAP gross profit$ 2,746,617$ 3,023,580$ 9,548,601$ 8,249,914Percentage of revenue (non-GAAP gross margin)84%87%85%85%Non-GAAP income (loss) from operations:Three Months EndedNine Months EndedJanuary 31,January 31,2013201220132012GAAP income (loss) from operations$ (782,464)$ (319,989)$ (1,289,977)$ (1,499,849)Plus:Stock-based compensation200,733158,649812,108532,832Amortization of intangible assets9,715199,56129,306683,735Non-GAAP income (loss) from operations$ (572,016)$ 38,221$ (448,563)$ (283,282)Non-GAAP net income (loss):Three Months EndedNine Months EndedJanuary 31,January 31,2013201220132012GAAP net income (loss)$ (171,725)$ (62,812)$ 370,708$ (876,481)Plus:Stock-based compensation200,733158,649812,108532,832Amortization of intangible assets9,715199,56129,306683,735Fair 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)FOR FURTHER INFORMATION PLEASE CONTACT: Contact Information: CounterPath CorporationDavid KarpChief Financial Officer(604) 628-9364dkarp@counterpath.comwww.counterpath.comTMX EquicomPhilip Dale(416) 815-0700 x253pdale@tmxequicom.com