01 Communique Reports Third Quarter Fiscal 2011 Results

TORONTO, Sept. 8, 2011 /CNW/ - 01 Communique Laboratory Inc. (TSX:ONE) today announced results for its third quarter fiscal 2011, which ended July 31st. The loss for the quarter was $819,982 compared to a loss of $348,047 for the same period in 2010. Excluding stock based compensation, depreciation and amortization, and patent enforcement and re-examination expenses, the adjusted loss for the third quarter 2011 was $426,504. We completed the period with $3,525,346 of cash and cash equivalents on hand.

"As we move forward we will continue with our case against Citrix and LogMeIn as well as completing and then implementing a licensing strategy in conjunction with WiLAN. We also plan to continue marketing our products and services through our Channel Partner Program," said Andrew Cheung. "We are monitoring our operating expenses very closely and will adjust them on a quarterly basis as required. In the third quarter we incurred additional expenses related to the LogMeIn case and subsequent appeal. We do not anticipate any such costs during the fourth quarter. For the fourth quarter 2011 we expect our cash operating expense, excluding patent enforcement and re-examination costs, to be at about the same level as the third quarter."

An update on these initiatives and our financial results follows.

Financial Highlights -

  • The third quarter loss of $819,982 includes $227,529 of patent enforcement and re-examination costs ("patent enforcement costs"), $163,000 of stock based compensation and $2,949 of depreciation and amortization. Excluding these costs the adjusted loss for the third quarter was $426,504.

  • Expenses for the third quarter excluding stock based compensation and patent enforcement costs were $467,824, which were in line with management's expectations. The majority of the patent enforcement costs were incurred as part of the LogMeIn case and subsequent appeal, and related to expenses associated with third party experts which were higher than initially anticipated. Expenses for the fourth quarter relating to patent enforcement costs, if any, are not expected to be significant.

  • For the fourth quarter cash operating expenses required to fund operations excluding patent enforcement costs, depreciation and amortization, and stock based compensation, are expected to be approximately the same as the third quarter.

  • Revenue for the third quarter was $41,464 compared to $84,307 for the same period in 2010. The decrease is primarily attributable to a reduction in revenue recognition for contract engineering fees. During the fourth quarter 2011 we expect to complete work for contracts in progress at the end of the third quarter, collect the account and recognize the revenue.

  • Cash and cash equivalents were $3,525,346 as at July 31, 2011 compared to $3,840,647 as at April 30, 2011 representing a decrease of $315,301. This decrease is primarily a result of cash being used to fund operating activities of $318,751. This being the loss for the period of $819,982 adjusted for non-cash items being depreciation of $2,949 and stock based compensation of $163,000, plus an increase in non-cash working capital of $335,282. Cash of $3,450 was provided by the issuance of common shares from exercising of stock options.

Corporate Update -

  • Building revenue from the channel. We are continuing with our Channel Partner Program, a program aimed at companies with a customer base that would be attracted to our suite of Software as a Service ("SaaS") offerings. We remain committed to this strategy and have identified a number of potential opportunities that we are pursuing. As a testimony to the quality of our technology, TMC named I'm InTouch Meeting as a 2011 TMC Labs Innovation Award winner. It was presented by its publication, INTERNET TELEPHONY.

  • We have identified a number of companies in addition to Citrix and LogMeIn, that we believe infringe on our patent even under the narrow application from the LogMeIn case, which we disagree with and have appealed. During the quarter we entered into an agreement with WiLAN Inc. whereby  WiLAN will assist us in developing and executing a licensing strategy against specific  companies that we believe are using the technology covered by our patents to compete against us. WiLAN is responsible for all costs associated with implementing the licensing strategy, which include all costs associated with litigation should litigation be required to enforce our intellectual property rights against these companies with such costs being reimbursed from licensing proceeds. We pay WiLAN a fee if there are any amounts collected from these companies with respect to our patents. The fee will be a percentage of any such amounts received, net of costs incurred by WiLAN, with such percentage being in the range which we believe is customary for an agreement of this type.

  • We are enforcing our intellectual property rights against Citrix Systems Inc. whereby on February 2, 2006, a lawsuit was filed in the United States District Court, Northern District of Ohio, Eastern Division, alleging infringement of our U.S. Patent No. 6,928,479 ("479 Patent").  The alleged infringing services include, but are not limited to, Citrix GoToMyPC®. We also believe our patent is not only infringed by GoToMyPC® as presently asserted in the litigation, but also GoToMeeting®. We are seeking past damages going back to August 9, 2005 being the date our patent was issued as well as a permanent injunction prohibiting infringement. On December 7, 2007 an inter partes re-examination of the 479 Patent was requested of the United States Patent and Trademark Office ("USPTO") by Citrix. On March 12, 2008 the judge in the case issued a memorandum and order staying the case pending the inter partes re-examination of the claims of the 479 Patent. We proceeded with the re-examination by the USPTO. On July 6, 2010 a Right of Appeal Notice was issued concluding that all of the claims in the inter partes re-examination are patentable. Citrix filed a Notice of Appeal appealing that decision to the USPTO's Board of Patent Appeals and Interferences. That appeal is in process. We have written to the Court requesting the case be reopened so that the stay can be lifted and the case can proceed to trial. We are now waiting for the Court to render a decision on lifting the stay.

  • On September 8, 2010 we filed a lawsuit in the Eastern District of Virginia, against LogMeIn Inc. and Dell Inc. alleging infringement of our 479 Patent.  We sought past damages going back to August 9, 2005 as well as a permanent injunction against both Dell and LogMeIn prohibiting infringement. On December 15, 2010 we entered into a settlement agreement with Dell, whereby Dell has discontinued the Dell Remote Access Products and Services accused of infringement. On April 1, 2011 the judge granted LogMeIn's summary judgment motion for non-infringement and removed the case from the court's trial calendar. We have appealed that judgment to the United States Court of Appeals for the Federal Circuit. The appeal is currently in process.  The Company expects the process of the Appeal to be generally as follows:
    • On May 26, 2011 the Court docketed the Company's Notice of Appeal.
    • On July 27, 2011 the Company filed its Appeal Brief.
    • LogMeIn has until October 7, 2011 to file their opposition brief.
    • The Company's reply brief is due 14 days after LogMeIn files its opposition brief.
    • After all briefs are filed there is an oral argument in front of a panel of judges (estimated to be scheduled about 7 to 8 months from the date the appeal is filed which is May 26, 2011), after which  the Court of Appeals will render its decision.

The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or the accuracy of this release.

About 01 Communique
Established in 1992, 01 Communique (TSX: ONE) offers a suite of remote access services designed for small-medium sized business, mobile professionals and IT service providers. 01's software as a service offerings are deployed on-demand and include functionality enabling on-line meetings, remote computing and IT support. 01's suite of products includes its remote access offering I'm InTouch (www.imintouch.com), its online meeting offering (www.imintouchmeeting.com) and its remote support offering I'm OnCall (www.imoncall.com) products are protected in the U.S.A. by its patents #6928479 / #6938076. For more information, visit www.01com.com or call (905) 795-2888 or (800) 668-2185 (North America only).

Cautionary Note Regarding Forward-looking Statements.
Certain statements in this news release may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this news release, such statements use such words as "may", "will", "expect", "believe", "plan", "intend", "are confident" and other similar terminology. These statements reflect current expectations regarding future events and operating performance and speak only as of the date of this news release.  Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved.  A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed under "Risk Factors" in the company's Annual Information Form filed on SEDAR.  Although the forward-looking statements contained in this news release are based upon what management of the Company believes are reasonable assumptions, the company cannot assure investors that actual results will be consistent with these forward looking statements. These forward-looking statements are made as of the date of this news release, and the company assumes no obligation to update or revise them to reflect new events or circumstances.

01 Communique Laboratory Inc.
SELECTED FINANCIAL INFORMATION
Consolidated Balance Sheets
(Unaudited)
July 31, 2011 and October 31, 2010

              31-Jul-11             31-Oct-10
                             
Assets                            
Current assets                            
    Cash and cash equivalents         $           3,525,346         $           4,869,398
    Accounts receivable                              13,182                            191,545
    Prepaid expenses and other assets                              54,213                              33,255
                          3,592,741                         5,094,198
                             
Capital assets                              22,813                              28,758
          $           3,615,554         $           5,122,956
                             
Liabilities & Shareholders' Equity                            
                             
Current liabilities                            
    Accounts payable & accruals         $               906,355         $               480,688
    Deferred revenue                              46,150                              68,646
                             952,505                            549,334
                             
                             
Shareholders' equity                            
   Share capital                      36,201,686                      35,434,092
   Contributed surplus                         1,890,046                         1,591,796
   Share purchase warrants                              58,743                              70,491
   Agent options                              95,241                            380,965
   Deficit                     (35,582,666)                     (32,903,722)
                          2,663,049                         4,573,622
          $           3,615,554         $           5,122,956




01 Communique Laboratory Inc.
SELECTED FINANCIAL INFORMATION
Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
For the 3 and 9 month periods ended July 31, 2011 and 2010


      for the 3 months ending         for the 9 months ending
        31-Jul-11       31-Jul-10         31-Jul-11       31-Jul-10
                                   
Revenue   $   41,464   $   84,307     $   325,424   $   267,469
Cost of revenue             144           646             405        1,914
        41,320       83,661         325,019       265,555
                                   
Expenses (income)                                  
Selling, general and administrative       396,450       198,820         1,106,034       703,128
Patent enforcement & re-examination       227,529                     -         1,167,822       -
Research and development       239,556       176,070         742,898       527,666
Interest       (5,182)          (200)         (22,691)       2,073
Depreciation and amortization       2,949       3,018         9,900       9,484
        861,302       377,708         3,003,963       1,242,351
                                   
Loss before interest and accretion on liability
component of debenture
 
  (819,982)  
  (294,047)    
  (2,678,944)  
  (976,796)
                                   
Interest on debenture       -         45,000         -         90,000
Accretion on liability component of debenture        -         9,000                  -         18,755
Loss for the period and comprehensive loss   $   (819,982)   $   (348,047)     $   (2,678,944)   $   (1,085,551)
                                   
Loss per common share                                  
Basic       (0.014)       (0.007)         (0.045)       (0.021)
Diluted       (0.014)       (0.007)         (0.045)       (0.021)
                                   
Weighted average number of common shares                                  
Basic       60,115,197       51,411,985         59,918,490       51,407,219
Diluted       60,115,197       51,411,985         59,918,490       51,407,219



01 Communique Laboratory Inc.
SELECTED FINANCIAL INFORMATION
Consolidated Statements of Cash Flows
(Unaudited)
For the 3 and 9 month periods ended July 31, 2011 and 2010

            for the 3 months ending         for the 9 months ending
            31-Jul-11       31-Jul-10         31-Jul-11       31-Jul-10
                                       
Cash provided by (used in):                                      
                                       
Operating activities:                                      
  Loss for the period       $   (819,982)   $   (348,047)     $   (2,678,944)   $   (1,085,551)
  Items not involving cash:                                      
    Depreciation and amortization           2,949       3,018         9,900         9,484
    Accretion of liability portion of debenture           -       9,000         -       18,755
    Stock-based compensation           163,000       14,957         298,250       137,599
  Change in non-cash working capital            335,282       23,169         560,576       (81,925)
            (318,751)       (297,903)         (1,810,218)       (1,001,638)
                                       
Financing activities:                                      
    Issue of debenture                -             -          -       1,200,000
    Issue of common shares           3,450       11,400         470,121       12,300
Investing activities:                                      
    Purchase of capital assets                       -       (2,395)         (3,955)       (2,764)
    Redemption of debenture           -       -            -            -
Increase (decrease) in cash           (315,301)       (288,898)         (1,344,052)       207,898
                                       
Cash and cash equivalents,
beginning of period
          3,840,647       1,418,887         4,869,398           922,091
Cash and cash equivalents, end of
period
      $   3,525,346   $   1,129,989     $   3,525,346   $    1,129,989

SOURCE 01 Communique Laboratory Inc.

For further information:

INVESTOR CONTACT:
Brian Stringer
Chief Financial Officer
01 Communique
(905) 795-2888 x204
brian.stringer@01com.com


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