01 Communique Reports Fiscal 2010 Results

TORONTO, Dec. 16 /CNW/ - 01 Communique Laboratory Inc. (TSX:ONE) today announced results for fiscal 2010, which ended October 31. Revenue was $431,745 compared to revenue of $414,350 for 2009. The loss before interest, accretion and loss on settlement of the debenture was $1,304,457 compared to a loss of $1,358,893 for 2009. The net loss for 2010 was $1,600,165 or $0.03 per share.  We completed the year with $4,869,398 of cash and cash equivalents on hand.

"2010 was a pivotal year for us at 01," said Andrew Cheung, President and CEO for 01. "With the July 6th USPTO Right of Appeal Notice concluding that all of the claims in our patent subject to the re-examination were patentable, this re-affirmed our assertion that our patent is valid. As we move forward into 2011 and beyond our strategy is to continue to bring to market new and innovative products built on our patented intellectual property ("IP"). We are also approaching companies that we believe have products that make use of our patents with a goal to enter into IP and product licensing agreements. We believe this strategy of direct sales combined with product and IP licensing provides us with the best opportunity to participate in the growth of the remote access and online meeting/communications market."

Highlights of fiscal 2010:

1. Right of Appeal Notice. 

On July 6, 2010 the United States Patent and Trademark Office ("USPTO") issued a Right of Appeal Notice finding that all of the claims in the inter partes re-examination, that were challenged by Citrix Systems, Inc., (CTXS:Nasdaq) are patentable. Citrix has appealed the decision to the USPTO's Board of Patent Appeals and Inferences ("BPAI") and have filed a supporting brief. We have filed our response to their brief and expect the appeal process to move forward at the BPAI.

2. Lawsuit filed alleging infringement by LogMeIn (LOGM:Nasdaq) and Dell (DELL:Nasdaq).

In September we filed a lawsuit in the Eastern District of Virginia against LogMeIn and Dell alleging infringement of our patent no.6,928,479.  We are seeking past damages going back to August 9, 2005 which is the date our patent was issued. We are also asking for injunctive relief. A Scheduling Order has been issued whereby the Final Pretrial Conference is scheduled for February 17, 2011 and a trial date to be between 4 and 8 weeks following the Final Pretrial Conference. We are preparing in earnest for trial, which according to the current court schedule is only about 4 months away.
Subsequent to the end of the year, on December 15, 2010, Dell entered into a settlement agreement with us, whereby Dell has discontinued the Dell Remote Access Products and Services accused of infringement in the action and paid us a settlement amount. The settlement amount is not material to either company.

3. Citrix litigation.

In March 2008 our lawsuit with Citrix was stayed pending the inter parte re-examination of our patent no. 6,928,479 by the USPTO. With the right of appeal notice received re-affirming all claims; we have approached the court and requested the stay be lifted and that we proceed to trial. The judge in the case has requested the matter be fully briefed. All briefs are to be completed by December 24, 2010 after which we expect the Court to render a decision on lifting the stay.

4. IP licensing and business development.

In August we opened an office in Arlington, Virginia staffed with business development personnel whose responsibility is to develop IP licensing revenue from companies looking to market the I'm InTouch product offering along the lines of the agreement with Hitachi Business Solution of Japan or enter into licensing arrangements with respect to our patents. We have identified a number of such companies and are in various stages of communication with an objective to enter into partnerships and licensing agreements with each of them.

5. Financing - $5,503,500 Private Placement.

In August we completed a private placement resulting in the issuance of 6,115,000 common shares at a price of $0.90 per common share for gross proceeds of $5,503,500.

6. Issuance and Redemption of a $1,200,000 Debenture.

In January we issued a $1,200,000 debenture which we used to help finance operations until its redemption in August. The debenture was redeemed by repaying the principal of $1,200,000 plus accrued interest to the date of redemption plus a $45,000 penalty of 3 months interest for redeeming prior to maturity.

7. New Product.

A Beta version of I'm InTouch Meeting was introduced in the second quarter 2010 and the final version is scheduled for release this quarter. I'm InTouch Meeting is a web-based service that enables users to easily conduct online meetings by inviting up to 15 attendees to join the meeting using their desktop PC's.  We are marketing it on a subscription basis, similar to the I'm InTouch hosted service, whereby we host the infrastructure servers and charge a subscription fee. 

Financial Highlights -

The loss before interest, accretion and settlement charges on the debenture was $327,661 for the fourth quarter 2010, which compares to a corresponding loss of $471,397 for the same period in 2009, representing a decrease of $143,736.  This decrease is a result of:

  1. A revenue increase of $93,644 primarily a result of an increase in engineering fees from Japan.
  2. A $90,074 reduction in Patent enforcement and re-examination expenses. The majority of the work pertaining to the re-examination process had been done in 2009.  The 2010 expense related to expenses for the litigation against LogMeIn and Dell in addition to expenses pertaining to the completion of the re-examination.
  3. Selling, general and administrative expenses were kept in line reporting a small increase of $14,679 even though there were additional expenses borne by the Company of approximately $88,700 pertaining to the U.S. office.

On August 25, 2010 the outstanding debenture was redeemed resulting in a non-cash charge to income of $122,227 plus three months interest penalty of $45,000. The loss for the quarter, after taking into account the accrued interest and settlement expenses pertaining to the debenture, was $514,614.

We completed the year with cash and cash equivalents of $4,869,398 an increase of $3,739,409 for the fourth quarter from the $1,129,989 on hand at the beginning of the quarter. This increase is a result of:

  1. The August private placement and exercise of options which provided $5,406,122 of cash.
  2. The redemption of the debenture which required cash of $1,200,000 plus 3 months interest of $45,000.
  3. Cash being used to fund the operating loss of $414,888, which is the loss for the quarter of $514,614 adjusted for non-cash expenses of $3,019 for depreciation and amortization, $167,227 for the non-cash portion of the debt settlement expense, $33,732 for stock-based compensation, and an increase in non-cash working capital of $104,252.

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
October 31, 2010 and 2009

  31-Oct-10   31-Oct-09
       
Assets      
Current assets      
    Cash and cash equivalents                    4,869,398                         922,091
    Accounts receivable                       191,545                           77,148
    Prepaid expenses and other assets                         33,255                           34,552
                     5,094,198                      1,033,791
       
Property and equipment                         28,758                           31,672
                     5,122,956                      1,065,463
       
Liabilities & Shareholders' Equity      
       
Current liabilities      
    Accounts payable and accrued liabilities                       480,688                         535,515
    Deferred revenue                         68,646                           86,896
                        549,334                         622,411
       
Shareholders' equity      
   Share capital                 35,434,092                   30,326,144
   Contributed surplus                    1,591,796                      1,364,035
   Share purchase warrants                         70,491                           37,556
   Agent unit options                       380,965                           18,874
   Deficit               (32,903,722)                  (31,303,558)
                     4,573,622                         443,052
                     5,122,956                      1,065,463

01 Communique Laboratory Inc.
SELECTED FINANCIAL INFORMATION
Consolidated Statements of Operations and Comprehensive Income
For the 3 and 12 month periods ended October 31, 2010 and 2009

  3- mos. ending     3- mos. ending  
  31-Oct-10 Fiscal 2010   31-Oct-09 Fiscal 2009
           
Revenue            164,276           431,745               70,632            414,350
Cost of revenue                   203               2,117                     783              5,150
             164,073           429,628                69,849           409,200
           
Expenses (income)          
Selling, general and administrative         280,891           984,018             266,212           888,204
Patent enforcement & re-examination expenses              84,708             84,708             174,782           191,324
Research and development           123,653           651,320             100,397           683,963
Interest                 (537)               1,536                (3,258)            (7,849)
Depreciation and amortization                3,019             12,503                  3,113             12,451
            491,734        1,734,085             541,246       1,768,093
           
Loss before interest, debt settlement expense,
accretion and interest on debenture
         (327,661)      (1,304,457)            (471,397)     (1,358,893)
           
Interest on debenture              19,726           109,726                         -                         -  
Accretion on liability component of debenture                       -               18,755                         -                         -  
Loss on settlement of debenture           167,227           167,227                         -                         -  
Loss for the period and comprehensive loss          (514,614)      (1,600,165)            (471,397)      (1,358,893)
           
Loss per common share          
Basic                (0.01)             (0.03)                  (0.01)              (0.03)
Diluted                (0.01)               (0.03)                  (0.01)              (0.03)
           
Weighted average number of common shares          
Basic      58,201,804     53,105,257        51,403,507      51,556,840
Diluted      58,201,804     53,105,257        51,403,507      51,556,840

01 Communique Laboratory Inc.
SELECTED FINANCIAL INFORMATION
Consolidated Statements of Cash Flows
(Unaudited)
For the 3 and 12 month periods ended October 31, 2010 and 2009

  3- mos. ending     3- mos. ending  
  31-Oct-10 Fiscal 2010   31-Oct-09 Fiscal 2009
Cash provided by (used in):          
           
Operating activities:          
   Loss for the period         (514,614)     (1,600,165)           (471,397)     (1,358,893)
   Items not involving cash:          
     Depreciation and amortization               3,019            12,503                 3,113             12,451
     Accretion of liability portion of debenture                      -              18,755   -                      -  
     Loss on settlement of debenture           167,227           167,227   -                       -  
     Stock-based compensation              33,732           171,331                10,439              98,773
   Change in non-cash working capital         (104,252)        (186,177)             290,550           198,126
          (414,888)     (1,416,526)           (167,295)     (1,049,543)
           
Financing activities:          
    Issue of debenture                       -          1,200,000                         -                         -  
    Issue of common shares        5,406,122        5,418,422   -                       -  
Investing activities:          
    Purchase of capital assets            (6,825)             (9,589)                        -               (3,024)
    Redemption of debenture      (1,245,000)      (1,245,000)   - -
Increase (decrease) in cash        3,739,409        3,947,307          (167,295)     (1,052,567)
           
Cash and cash equivalents, beginning of period        1,129,989          922,091          1,089,386        1,974,658
Cash and cash equivalents, end of period        4,869,398        4,869,398             922,091           922,091

SOURCE 01 Communique Laboratory Inc.

For further information: For further information:

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


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