CounterPath Reports First Quarter Fiscal 2009 Financial Results



    VANCOUVER, Sept. 15 /CNW/ - CounterPath Corporation (TSX-V: CCV; OTCBB:
CPAH), a leading provider of desktop and mobile VoIP software products and
solutions, today announced financial and operating results for the first
quarter ended July 31, 2008.

    
    Financial and operating highlights for the quarter include:

    -  Revenues of $2.6 million for the quarter ended July 31, 2008 compared
       to $1.2 million for the quarter ended July 31, 2007, an increase of
       113%.

    -  Launching of the Vonage Companion(TM) by Vonage. Powered by
       CounterPath, the Vonage Companion is a next generation Vonage
       SoftPhone client that allows the residential or home office user to
       access their home number from any desktop or laptop PC connected to a
       high speed Internet connection, enabling them to communicate as if
       they are at home.

    -  Successful Beta deliveries of our Enterprise Mobility Client and
       Gateway to two of our OEM customers both with commercial launches
       expected towards the end of the calendar year. The Enterprise Mobility
       Gateway extends the functionality of an enterprise's PBX (telephone
       system) out to a mobile handset such as those offered by RIM
       (Blackberry(TM)) and Nokia.

    -  Completing a multiyear agreement with a tier one European carrier for
       our multimedia softphone solution, which has now been deployed with
       more than 15 tier one carriers in Europe and North America.

    -  Raising $3.7 million in capital as the first closing under a private
       placement.
    

    "Overall business activities in the quarter met with management
expectations," stated Donovan Jones President and CEO, CounterPath. "We are
also beginning to see customer traction from the acquisitions we made in the
mobile space with a number of deployments and paid trials in Europe with major
carriers for the Network Convergence Gateway. The company is expecting early
market acceptance from the Enterprise Mobility Client and Gateway products
with our OEM partners. CounterPath is one of the few vendors worldwide with
engineering and product strength across both the desktop and mobile
communications software space. We are pleased with the revenue growth of over
100% year over year. We are looking for continued success from our customers
and partners as the market for software-based communications begins to ramp
up, evidenced by a significantly increasing deployment of our applications.
CounterPath has a clear technology lead in its sector and a strong management
team. We continue to take market share away from the smaller vendors. This,
added to a growing customer funnel, is allowing the company to attract
additional capital to take advantage of market opportunities. We have recently
taken $4 million in annualized operating costs out of the consolidated company
and will continue to manage our costs in delivering on the operating plan.
Overall, I believe the CounterPath business strategy is optimum and I look
forward to the coming quarters."

    Financial Results

    (All amounts in U.S. dollars and in accordance with accounting principles
generally accepted in the United States ("GAAP") unless otherwise specified.
Consolidated financial results include the financial results of NewHeights
Software Corporation from August 2, 2007 and the financial results for
FirstHand Technologies Inc. and BridgePort Networks, Inc., from February 1,
2008)

    For the first quarter ended July 31, 2008, revenue was $2.6 million
compared to $1.2 million for the quarter ended July 31, 2007. Software revenue
for the quarter ended July 31, 2008 was $1.8 million compared to $0.8 million
for the previous year. Service revenue for the quarter ended July 31, 2008 was
$0.8 million compared to $0.5 million for the quarter ended July 31, 2007.
    Operating expenses for the quarter ended July 31, 2008 were $8.3 million
compared to $2.3 million for the same period in 2007. Inclusive in operating
expenses of $8.3 million were non-cash expenses of $1 million. The increase in
operating expenses was primarily due to the addition of cash and non-cash
operating expenses related to the acquisition of NewHeights, FirstHand and
BridgePort. Operating expenses for the quarter ended July 31, 2008 include a
non-cash charge of $0.5 million from amortization of intangible assets
acquired from NewHeights, FirstHand and BridgePort and a non-cash $0.5 million
stock-based compensation expense. Sales and marketing expenses were $1.5
million for the quarter ended July 31, 2008 compared to $0.5 million for the
quarter ended July 31, 2007. For the quarter ended July 31, 2008, research and
development expenses were $3.0 million and general and administrative expenses
were $2.2 million, compared to $0.8 million and $0.7 million, respectively,
for the same quarter last year. Restructuring charges were $0.2 million for
the quarter (2007 - $nil) relating to employee rationalization following the
acquisitions of FirstHand and BridgePort.
    The net loss for the quarter ended July 31, 2008 was $5.9 million, or a
loss of $0.23 per share, compared to a net loss of $1.2 million, or a loss of
$0.15 per share for the quarter ended July 31, 2007.
    At July 31, 2008, the Company had $5.8 million in cash, compared to
$6.2 million at April 30, 2008. On July 31, 2008, the Company issued 2,433,439
units at a price of $1.50 (CDN$1.54) per unit for gross proceeds of $3,660,379
(CDN$3,747,497) through a non-brokered private placement announced on July 30,
2008. Each unit consists of one share of common stock in the capital of
CounterPath and one-half of one non-transferable common share purchase
warrant. Each whole warrant shall entitle the holder thereof to purchase one
share of common stock in the capital of CounterPath for a period of two years
commencing from July 31, 2008 at an exercise price of US$2.25 per warrant
share. At July 31, 2008, the Company's working capital was $6.9 million,
compared to $7.6 million at April 30, 2008. The shares and warrants are
subject to a four-month hold period in Canada expiring on December 1, 2008.

    The shares and warrants issued in the private placement were not and will
not be registered under the United States Securities Act of 1933 and may not
be offered or sold in the United States absent registration or an applicable
exemption from the registration requirements of United States Securities Act
of 1933.

    About CounterPath

    CounterPath Corporation is a leading provider of innovative desktop and
mobile VoIP software products and solutions. The Company's product suite
includes SIP-based softphones, server applications and Fixed Mobile
Convergence (FMC) solutions that enable service providers, enterprises and
Original Equipment Manufacturers (OEM) to cost-effectively integrate voice,
video, presence and Instant Messaging (IM) applications into their VoIP
offerings and extend functionality across both fixed and mobile networks.
    CounterPath's customers include some of the world's largest
telecommunications service providers and network equipment providers including
AT&T, Verizon, BT (British Telecommunications PLC), Deutsche Telekom, Cisco
Systems, Mitel and Nortel.
    Visit www.counterpath.com.

    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, expectations
or intentions regarding the future.
    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 failure to successfully integrate the businesses of CounterPath, FirstHand
Technologies and BridgePort Networks, (2) the failure to develop new and
innovative products using the Company's and FirstHand's and BridgePort's
technologies, (3) the Company's ability to remain competitive as other parties
develop and release competitive products, (4) the Company's ability to retain
the employees necessary to continue research and development of current and
new products, (5) the success by the Company of the sales of its current and
new products, (6) the impact of competitive products on the sales of the
Company's products, (7) the impact of technology changes on the Company's
products and on the VoIP industry, (8) the compatibility of the Company's
products with new computer operating systems, (9) the rate of adoption by
service providers and the general public of VoIP as a replacement for regular
and cellular phone service, (10) general economic conditions as they affect
CounterPath and its prospective customers, (11) the ability of the Company to
control costs operating, general administrative and other expenses, and (12)
insufficient investor interest in the Company's securities which may impact on
the Company's ability to raise additional financing as required. Readers
should also refer to the risk disclosures outlined in the Company's quarterly
reports on Form 10-QSB and Form 10-Q, annual reports on Form 10-KSB and the
Company's other disclosure documents filed from time-to-time with the
Securities and Exchange Commission.

    
    Disclaimer: The TSX Venture Exchange does not accept responsibility for
    the adequacy or accuracy of this release.


                           COUNTERPATH CORPORATION
                   (Formerly CounterPath Solutions, Inc.)
                CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
                           (Stated in U.S. Dollars)

                                                   July 31,        April 30,
                                                     2008            2008
                                               --------------  --------------
    Assets                                       (Unaudited)
      Current assets:
        Cash                                   $   5,769,185   $   6,223,613
        Accounts receivable (net of
         allowance for doubtful accounts of
         $537,050 and $407,050, respectively)      6,123,630       5,409,658
        Investment tax credits recoverable                 -       1,061,133
        Prepaid expenses and deposits                535,048         646,679
                                               --------------  --------------
          Total current assets                    12,427,863      13,341,083

      Deposits                                       165,775         103,017
      Equipment                                      504,798         736,854
      Intangible assets (net of accumulated
       amortization of $1,909,838 and
       $1,364,365)                                 7,853,480       8,534,666
      Goodwill                                     8,586,228       8,674,990
      Other assets                                   103,839         177,749
                                               --------------  --------------
    Total Assets                               $  29,641,983   $  31,568,359
                                               --------------  --------------
                                               --------------  --------------

    Liabilities and Stockholders' Equity
     (Capital Deficit)
      Current liabilities:
        Accounts payable and accrued
         liabilities                           $   4,041,904   $   4,529,201
        Unearned revenue                           1,228,076         936,343
        Customer deposits                             70,834          85,283
        Warranty accrual                             150,330         144,347
                                               --------------  --------------
          Total current liabilities                5,491,144       5,695,174

      Deferred Lease Inducements                      73,977          97,734
      Unrecognized tax benefit                        98,575          98,575
                                               --------------  --------------
          Total liabilities                        5,663,696       5,891,483

      Stockholders' equity (capital deficit):
      Preferred stock, $0.001 par value
        Authorized: 100,000,000
        Issued and outstanding:
         July 31, 2008 - 1; April 30,
         2007 - Nil                                        -               -
      Common stock, $0.001 par value
        Authorized: 83,076,900
        Issued and outstanding:
         July 31, 2008 - 28,355,236; April 30,
         2007 - 7,588,197                             28,355          25,921
      Additional paid-in capital                  47,533,178      43,398,849
      Accumulated deficit                        (24,335,285)    (18,479,483)
      Accumulated other comprehensive income
       (loss) - currency translation
       adjustment                                    752,039         731,589
                                               --------------  --------------
          Total stockholders' equity              23,978,287      25,676,876
                                               --------------  --------------
    Liabilities and Stockholders' Equity       $  29,641,983   $  31,568,359
                                               --------------  --------------
                                               --------------  --------------


                           COUNTERPATH CORPORATION
                   (Formerly CounterPath Solutions, Inc.)
                  CONDENSED INTERIM CONSOLIDATED STATEMENTS
                     OF OPERATIONS AND COMPREHENSIVE LOSS
                           (Stated in U.S. Dollars)
                                 (Unaudited)

                                                     Three Months Ended
                                                          July 31,
                                               ------------------------------
                                                    2008            2007
                                               --------------  --------------
    Revenue:
      Software                                 $   1,848,305   $     769,008
      Service                                        764,455         457,783
        Total revenue                              2,612,760       1,226,791
    Operating expenses:
      Cost of sales (includes depreciation
       of $21,484 and $38,541 and
       amortization of intangible assets of
       $545,473 and $nil)                          1,377,843         361,158
      Sales and marketing                          1,481,951         454,883
      Research and development                     3,017,412         766,468
      General and administrative                   2,228,127         724,527
      Restructuring costs                            190,961               -
                                               --------------  --------------
        Total operating expenses                   8,296,294       2,307,036
                                               --------------  --------------
        Loss from operations                      (5,683,534)     (1,080,245)
    Interest and other income (expense), net
      Interest income                                 18,068          15,524
      Interest expense                                (7,295)       (140,576)
      Foreign exchange loss                         (183,041)              -
                                               --------------  --------------
      Net loss for the period                     (5,855,802)     (1,205,297)
                                               --------------  --------------
                                               --------------  --------------
      Other comprehensive income (loss):
      Foreign currency translation
       adjustments                                    20,450          (5,940)
                                               --------------  --------------
    Comprehensive loss                         $  (5,835,352)  $  (1,211,237)
                                               --------------  --------------
                                               --------------  --------------
    Net loss per share:
      Basic and diluted                        $       (0.23)  $       (0.15)
                                               --------------  --------------
                                               --------------  --------------

      Weighted average common shares
       outstanding:                               25,948,247       7,588,197
    





For further information:

For further information: David Karp, Chief Financial Officer,
CounterPath Corporation, (604) 320-3344 ext 1114, ir@counterpath.com

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CounterPath Corporation

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