CounterPath Reports Third Quarter Fiscal 2010 Financial Results

VANCOUVER, March 12 /CNW/ - CounterPath Corporation ("CounterPath" or the "Company") (OTCBB: CPAH; TSX-V: CCV), a leading provider of desktop and mobile VoIP software products and solutions, today announced financial and operating results for the third quarter of fiscal year 2010.

Financial and operating highlights for the third quarter ended January 31, 2010 include:

    
    -   Revenue for the third quarter of $1.4 million compared to revenue of
        $1.9 million for the second quarter of fiscal 2010 and $2.0 million
        for the third quarter of fiscal 2009.

    -   A considerable reduction in expenses as non-GAAP operating expenses
        for the third quarter were $2.6 million, down from $3.6 million in
        non-GAAP operating expenses for the quarter ended January 31, 2009.

    -   A net loss for the third quarter of $1.8 million ($0.06 per share)
        compared to a net loss of $2.2 million ($0.08 per share) for the
        quarter ended January 31, 2009.

    -   The launch of Bria for Asterisk, a co-branded, open standards-based
        softphone that interoperates seamlessly with Asterisk telephony
        platforms enabling SMBs and enterprises to implement a complete
        end-to-end VoIP solution that is powerful and easy to install.

    -   The launch of Bria 3.0 multimedia VoIP softphone for both Mac and PC
        platforms with new features such as high-definition (HD) video, user
        customization and presence alert, all designed to enhance the overall
        user experience and the enterprise feature set.

    -   Subsequent to the quarter, the granting of a fundamental patent which
        extends CounterPath's portfolio of patents and exclusive licenses
        covering its fixed-mobile convergence solutions.
    

"While we had a number of orders which were delayed resulting in lower revenues for this quarter, we are seeing increased sales activity," stated Donovan Jones, President and CEO, CounterPath. "There is strong interest in our end-to-end solutions and the market momentum is favorable. Our industry leading, patent protected VoIP, mobile VoIP and fixed mobile convergence applications continue to represent compelling solutions for improving both enterprise and consumer productivity while reducing costs," continued Jones.

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 quarter ended January 31, 2010, revenue was $1.4 million compared to $2.0 million for the same quarter last year. Software revenue for the quarter ended January 31, 2010 was $1.0 million compared to $1.3 million for the same quarter last year. Service revenue for the quarter ended January 31, 2010 was $0.3 million compared to $0.7 million for same quarter last year.

Operating expenses for the quarter ended January 31, 2010 were $3.2 million compared to $4.3 million for the same quarter last year. Operating expenses for the quarter included a non-cash expense of $0.2 million for amortization of intangible assets and a non-cash stock-based compensation expense of $0.3 million. The quarter-over-quarter decrease in operating expenses was primarily due to significant employee rationalization completed over the previous quarters.

Sales and marketing expenses were $0.6 million for the quarter ended January 31, 2010 compared to $0.8 million for same quarter last year. For the quarter ended January 31, 2010, research and development expenses were $0.8 million and general and administrative expenses were $0.9 million, compared to $1.1 million and $1.5 million, respectively, for the same quarter last year.

The net loss for the quarter ended January 31, 2010 was $1.8 million, or a loss of $0.06 per share, compared to a net loss of $2.2 million, or a loss of $0.08 per share, for the quarter ended January 31, 2009.

At January 31, 2010, the Company had $2.4 million in cash, compared to $2.9 million at April 30, 2009. At January 31, 2010, the Company's working capital was $1.1 million, compared to $1.6 million at April 30, 2009.

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 and Mitel.

Visit www.counterpath.com.

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 operating expenses which exclude non-cash stock-based compensation, amortization and impairment of intangible asset charges relative to operating expenses and operating losses 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
                                                       Three months ended
                                                           January 31,
                                                   --------------------------
    (Unaudited)                                        2010          2009
                                                   ------------  ------------
    Non-GAAP operating expenses                     $2,593,875    $3,603,292

    Add:
      Stock-based compensation                         336,796       257,132
      Amortization of intangible assets                220,369       458,871
                                                   ------------  ------------

    Operating expenses (GAAP)                       $3,151,040    $4,319,295
                                                   ------------  ------------
                                                   ------------  ------------
    

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, such as the following: (1) There is strong interest in our end-to-end solutions and the market momentum is favorable.

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 develop new and innovative products using the Company's technologies, (2) the Company's ability to remain competitive as other parties develop and release competitive products, (3) the Company's ability to retain the employees necessary to continue research and development of current and new products, (4) the success by the Company of the sales of its current and new products, (5) the impact of technology changes on the Company's products and on the VoIP industry, (6) the compatibility of the Company's products with new computer operating systems, (7) the rate of adoption by service providers and the general public of VoIP as a replacement for regular and cellular phone service, (8) general economic conditions as they affect CounterPath and its current and prospective customers, including a continued downturn in general economic conditions internationally, (9) the ability of the Company to control costs operating, general administrative and other expenses, and (10) 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-Q, annual reports on Form 10-K 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.

Disclaimer: Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

    
                           COUNTERPATH CORPORATION
                CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
                          (Stated in U.S. Dollars)

                                                   January 31,    April 30,
                                                      2010          2009
                                                  -------------  ------------
                                                   (Unaudited)
    Assets
      Current assets:
        Cash                                      $  2,351,791  $  2,931,932
        Accounts receivable (net of allowance
         for doubtful accounts of $1,032,784
         and $755,114, respectively)                 1,546,144     2,524,220
        Investment tax credits recoverable             102,817       143,334
        Other current assets                           854,816       310,274
                                                   ------------  ------------
          Total current assets                       4,855,568     5,909,760

      Deposits                                         101,538       114,267
      Equipment                                        202,638       258,442
      Intangible assets (net of accumulated
       amortization of $4,018,121 and
       $3,375,195, respectively)                     2,587,959     2,201,894
      Goodwill                                       8,214,480     7,262,701
      Other assets                                      67,912        92,101
                                                   ------------  ------------
    Total Assets                                  $ 16,030,095  $ 15,839,165
                                                   ------------  ------------
                                                   ------------  ------------

    Liabilities and Stockholders' Equity
      Current liabilities:
        Accounts payable and accrued liabilities  $  3,191,821  $  3,488,001
        Unearned revenue                               486,862       708,455
        Customer deposits                                4,213         9,443
        Accrued warranty                               108,786       137,378
                                                   ------------  ------------
          Total current liabilities                  3,791,682     4,343,277

      Deferred lease inducements                         9,619        55,016
      Unrecognized tax benefit                          98,575        98,575
                                                   ------------  ------------
        Total liabilities                            3,899,876     4,496,868
                                                   ------------  ------------

      Stockholders' equity:
      Preferred stock, $0.001 par value
        Authorized: 100,000,000
        Issued and outstanding: January 31,
         2010 - 1; April 30, 2009 - 1                        -             -
      Common stock, $0.001 par value
        Authorized: 83,076,900
        Issued and outstanding:
        January 31, 2010 - 32,949,835
         April 30, 2009 - 28,832,050                    32,949        28,832
      Additional paid-in capital                    51,743,434    48,718,443
      Accumulated deficit                          (39,095,668)  (34,318,195)
      Accumulated other comprehensive loss -
       currency translation adjustment            `   (550,496)   (3,086,783)
                                                   ------------  ------------
        Total stockholders' equity                  12,130,219    11,342,297
                                                   ------------  ------------
    Liabilities and Stockholders' Equity          $ 16,030,095  $ 15,839,165
                                                   ------------  ------------
                                                   ------------  ------------



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

                           Three Months Ended          Nine Months Ended
                               January 31,                 January 31,
                       --------------------------  --------------------------
                           2010          2009          2010          2009
                       ------------  ------------  ------------  ------------
    Revenue:
      Software        $  1,030,004  $  1,305,303  $  3,623,173  $  5,267,225
      Service              333,414       724,758     1,691,309     2,392,426
                       ------------  ------------  ------------  ------------
        Total revenue    1,363,418     2,030,061     5,314,482     7,659,651
    Operating expenses:
      Cost of sales
       (includes
       depreciation
       of $4,911 and
       $48,490 and
       amortization
       of intangible
       assets of
       $642,925 and
       $1,514,515 for
       nine months
       ended
       January 31,
       2010 and 2009
       respectively)       794,364       863,573     2,164,966     3,327,619
      Sales and
       marketing           644,212       762,398     2,093,768     3,431,062
      Research and
       development         797,162     1,142,497     2,621,884     6,263,594
      General and
       administrative      915,302     1,524,559     2,810,605     5,312,358
      Restructuring
       costs                     -        26,268        44,912       959,264
                       ------------  ------------  ------------  ------------
        Total operating
         expenses        3,151,040     4,319,295     9,736,135    19,293,897
                       ------------  ------------  ------------  ------------
        Loss from
         operations     (1,787,622)   (2,289,234)   (4,421,653)  (11,634,246)
    Interest and other
     income (expense),
     net:
      Interest income       53,239        33,627       114,813        83,893
      Interest expense        (685)       (1,278)       (2,356)      (11,713)
      Foreign exchange
       gain (loss)         (46,516)       19,360      (468,277)      (55,335)
                       ------------  ------------  ------------  ------------
      Net loss for
       the period     $ (1,781,584) $ (2,237,525) $ (4,777,473) $(11,617,401)
                       ------------  ------------  ------------  ------------
                       ------------  ------------  ------------  ------------
    Other comprehensive
     income (loss):
      Foreign currency
       translation
       adjustments          82,992      (282,407)    2,536,287    (3,314,268)
                       ------------  ------------  ------------  ------------
      Comprehensive
       loss           $ (1,698,592) $ (2,519,932) $ (2,241,186) $(14,931,669)
                       ------------  ------------  ------------  ------------
                       ------------  ------------  ------------  ------------
    Net loss per share:
      Basic and
       diluted        $      (0.06) $      (0.08) $      (0.16) $      (0.42)
                       ------------  ------------  ------------  ------------
                       ------------  ------------  ------------  ------------
      Weighted average
       common shares
       outstanding:     30,710,069    28,542,855    30,395,799    27,721,110
    

SOURCE CounterPath Corporation

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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