01 Communique Reports Second Quarter Fiscal 2011 Results & Provides an Update on Corporate Developments

TORONTO, June 14, 2011 /CNW/ - 01 Communique Laboratory Inc. (TSX:ONE) today announced results for its second quarter fiscal 2011, which ended April 30th. Revenue for the quarter was $148,695 compared to $108,127 for the same period in 2010. The loss for the quarter was $1,029,026 compared to a loss of $320,753 for the same period in 2010. Excluding the costs associated with preparation for the LogMeIn trial and stock based compensation the adjusted loss for the second quarter 2011 was $416,686. We completed the period with $3,840,647 of cash and cash equivalents on hand.

"We are moving forward on all fronts to build revenue from our products and from those companies that we believe are using our intellectual property to compete against us," said Andrew Cheung, President and CEO for 01. "We recently launched a Channel Partner Program and I am encouraged by the feedback we have received to date from prospective partners. To assist us in protecting our intellectual property rights we recently signed an agreement with WiLAN Inc. ("WiLAN"), a company that has demonstrated superior licensing capabilities. With WiLAN's proven track record and its strong financial position they are the ideal choice for us to help maximize the revenue that we anticipate can be generated from our patented technology. In addition to these recent initiatives we are pushing forward and remain confident in the merits of our appeal in the LogMeIn lawsuit. We are waiting for the judge's decision with respect to lifting the stay in the Citrix lawsuit and then look forward to proceeding to trial."

An update on these initiatives and our financial results follows.

Financial Highlights -

  • The second quarter loss of $1,029,026 includes $497,340 of patent litigation and re-examination costs ("litigation costs"), and $105,000 of stock based compensation a non-cash expense. Excluding these costs the adjusted loss for the second quarter was $416,686. The litigation costs pertained to expenses incurred by us as we prepared for trial with LogMeIn.

  • Expenses for the second quarter excluding stock based compensation and litigation costs were $575,312. Litigation costs are expected to be nominal for the third quarter. We continue to monitor expenses very closely and expect them to be approximately $500,000 for the third quarter 2011, excluding the non-cash charge for stock based compensation.

  • Cash and cash equivalents were $3,840,647 as at April 30, 2011 compared to $4,726,881 as at January 31, 2011 representing a decrease of $886,234.  This decrease is a result of cash being used to fund the adjusted operating loss of $940,588. This being the loss for the period of $1,029,026 adjusted for non-cash items being depreciation of $3,213 and stock based compensation of $105,000 and a decrease in non-cash working capital of $19,775. Cash of $57,500 was provided by the issuance of common shares from exercising of stock options.

Corporate Update -

  • Building revenue from the channel. We launched a Channel Partner Program aimed at companies with a customer base that would be attracted to our suite of Software as a Service ("SaaS") offerings. We are encouraged by the response from potential partners and our plan is to continue to pursue these opportunities.

  • Protecting our Company's Intellectual Property. The remote access, remote support and online meeting markets are large and growing and our intellectual property covers all three markets. A number of companies have been identified, in addition to Citrix and LogMeIn, that we believe infringe the 479 Patent even under the presently narrow application from the LogMeIn case, which we disagree with and have appealed. On June 10, 2011 we entered into an agreement with WiLAN Inc. whereby  WiLAN will assist us  in developing and executing a licensing strategy against a number of such 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.

Update on Current litigation -

  • Patent lawsuit against LogMeIn alleging infringement of U.S. Patent No. 6,928,479 ("the 479 Patent").  The patent lawsuit against LogMeIn in the Eastern District of Virginia was filed in September 2010. 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. We expect the process of the Appeal to be generally as follows - the Court docket our Notice of Appeal on May 26, 2011 following which we have 60 days to file our appeal brief, LogMeIn will then have 40 days to file their opposition brief. Our reply brief will be 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 docket date), after which we wait for the Court of Appeals to render its decision. While we are confident in the merits of our appeal there can be no guarantee that we will be successful in the appeal.

  • Patent lawsuit against Citrix alleging infringement of the 479 Patent. We filed a patent lawsuit against Citrix in February, 2006 in the Northern District of Ohio. On March 12, 2008 the judge in the case issued a memorandum and order staying the case pending completion of an inter partes re-examination of the claims underlying the Patent in the case, which was requested by Citrix. In July, 2010 the United States Patent and Trademark Office ("USPTO") issued a Right of Appeal Notice ("RAN") finding that all of the claims in the inter partes re-examination are patentable. Citrix appealed the decision to the USPTO's Board of Patent Appeals and Inferences ("BPAI"). That appeal is still in process. With the RAN issued we have requested that the Judge in the case, Judge Lioi, lift the stay and proceed to trial. We are waiting for the Court's decision on the matter.

We are seeking past damages, which go back to the patent issue date in August 2005 as well as a permanent injunction against both Citrix and LogMeIn prohibiting infringement of the 479 Patent. In addition, we allege Citrix and LogMeIn are willfully infringing the patent. While we are confident in the merits of both cases, there can be no assurance that we will be successful in our litigation.

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.          
Consolidated Balance Sheets          
April 30, 2011 and October 31, 2010          
    30-Apr-11     31-Oct-10
Current assets          
  Cash and cash equivalents $ 3,840,647   $ 4,869,398
  Accounts receivable       131,250          191,545
  Prepaid expenses and other assets      71,586            33,255
     4,043,483       5,094,198
Capital assets   25,762     28,758
  $ 4,069,245   $ 5,122,956
Liabilities & Shareholders' Equity          
Current liabilities          
  Accounts payable & accruals $ 699,742   $ 480,688
  Deferred revenue   52,922     68,646
     752,664     549,334
Shareholders' equity          
  Share capital    36,198,236     35,434,092
  Contributed surplus   1,727,046     1,591,796
  Share purchase warrants   58,743     70,491
  Agent options   95,241     380,965
  Deficit   (34,762,684)     (32,903,722)
    3,316,581     4,573,622
  $ 4,069,245   $ 5,122,956

01 Communique Laboratory Inc.
Consolidated Statements of Operations and Comprehensive Income
For the 3 and 6 month periods ended April 30, 2011 and 2010
    3 months ending           6 months ending      
    30-Apr-11     30-Apr-10     30-Apr-11     30-Apr-10
Revenue $ 148,695   $ 108,127   $ 283,960   $ 183,162
Cost of revenue   69     576     261     1,268
    148,626     107,551     283,699     181,894
Expenses (income)                      
Selling, general and administrative   417,316      206,092      709,584     504,308
Patent enforcement & re-examination expenses     497,340         -      940,293       -
Research and development   267,989     170,010     503,342     351,596
Interest  expense (income)   (8,206)     2,457     (17,509)     2,273
Depreciation and amortization   3,213     3,127     6,951     6,466
    1,177,652     381,686      2,142,661     864,643
Loss before interest and accretion on liability
component of debenture
  (1,029,026)     (274,135)     (1,858,962)     (682,749)
Interest on debenture   -     38,581     -     45,000
Accretion on liability component of debenture   -     8,037     -       9,755
Loss for the period and comprehensive loss $ (1,029,026)   $ (320,753)   $ (1,858,962)   $ (737,504)
Loss per common share                      
Basic   (0.017)     (0.006)     (0.031)                 (0.014)
Diluted   (0.017)     (0.006)     (0.031)     (0.014)
Weighted average number of common shares                      
Basic   60,625,864     51,406,007     59,823,670     51,404,757
Diluted   60,625,864     51,406,007     59,823,670     51,404,757

01 Communique Laboratory Inc.
Consolidated Statements of Cash Flows
For the 3 and 6 month periods ended April 30, 2011 and 2010
    3 months ending           6 months ending      
    30-Apr-11     30-Apr-10     30-Apr-11     30-Apr-10
Cash provided by (used in):                      
Operating activities:                      
  Loss for the period $ (1,029,026)   $ (320,753)   $ (1,858,962)   $ (737,504)
  Items not involving cash:                      
  Depreciation and amortization      3,213        3,127            6,951         6,466
  Accretion of liability portion of debenture   -     8,037     -     9,755
  Stock-based compensation   105,000     37,821     135,250     122,642
  Change in non-cash working capital   (19,775)     (82,436)     225,294     (105,094)
    (940,588)     (354,204)      (1,491,467)     (703,735)
Financing activities:                      
  Issue of debenture   -     -     -     1,200,000
  Issue of common shares   57,500      900     466,671     900
Investing activities:                      
  Purchase of capital assets   (3,146)      (369)          (3,955)     (369)
Increase (decrease) in cash   (886,234)      (353,673)     (1,028,751)     496,796
Cash and cash equivalents, beginning of period    4,726,881      1,772,560     4,869,398     922,091
Cash and cash equivalents, end of period $ 3,840,647   $ 1,418,887   $ 3,840,647   $ 1,418,887






SOURCE 01 Communique Laboratory Inc.

For further information:

Brian Stringer
Chief Financial Officer
01 Communique
(905) 795-2888 x204


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