01 Communique Reports Results for Third Quarter Fiscal 2014 and Provides an Update on its Patent Litigation

TORONTO, Sept. 29, 2014 /CNW/ - 01 Communique Laboratory Inc. (ONE:TSX-V) today announced results for its third quarter 2014 which ended July 31, 2014. The loss for the quarter was $629,744 compared to a loss of $584,941 for the same period in 2013. Excluding non-cash expenses for stock-based compensation and depreciation the adjusted loss for the quarter was $438,470 (2013 - $235,187) an increase of $203,283. The Company completed the quarter with $1,607,879 of cash and cash equivalents.   

"Our adjusted loss from operations was $438,470 for the third quarter. We have implemented a number of cost savings initiatives, outlined below, which we expect will reduce our expenses and adjusted loss by $75,000 per quarter or $300,000 per year. We will continue to monitor our expenses closely with the goal to continue in the defense of our intellectual property and then to accelerate our product development," said Andrew Cheung, President and CEO for 01 Communique. "In respect of our patent litigation there have been several recent developments which are highlighted below."     

An update on the Company's patent lawsuit against Citrix Systems Inc. ("Citrix") follows.  

The Company alleges infringement of its U.S. patent number 6,928,479 ("'479 Patent") by Citrix's GoToMeeting and GoToMyPC product offerings. The Company is seeking past damages going back to August 9, 2005; being the date the '479 Patent was issued, as well as a permanent injunction prohibiting infringement. The case is taking place in the Northern District of Ohio. After receiving a positive decision from the USPTO's Patent Trial and Appeals Board ("PTAB") the Company requested and on February 14, 2014 the Court granted the request that the case be re-opened so that the stay can be lifted and the case proceed to trial. A claim construction tutorial and hearing is scheduled for November 12 and 13, 2014. Expert discovery is scheduled to be completed by January 16, 2015 following which a scheduling conference is expected to take place to set dates regarding filing and/or renewing dispositive motions, trial preparation and trial.

On May 30, 2014 Citrix filed a complaint in the United States District Court Central District of California alleging infringement of their U.S. Patent No. 7,219,233  by the Company's I'm InTouch Meeting product and requesting a declaratory judgment against the Company alleging that Citrix's GoToMeeting product offering does not infringe the "479 Patent". An amended complaint was filed on July 31, 2014 dropping the request for a declaratory judgment and alleging infringement of two additional patents, being U.S. Patent No. 8,127,019 and 8,325,896.

In respect of the inter partes re-examination of the '479 Patent at the request of Citrix, a Right of Appeal Notice was issued confirming the patentability of the claims that were part of the re-examination. Citrix filed a Notice of Appeal appealing that decision to the PTAB. On October 29, 2013 the PTAB rendered their decision affirming the Examiner's finding of validity of the '479 Patent. Citrix appealed that decision to the United States Court of Appeal for the Federal Circuit ("Federal Circuit"). That appeal is in process with an oral hearing scheduled for October 9, 2014 at the Federal Circuit, after which their decision is expected to be rendered.

An update on financial results follows.

Cash operating expenses to fund operations for the third quarter 2014 were $405,474 (2013 - $396,812). This excludes non-cash expenses for stock based compensation of $189,643 (2013 - $348,000) and depreciation of $1,631 (2013 - $1,754), as well as patent litigation and re-examination costs of $85,000 (2013 - $568,442).

Executive management and directors agreed to a reduction in the cash component of their compensation effective August 1, 2014. This reduction along with other cost saving initiatives is expected to save approximately $75,000 per quarter ($300,000 annually). The fourth quarter 2014 cash operating expenses, excluding patent litigation and re-examination costs, are now expected to be approximately $325,000.

Excluding non-cash expenses for stock based compensation and depreciation included in operating expenses, the adjusted loss for the third quarter 2014 was $438,470 (2013 - $235,187) an increase of $203,283. The majority of this increase is a result of a reduction in revenue net of associated costs from intellectual property from the third quarter 2013 to 2014.

Cash and cash equivalents were $1,607,879 as at July 31, 2014 compared to $2,101,469 as at April 30, 2014 a decrease of $493,590 for the third quarter. This decrease is primarily a result of funding the adjusted loss of $438,470 and a decrease in accounts payable and accrued liabilities of $82,051 offset by a decrease in prepaid expenses of $23,354.

On September 3, 2014 stock options were granted to certain members of the Company's executive management and directors. There were 90,000 stock options granted expiring on September 3, 2017 with an exercise price of $0.22 and vesting on March 3, 2015.   

The TSX Venture 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 Laboratory Inc. (TSX-V: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 #6,928,479 / #6,938,076 / #8,234,701 and in  Canada by its patents #2,309,398 / #2,524,039 and Japan by its patent #4,875,094. For more information, visit www.01com.com or call (905) 795-888 or [phone] (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 Statements of Financial Position Unaudited
		31-Jul-14	31-Oct-13
Assets
Current assets
	Cash and cash equivalents	$     1,607,879	$     3,072,281
	Accounts receivable	185,108	225,007
	Prepaid expenses and other assets	57,570	36,073
		1,850,557	3,333,361
Plant and equipment		11,960	17,816
		$     1,862,517	$     3,351,177
Liabilities & Shareholders' Equity
Current liabilities
	Accounts payable & accruals	$607,173	$1,048,164
	Deferred revenue	20,263	24,582
		627,436	1,072,746
Shareholders' equity
	Share capital	40,072,877	39,997,277
	Contributed surplus	4,747,837	4,468,044
	Agent options	111,780	111,780
	Deficit	(43,697,413)	(42,298,670)
		1,235,081	2,278,431
		$     1,862,517	$     3,351,177

01 Communique Laboratory Inc. SELECTED FINANCIAL INFORMATION Consolidated Statements of Operations and Comprehensive Income For the 3 and 9 month periods ended July 31, 2014 and 2013 Unaudited
	for the three months ending			for the nine months ending
	31-Jul-14	31-Jul-13		31-Jul-14	31-Jul-13
Revenue	$        49,355	$    729,860		$     208,943	$   1,096,299
Cost of revenue	-	-		-	-
	49,355	29,860		208,943	1,096,299
Expenses (income)
Selling, general and administrative	418,051	530,394		957,373	1,306,409
Patent enforcement & re-examination expenses	85,000	568,442		114,696	1,965,542
Research and development	178,697	216,172		541,175	657,864
Interest	(2,649)	(207)		(5,558)	(19,067)
	679,099	1,314,801		1,607,686	3,910,748
Loss for the period and comprehensive loss	(629,744)	(584,941)		(1,398,743)	(2,814,449)
Loss per common share
Basic	$        (0.010)	$      (0.009)		$      (0.021)	$      (0.043)
Diluted	$        (0.010)	$      (0.009)		$      (0.021)	$      (0.043)
Weighted average number of common shares
Basic	65,743,807	65,203,807		65,607,697	65,080,948
Diluted	65,743,807	65,203,807		65,607,697	65,080,948

01 Communique Laboratory Inc. SELECTED FINANCIAL INFORMATION Consolidated Statements of Cash Flows For the 3 and 9 month periods ended July 31, 2014 and 2013 Unaudited
		For the three	months ending				For the nine		months ending
		31-Jul-14	31-Jul-13				31-Jul-14		31-Jul-13
Cash provided by (used in):
Operating activities:
	Loss for the period	$        (629,744)	$       (584,941)				$     (1,398,743)		$     (2,814,449)
	Adjustments to reconcile the loss for   the period to net cash flows from   operating activities:
	Depreciation	1,631	1,754				5,855		5,657
	Stock-based compensation	189,643	348,000				279,793		631,356
	Interest income	(2,649)	(207)				(5,558)		(19,067)
	Change in non-cash working capital	(55,120)	(1,303)				(426,907)		908,318
		(496,239)	(236,697)				(1,545,560)		(1,288,185)
Interest income received		2,649	207				5,558		19,067
		(493,590)	(236,490)				(1,540,002)		(1,269,118)
Financing activities:
	Issue of common shares	-	-				75,600		294,250
Investing activities:
	Purchase of capital assets	-	(572)				-		(6,357)
Increase (decrease) in cash		(493,590)	(237,062)				(1,464,402)		(981,225)
Cash and cash equivalents, beginning of period		2,101,469	3,803,212				3,072,281		4,547,375
Cash and cash equivalents, end of period		$      1,607,879	$    3,566,150				$     1,607,879		$    3,566,150

SOURCE: 01 Communique Laboratory Inc.

INVESTOR CONTACT: Brian Stringer, Chief Financial Officer, 01 Communique, [phone] x204, [email protected]