CounterPath Reports Second Quarter Fiscal 2013 Financial Results

VANCOUVER, Dec. 13, 2012 /CNW/ - CounterPath Corporation ("CounterPath" or the "Company") (NASDAQ: CPAH) (TSX: CCV), an award-winning provider of desktop and mobile VoIP software products and solutions, today announced the financial and operating results for its fiscal 2013 second quarter ended October 31, 2012.

Second Quarter Financial Highlights

• Quarterly revenue of $3.6 million, a 3% increase year-over-year.  Revenue for the six months ending October 31, 2012 of $8.0 million, a 28% increase year-over-year
  
  
• Gross margin of 82% in Q2 2013 versus 81% in Q2 2012 and a non-GAAP gross margin of 83%.
  
  
• Non-GAAP loss from operations of $0.3 million compared to non-GAAP income from operations of $0.1 million for the second quarter of fiscal 2012.
  
  
• Net loss of $0.3 million (or loss of $0.01 per share), compared to a net income of $0.1 million (or $0.00 per share) for the second quarter of fiscal 2012.
  
  
• Non-GAAP net loss of $0.3 million (or loss of $0.01 per share), compared to a non-GAAP net income of $0.2 million (or $0.00 per share) for the second quarter of fiscal 2012.  For the six months ended October 31, 2012, non-GAAP net income was $0.2 million (or $0.00 per share).
  
  
• Cash of $11.7 million as of October 31, 2012.

"While year-to-date sales growth was solid based on an exceptionally strong first quarter, growth in the second quarter was affected by some delays in sales from our channel partners as we transition a greater share of our contract business from direct sales to the channel, as well as the continued economic challenges in Europe," stated Donovan Jones, President and Chief Executive Officer.  "The opportunity continues to grow for our offerings with carriers looking to offer voice and video on multiple end user devices, leveraging data and WiFi networks and enterprises looking to create cost savings and increased productivity extending communications services to mobile devices. Overall, with a strong sales pipeline, channel partners coming on-line and favorable long-term market trends, our outlook for continued growth remains very positive." continued Jones.

Recent Operational Highlights

• Announced an agreement to provide the Bria mobile and tablet softphone applications to Altibox, a leading Norwegian triple-play service provider, enabling their customers to make mobile calls using their home phone number regardless of their location.
  
  
• Announced an agreement with Nippon Telegraph and Telephone Software Corporation that will enable Japanese enterprises to extend unified communications and fixed-mobile convergence services to their customers' mobile workers, telecommuters and business travelers.
  
  
• Rogers Communications, Canada's largest provider of wireless voice and data communications services and one of Canada's leading providers of cable television, high-speed Internet and telephony services launched the iOS and Android tablet applications late in the second fiscal quarter for Rogers One Number^TM service based on CounterPath's technology.
  
  
• Released new features for the Client Configuration Server, a carrier-grade solution enabling enterprises to remotely manage all of their Bria desktop, mobile and tablet softphones and address and the challenges inherit in the "bring your own device" (BYOD) to work trend.

Conference Call Information

CounterPath will host an investor conference call and live webcast today at 11:00 a.m. ET to discuss its financial results for the quarter ended October 31, 2012. To access the conference call by telephone, dial 647-427-7450 or 1-888-231-8191.  Please connect approximately 15 minutes prior to the beginning of the call to ensure participation.  A question and answer session for analysts and institutional investors will follow management's presentation.

A live audio webcast of the conference call will be available at www.cnw.ca.  Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast.  The webcast will be archived for 30 days.

A rebroadcast will be available to listeners until 12:00 a.m. ET on December 20, 2012. To access the rebroadcast, please dial 416-849-0833 or 1-855-859-2056 and enter passcode 75231593, followed by the number sign.

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: overall, with a strong sales pipeline, channel partners coming on-line and favorable long-term market trends, our outlook for continued growth remains very positive.

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) general economic conditions as they affect CounterPath and its current and prospective customers, including a continued downturn in general economic conditions internationally, (2) the variability in our sales from reporting period to reporting period due to extended sales cycles as a result of selling our products through channel partners or the length of time of deployment of our products by our customers (3) the Company's ability to control its operating expenses, which may adversely affect its financial condition, (4) a decline in the Company's stock price or insufficient investor interest in the Company's securities which may impact on the Company's ability to raise additional financing as required, (5) the Company's ability to remain competitive as other better financed parties develop and release competitive products, (6) the impact of intellectual property litigation that could materially and adversely affect our business, (7) the success by the Company of the sales of its current and new products, (8) the impact of technology changes on the Company's products and on our industry, (9) the failure to develop new and innovative products using the Company's technologies, (10) the potential dilution to shareholders or overhang on the Company's share price of its outstanding stock options and warrants.  Readers should also refer to the risk disclosures outlined in the Company's quarterly reports on Form 10-Q or Form 10-Q/A, or in the annual reports on Form 10-K or Form 10-K/A, 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.

About CounterPath

CounterPath's SIP-based VoIP softphones are changing the face of telecommunications. An industry and user favorite, Bria softphones for desktop and mobile devices, together with the company's server applications and Fixed Mobile Convergence (FMC) solutions, enable service providers, OEMs and enterprises large and small around the globe to offer a seamless and unified communications experience across both fixed and mobile networks. Standards-based, cost-effective and reliable, CounterPath's award-winning solutions power the voice and video calling, messaging, and presence offerings of customers such as Alcatel-Lucent, AT&T, Verizon, BT, Mobilkom Austria, Rogers, Avaya, BroadSoft, Cisco Systems, GENBAND, Metaswitch Networks, Mitel and NEC. For more information please visit www.counterpath.com.

COUNTERPATH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Stated in U.S. Dollars)
					October 31,			April 30,
					2012			2012
Assets					(Unaudited)
	Current assets:
		Cash		$	11,669,746		$	8,154,139
		Accounts receivable (net of allowance for doubtful accounts of $328,188 and $334,294 respectively)			4,733,123			4,014,472
		Prepaid expenses and deposits			83,861			170,556
			Total current assets		16,486,730			12,339,167
	Deposits				126,551			62,521
	Equipment				233,282			101,024
	Intangible assets (net of accumulated amortization of $5,909,873 and $5,890,282, respectively)				19,425			38,853
	Derivative instruments				65,461			-
	Goodwill				8,783,088			8,957,977
	Other assets				84,819			44,402
Total Assets				$	25,799,356		$	21,543,944
Liabilities and Stockholders' Equity
	Current liabilities:
		Accounts payable and accrued liabilities		$	2,318,598		$	2,416,489
		Derivative instruments			969,451			2,026,944
		Unearned revenue			1,594,643			1,308,174
		Customer deposits			13,872			13,872
		Accrued warranty			87,555			84,948
			Total current liabilities		4,984,119			5,850,427
	Deferred lease inducements				45,314			56,082
	Unrecognized tax benefit				98,575			98,575
			Total liabilities		5,128,008			6,005,084
	Stockholders' equity:
	Preferred stock, $0.001 par value
		Authorized: 100,000,000
		Issued and outstanding: October 31, 2012 - 1; April 30, 2012 - 1			-			-
	Common stock, $0.001 par value
		Authorized: 83,076,900
		Issued and outstanding:
		October 31, 2012 - 41,724,874;   April 30, 2012 - 39,960,479			41,725			39,961
	Additional paid-in capital				65,742,529			61,025,529
	Accumulated deficit				(44,904,338)			(45,446,771)
	Accumulated other comprehensive income - currency translation adjustment				(208,568)			(79,859)
			Total stockholders' equity		20,671,348			15,538,860
Liabilities and Stockholders' Equity				$	25,799,356		$	21,543,944

COUNTERPATH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Stated in U.S. Dollars) (Unaudited)
				Three Months Ended						Six Months Ended
				October 31,						October 31,
				2012			2011			2012			2011
Revenue:
	Software		$	1,811,815		$	2,127,860		$	4,339,871		$	3,711,911
	Service			1,750,972			1,345,993			3,610,684			2,520,676
		Total revenue		3,562,787			3,473,853			7,950,555			6,232,587
Operating expenses:
	Cost of sales (includes depreciation of $22,071 (2011 - $12,363) and amortization of intangible assets of $19,591 (2011 - $484,174))			626,006			648,201			1,185,799			1,508,346
	Sales and marketing			1,028,217			921,232			2,083,252			1,743,266
	Research and development			1,284,594			1,114,017			2,645,606			2,106,528
	General and administrative			1,164,092			1,020,033			2,543,411			2,054,307
		Total operating expenses		4,102,909			3,703,483			8,458,068			7,412,447
Loss from operations				(540,122)			(229,630)			(507,513	)		(1,179,860)
Interest and other income (expense), net:
	Interest and other income			18,090			49,483			61,943			98,836
	Interest expense			(154)			(442)			(624	)		(171,684)
	Fair value adjustment on derivative instruments			208,036			282,014			993,164			427,728
	Foreign exchange gain (loss)			(10,955)			10,624			(4,537	)		11,311
Net income (loss) for the period			$	(325,105)		$	112,049		$	542,433		$	(813,669)
Net income (loss) per share:
	Basic and diluted		$	(0.01)		$	0.00		$	0.01		$	(0.02)
	Weighted average common shares outstanding:			41,592,776			39,552,114			41,159,949			37,692,012

Non-GAAP Financial Measures

This news release contains "non-GAAP financial measures". The non-GAAP financial measures in this news release may include non-GAAP gross margin and non-GAAP income (loss) from operations which exclude non-cash stock-based compensation and amortization of intangible asset charges relative to gross margin and income (loss) from operations calculated in accordance with GAAP. The non-GAAP financial measures may also include non-GAAP net income (loss) which excludes non-cash stock-based compensation, amortization of intangible assets and fair value adjustment on derivative instruments charges relative to net income (loss) 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
(Unaudited)

Non-GAAP gross margin:				Three Months Ended						Six Months Ended
				October 31,						October 31,
				2012			2011			2012			2011
	Revenue		$	3,562,787		$	3,473,853		$	7,950,555		$	6,232,587
		Less:
		Cost of sales		626,006			648,201			1,185,799			1,508,346
	GAAP gross profit		$	2,936,781		$	2,825,652		$	6,764,756		$	4,724,241
	Percentage of revenue (gross margin)			82%			81%			85%			76%
	GAAP gross profit		$	2,936,781		$	2,825,652		$	6,764,756		$	4,724,241
		Plus:
		Stock-based compensation		8,797			8,875			17,636			17,919
		Amortization of intangible assets		9,683			203,294			19,591			484,174
	Non-GAAP gross profit		$	2,955,261		$	3,037,821		$	6,801,983		$	5,226,334
	Percentage of revenue (non-GAAP gross margin)			83%			87%			86%			84%

Non-GAAP income (loss) from operations:			Three Months Ended						Six Months Ended
			October 31,						October 31,
			2012			2011			2012			2011
GAAP Income (loss) from operations		$	(540,122)		$	(229,630)		$	(507,513)		$	(1,179,860)
Plus:
Stock-based compensation			214,605			129,923			611,375			374,184
Amortization of intangible assets			9,683			203,294			19,591			484,174
Non-GAAP income (loss) from operations		$	(315,834)		$	103,587		$	123,453		$	(321,502)
Non-GAAP net income (loss):			Three Months Ended						Six Months Ended
			October 31,						October 31,
			2012			2011			2012			2011
GAAP net income (loss)		$	(325,105)		$	112,049		$	542,433		$	(813,669)
Plus:
Stock-based compensation			214,605			129,923			611,375			374,184
Amortization of intangible assets			9,683			203,294			19,591			484,174
Fair value adjustment on derivative instruments			(208,036)			(282,014)			(993,164)			(427,728)
Non-GAAP net income (loss)		$	(308,853)		$	163,252		$	180,235		$	(383,039)
GAAP net income (loss) per share - basic & diluted		$	(0.01)		$	0.00		$	0.01		$	(0.02)
Non-GAAP net Income (loss) per share - basic & diluted		$	(0.01)		$	0.00		$	0.00		$	(0.01)

 

SOURCE: CounterPath Corporation

Contacts:
David Karp
Chief Financial Officer, CounterPath
[email protected]
[phone]

Craig Armitage
Equicom Group
[email protected]
[phone] x278