CounterPath Reports Third Quarter Fiscal 2008 Financial Results

VANCOUVER, March 14 /PRNewswire-FirstCall/ -- CounterPath Corporation (OTCBB: COPA), a leading provider of desktop and mobile VoIP software products and solutions, today announced financial and operating results for the third quarter ended January 31, 2008. Recent financial and operating highlights include: - Record quarterly revenues of $2.6 million for the third quarter of fiscal 2008 compared to $1.0 million for the third quarter of fiscal 2007 and $2.4 million for the second quarter of fiscal 2008. - Acquisition of FirstHand Technologies Inc., an innovator in extending enterprise telephony features to smartphones and dual-mode handheld devices over WiFi and cellular networks. FirstHand's products are backed by eleven patents either pending or granted. The acquisition allows CounterPath to combine its suite of softphone and server applications with Fixed Mobile Convergence (FMC) solutions from FirstHand to deliver an integrated communications experience and empower workforces to go mobile. - Acquisition of BridgePort Networks, Inc., a leading innovator in Fixed Mobile Convergence (FMC) solutions for service providers. BridgePort's products, which include the NomadicONE(TM) Network Convergence Gateway (NCG) and NomadicONE IMS Convergence Server (ICS), are backed by eighteen patents either pending or granted. The addition of carrier-class FMC solutions to its VoIP softphone and enterprise offerings immediately broadens the Company's market reach. "The third quarter was a strategic one for CounterPath. Two acquisitions were completed in the quarter to position the Company as a serious player in the move worldwide to Fixed Mobile Convergence (FMC) services, while at the same time, we maintained our overall revenue growth," said Greg Pelling, Chief Executive Officer of CounterPath. "There is an increasing demand for innovative FMC solutions providing seamless connectivity between fixed and wireless telecommunications networks. Our extensive client base of world-class service providers and technology vendors require these solutions to deliver high-value services to small and medium enterprises and consumers. In other words, we can now provide a complete end to end solution with our softphone applications running on a personal computer and optimized to work in conjunction with a mobile phone, enabling end users to easily switch between the two devices. We are the only source for SIP softphone solutions which combine voice, text messaging, multimedia, video and presence-based consumer and enterprise applications for virtually any network - fixed or mobile. These acquisitions enable us to leverage our extensive customer base and support our growth plans for fiscal 2009," concluded Pelling. Financial Results - (Unaudited) (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 but do not include financial results for FirstHand Technologies Inc. and BridgePort Networks, Inc. both of which were acquired after the end of third quarter of fiscal 2008.) For the third quarter of fiscal 2008, revenue was $2.6 million compared to $1.0 million for the third quarter of fiscal 2007. Software revenue for the quarter was $1.7 million compared to $653,332 for the same period last year. Service revenue for the quarter was $935,934 compared to $354,250 for the third quarter of fiscal 2007. Operating expenses for the third quarter of fiscal 2008 were $4.9 million compared to $2.0 million for the third quarter of fiscal 2007. The increase in operating expenses was primarily due to the addition of cash and non-cash operating expenses related to the acquisition of NewHeights and employee growth in the Company. Operating expenses include a non-cash charge of $303,931 from amortization of intangible assets acquired from NewHeights and a non-cash $298,704 stock-based compensation expense. Sales and marketing expenses were $1.0 million for the third quarter of fiscal 2008 compared to $409,856 for the same period last year. For the current quarter, research and development expenses were $1.5 million and general and administrative expenses were $1.6 million, compared to $647,664 and $581,446, respectively, for the same period last year. The net loss for the third quarter of fiscal 2008 was $2.2 million, or $(0.02) per share, compared to a net loss of $1.3 million, or $(0.04) per share recorded for the third quarter of fiscal 2007. The Company closed the quarter with $3.1 million in cash, compared to $1.7 million at the end of the fiscal year on April 30, 2007. At the end of the third fiscal quarter of 2008, the Company's working capital was $4.3 million, compared to $1.9 million at the end of the fiscal year on April 30, 2007. 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 http://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 Inc. ("FirstHand") and BridgePort Networks, Inc. ("BridgePort") (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, annual reports on Form 10-KSB and the Company's other disclosure documents filed from time-to-time with the Securities and Exchange Commission. (TABLES TO FOLLOW) COUNTERPATH CORPORATION (Formerly CounterPath Solutions, Inc.) INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (Stated in U.S. Dollars) January 31, April 30, 2008 2007 ------------ ------------ (Unaudited) Assets Current assets: Cash $ 3,079,584 $ 1,680,220 Accounts receivable (net of allowance for doubtful accounts of $197,922 and $56,817 respectively) 3,932,699 1,924,899 Prepaid expenses and deposits 546,613 129,534 ------------ ------------ Total current assets 7,558,896 3,734,653 Deposits 403,615 74,613 Equipment 388,437 276,599 Intangible assets (net of accumulated amortization of $599,162 and $nil) 5,533,770 - Investment tax credits recoverable 233,582 - Goodwill 6,727,744 - Other assets 129,494 25,716 ------------ ------------ Total Assets $20,975,538 $ 4,111,581 ------------ ------------ ------------ ------------ Liabilities and Stockholders' Equity (Capital Deficit) Current liabilities: Accounts payable and accrued liabilities $ 2,496,182 $ 1,314,083 Due to related parties 20,853 25,417 Unearned revenue 658,189 408,188 Customer deposits 23,351 5,615 Warranty payable 105,404 83,769 ------------ ------------ Total current liabilities 3,303,979 1,837,072 Convertible debentures - 3,369,230 Unrecognized tax benefit 332,157 - ------------ ------------ Total liabilities 3,636,136 5,206,302 Stockholders' equity (capital deficit): Preferred stock, $0.001 par value Authorized: 100,000,000 Issued and outstanding: January 31, 2008 - 1; April 30, 2007 - Nil - - Common stock, $0.001 par value Authorized: 415,384,500 Issued and outstanding: January 31, 2008 - 95,108,887; April 30, 2007 - 37,940,983 95,109 37,941 Additional paid-in capital 28,982,590 4,820,069 Accumulated deficit (12,823,439) (5,872,151) Accumulated other comprehensive income (loss) - currency translation adjustment 1,085,142 (80,580) ------------ ------------ Total stockholders' equity (capital deficit) 17,339,402 (1,094,721) ------------ ------------ Liabilities and Stockholders' Equity $20,975,538 $ 4,111,581 ------------ ------------ ------------ ------------ COUNTERPATH CORPORATION (Formerly CounterPath Solutions, Inc.) INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Stated in U.S. Dollars) (Unaudited) Three Months Ended Nine Months Ended January 31, January 31, --------------------------- --------------------------- 2008 2007 2008 2007 ------------- ------------- ------------- ------------- Revenue: Software $ 1,698,829 $ 653,332 $ 4,509,969 $ 3,339,116 Service 935,934 354,250 1,796,295 1,102,140 ------------- ------------- ------------- ------------- Total revenue 2,634,763 1,007,582 6,306,264 4,441,256 Operating expenses: Cost of sales (includes amortization of intangibles of $303,931 and $599,162) 771,178 337,009 1,833,707 1,135,221 Sales and marketing 1,016,758 409,856 2,583,761 1,164,793 Research and development 1,545,630 647,664 3,945,543 1,942,508 General and administrative 1,589,055 581,446 4,145,223 1,806,663 Restructuring cost - - 182,107 - ------------- ------------- ------------- ------------- Total operating expenses 4,922,621 1,975,975 12,690,341 6,049,185 ------------- ------------- ------------- ------------- Loss from operations (2,287,858) (968,393) (6,384,077) (1,607,929) Interest and other income (expense), net Interest income 87,707 17,485 136,786 38,087 Interest expense (1,258) (394,969) (689,810) (480,758) Loss on sale of assets - (1,169) - (9,237) Foreign exchange gain 4,709 - 58,226 - ------------- ------------- ------------- ------------- Net loss for the period $(2,196,700) $(1,347,046) $(6,878,875) $(2,059,837) ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- Other comprehensive income: Foreign currency translation adjustments (522,573) (31,462) 1,165,722 (22,231) ------------- ------------- ------------- ------------- Comprehensive loss $(2,719,273) $(1,378,508) $(5,713,153) $(2,082,068) ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- Net loss per share: Basic and diluted $ (0.02) $ (0.04) $ (0.09) $ (0.06) ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- Weighted average common shares outstanding: 94,939,745 37,940,983 74,127,654 37,936,135 CONTACT: Investor Contact: Gina DeBoutez, The Blueshirt Group, (415) 489-2184, ; Media Contact: Sarah Stover, Grey Vancouver, (604) 484-3274, DATASOURCE: CounterPath Corporation CONTACT: Investor Contact: Gina DeBoutez, The Blueshirt Group, (415) 489-2184, ; Media Contact: Sarah Stover, Grey Vancouver, (604) 484-3274,