UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 13, 2017
COUNTERPATH CORPORATION
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of
incorporation)
001-35592
(Commission File Number)
20-0004161
(IRS Employer Identification
No.)
Suite 300, One Bentall Centre, 505 Burrard Street,
Vancouver, British Columbia, Canada V7X 1M3
(Address of
principal executive offices and Zip Code)
(604) 320-3344
Registrants telephone
number, including area code
N/A
(Former name or former address, if
changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))
Item 7.01 Regulation FD Disclosure
A News Release dated July 13, 2017 is furnished herewith.
Item 9.01 | Financial Statements and Exhibits |
(d) | Exhibits |
99.1 | News Release dated July 13, 2017 |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
COUNTERPATH CORPORATION
By: | /s/David Karp | |
David Karp | ||
Chief Financial Officer |
Dated: July 13, 2017
3
CounterPath Reports Fourth Quarter
and Fiscal 2017
Financial Results
Progress Made Towards Transition to Recurring Revenue
VANCOUVER, BC, Canada July 13, 2017 CounterPath Corporation (CounterPath or the Company) (NASDAQ: CPAH) (TSX: PATH), a global provider of award-winning, over-the-top (OTT) Unified Communications solutions for enterprises and carriers, today announced the financial and operating results for its fourth quarter and fiscal year ended April 30, 2017.
Fiscal 2017 Financial Highlights
Revenue of $10.7 million for fiscal 2017, compared to $11.1 million for fiscal 2016.
Revenue of $2.4 million for the fourth quarter of fiscal 2017, compared to revenue of $2.6 million for the third quarter of fiscal 2017 and $3.0 million for the fourth quarter of fiscal 2016.
Subscription, support and maintenance revenue (revenue of a recurring nature) grew 14% year- over-year, representing 37% of total sales for fiscal 2017, compared to 31% of total sales for fiscal 2016.
Non-GAAP gross margin of 85% and GAAP gross margin of 84% in fiscal 2017, compared to non-GAAP gross margin of 86% and GAAP gross margin of 85% in fiscal 2016.
Non-GAAP loss from operations of $2.1 million for fiscal 2017, compared $1.9 million in fiscal year 2016.
Net loss of $2.5 million, or $0.52 per share for fiscal 2017, compared to $2.7 million, or $0.61 per share, in fiscal 2016.
Non-GAAP net loss of $2.1 million, or $0.45 per share for fiscal 2017, compared to $1.9 million, or $0.44 per share, in fiscal 2016.
Cash of $2.1 million as of April 30, 2017 compared to $2.2 million as of April 30, 2016.
Management Commentary
For the fourth quarter of fiscal 2017 and for the full fiscal year, we grew subscription, support and maintenance revenue as we continue our transition to recurring revenue software licensing said Donovan Jones, President and Chief Executive Officer. This growth was furthered last year through our launch of Bria X and Bria for Salesforce, two cloud based SaaS offerings targeting the small and medium sized enterprise market. While it is early days for Bria X, we are starting to see the user base build. We are currently working with partners to target large enterprises and carriers and we look forward to updating our investors on these partner initiatives in the coming quarters. This year we will be enhancing our unified communication solutions to allow team collaboration. These solutions consolidate secure voice, video conferencing and screen sharing that will work over virtually any device, any network and with any call server. Our award winning products are deployed by millions of users and thousands of customers, support by our development team who continue to build innovative applications.
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CounterPath Reports Fourth Quarter and Fiscal 2017 Financial Results |
Outlook
The Company expects revenue growth in the first quarter of fiscal 2018 compared to the fourth quarter of fiscal 2017.
Recent Business Highlights
Released Bria 5 for desktop which includes 1080p high-definition video for much clearer image quality and Microsoft Office integration.
Released enhancements to the Stretto PlatformTM including improved User Experience Metrics for desktop and enhanced security settings for highly regulated verticals such as financial services, government and healthcare.
Bria X was named as a 2017 Unified Communications Product of the Year Award Winner. Bria X enables secure voice, video, messaging, presence and screen sharing overlaying any existing IP- based call server, across virtually any device and using any network.
Financial Overview
(All amounts in U.S. dollars and in accordance with accounting principles generally accepted in the United States (GAAP) unless otherwise specified. Per share figures reflect the impact of a one-for-ten reverse stock split effected at the opening of trading on November 2, 2015 which has been retroactively applied to the figures in this news release and the consolidated financial statements.)
Revenue was $10.7 million for the year ended April 30, 2017 compared to $11.1 million for last fiscal year. Software revenue was $5.4 million, compared to $6.0 million for last fiscal year, subscription, support and maintenance revenue was $3.9 million, compared to $3.4 million for last fiscal year, and professional services and other revenue was $1.3 million, compared to $1.6 million for last fiscal year.
Operating expenses for the year ended April 30, 2017 were $13.6 million, compared to $13.9 million for last fiscal year. Operating expenses for fiscal 2017 included a non-cash stock-based compensation expense of $0.8 million (fiscal 2016 - $0.9 million). Sales and marketing expenses were $3.8 million for the year ended April 30, 2017 compared to $4.1 million for last fiscal year. For the year ended April 30, 2017, research and development expenses were $4.8 million and general and administrative expenses were $3.2 million, compared to $4.7 million and $3.4 million, respectively, for last fiscal year.
Foreign exchange gain for the year ended April 30, 2017 was $0.5 million, compared to $0.2 million for last fiscal year. The foreign exchange gain represents the gain on account of translation of the intercompany accounts of the Companys subsidiary, which are maintained in Canadian dollars, and transactional gains and losses resulting from transactions denominated in currencies other than U.S. dollars.
The net loss for the year ended April 30, 2017 was $2.5 million, or ($0.52) per share, compared to a net loss of $2.7 million, or ($0.61) per share, for last fiscal year. As of April 30, 2017, the Company had $2.1 million in cash, compared to $2.2 million at April 30, 2016.
Page 3 |
CounterPath Reports Fourth Quarter and Fiscal 2017 Financial Results |
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, outlook, expectations or intentions regarding the future, including statements that the Company looks forward to updating its investors on its partner initiatives in the coming quarters; this year the Company will be enhancing its unified communication solutions that will allow team collaboration; these solutions consolidate secure voice, video conferencing and screen sharing that will work over virtually any device, any network and with any call server; and the Companys expectation of revenue growth in first quarter of fiscal 2018 compared to the fourth quarter of fiscal 2017. It is important to note that actual outcomes and the Companys 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 variability in CounterPaths sales from reporting period to reporting period due to extended sales cycles as a result of selling CounterPaths products through channel partners or the length of time of deployment of CounterPaths products by its customers; (2) the Companys ability to manage its operating expenses, which may adversely affect its financial condition; (3) the Companys ability to remain competitive as other better financed competitors develop and release competitive products; (4) a decline in the Companys stock price or insufficient investor interest in the Companys securities which may impact the Companys ability to raise additional financing as required or may cause the Company to be delisted from a stock exchange on which its common stock trades; (5) the impact of intellectual property litigation that could materially and adversely affect CounterPaths business; (6) the success by the Company of the sales of its current and new products; (7) the impact of technology changes on the Companys products and industry; (8) the failure to develop new and innovative products using the Companys technologies; and (9) the potential dilution to shareholders or overhang on the Companys share price of its outstanding stock options. Readers should also refer to the risk disclosures outlined in the Companys quarterly reports on Form 10-Q, the Companys annual reports on Form 10-K, and the Companys other disclosure documents filed from time-to-time with the Securities and Exchange Commission at http://www.sec.gov and the Companys interim and annual filings and other disclosure documents filed from time-to-time on SEDAR at www.sedar.com.
About CounterPath
CounterPath Unified Communications solutions are changing the face of telecommunications. An industry and user favorite, Bria softphones for desktop, tablet and mobile devices, together with Stretto Platform server solutions, enable operators, OEMs and enterprises large and small around the globe to offer a seamless and unified over-the-top (OTT) communications experience across both fixed and mobile networks. The Bria and Stretto combination enables an improved user experience as an overlay to the most popular UC and IMS telephony and applications servers on the market today. Standards-based, cost-effective and reliable, CounterPaths award-winning solutions power the voice and video calling, messaging, and presence offerings of customers such as AT&T, Avaya, BroadSoft, BT, Cisco Systems, GENBAND, Metaswitch Networks, Mitel, NEC, Network Norway, Nokia, Rogers and Verizon. Visit www.counterpath.com.
Contacts: |
David Karp |
Chief Financial Officer, CounterPath |
dkarp@counterpath.com |
(604) 628-9364 |
Page 4 |
CounterPath Reports Fourth Quarter and Fiscal 2017 Financial Results |
###
(TABLES TO FOLLOW)
Page 5 |
CounterPath Reports Fourth Quarter and Fiscal 2017 Financial Results |
COUNTERPATH CORPORATION |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(Stated in U.S. Dollars) |
April 30, | April 30, | |||||
2017 | 2016 | |||||
Assets | ||||||
Current assets: | ||||||
Cash | $ | 2,071,019 | $ | 2,159,738 | ||
Accounts receivable (net of allowance for doubtful accounts of $80,232 (2016 - $547,173)) | 2,133,469 | 3,209,279 | ||||
Prepaid expenses and deposits | 170,853 | 184,644 | ||||
Total current assets | 4,375,341 | 5,553,661 | ||||
Deposits | 91,400 | 93,868 | ||||
Equipment | 125,813 | 142,563 | ||||
Goodwill | 6,440,955 | 7,001,228 | ||||
Other assets | 199,637 | 174,811 | ||||
Total Assets | $ | 11,233,146 | $ | 12,966,131 | ||
Liabilities and Stockholders Equity | ||||||
Current liabilities: | ||||||
Accounts payable and accrued liabilities | $ | 1,825,528 | $ | 1,943,108 | ||
Unearned revenue | 2,134,948 | 1,808,857 | ||||
Customer deposits | 6,211 | 2,384 | ||||
Accrued warranty | 54,365 | 61,356 | ||||
Total current liabilities | 4,021,052 | 3,815,705 | ||||
Deferred lease inducements | 23,022 | 35,379 | ||||
Unrecognized tax benefit | 9,763 | 10,563 | ||||
Total liabilities | 4,053,837 | 3,861,647 | ||||
Stockholders equity: | ||||||
Preferred stock, $0.001 par
value Authorized: 100,000,000 Issued and outstanding: April 30, 2017 nil; April 30, 2016 nil |
|
|
||||
Common stock, $0.001 par value
Authorized: 100,000,000 Issued: April 30, 2017 5,005,245; April 30, 2016 4,542,348 |
5,005 |
4,542 |
||||
Treasury stock | (60 | ) | | |||
Additional paid-in capital | 71,680,575 | 70,065,082 | ||||
Accumulated deficit | (60,481,015 | ) | (58,022,500 | ) | ||
Accumulated other comprehensive income (loss) currency translation adjustment | (4,025,196 | ) | (2,942,640 | ) | ||
Total stockholders equity | 7,179,309 | 9,104,484 | ||||
Liabilities and Stockholders Equity | $ | 11,233,146 | $ | 12,966,131 |
Page 6 |
CounterPath Reports Fourth Quarter and Fiscal 2017 Financial Results |
COUNTERPATH CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
(Stated in U.S. Dollars) |
Three Months Ended | ||||||||||||
April 30, | Years Ended | |||||||||||
(Unaudited) | April 30, | |||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Revenue: | ||||||||||||
Software | $ | 1,226,074 | $ | 1,771,884 | $ | 5,449,140 | $ | 6,031,618 | ||||
Subscription, support and maintenance | 964,977 | 835,416 | 3,909,326 | 3,435,797 | ||||||||
Professional services and other | 162,073 | 433,087 | 1,327,124 | 1,613,943 | ||||||||
Total revenue | 2,353,124 | 3,040,387 | 10,685,590 | 11,081,358 | ||||||||
Operating expenses: | ||||||||||||
Cost of sales (includes depreciation of $6,559 (2016 - $7,225)) | 395,545 | 225,420 | 1,729,930 | 1,667,087 | ||||||||
Sales and marketing | 1,061,071 | 968,168 | 3,831,438 | 4,145,351 | ||||||||
Research and development | 1,318,854 | 1,217,363 | 4,843,813 | 4,737,055 | ||||||||
General and administrative | 702,704 | 953,849 | 3,234,026 | 3,373,674 | ||||||||
Total operating expenses | 3,478,174 | 3,364,800 | 13,639,207 | 13,923,167 | ||||||||
Loss from operations | (1,125,050 | ) | (324,413 | ) | (2,953,617 | ) | (2,841,809 | ) | ||||
Interest and other income (expense), net | ||||||||||||
Interest and other income | | 1,114 | 173 | 5,211 | ||||||||
Interest expense | (3,105 | ) | (57 | ) | (3,056 | ) | (2,310 | ) | ||||
Foreign exchange gain | 279,711 | (675,557 | ) | 497,985 | 195,003 | |||||||
Fair value adjustment on derivative instruments | | | | (47,690 | ) | |||||||
Net loss for the year | $ | (848,444 | ) | $ | (998,913 | ) | $ | (2,458,515 | ) | $ | (2,691,595 | ) |
Net loss per share: | ||||||||||||
Basic | $ | (0.17 | ) | $ | (0.22 | ) | $ | (0.52 | ) | $ | (0.61 | ) |
Diluted | $ | (0.17 | ) | $ | (0.22 | ) | $ | (0.52 | ) | $ | (0.61 | ) |
Weighted average common shares outstanding: | ||||||||||||
Basic | 5,005,708 | 4,535,419 | 4,722,724 | 4,433,402 | ||||||||
Diluted | 5,005,708 | 4,535,419 | 4,722,724 | 4,433,402 |
Page 7 |
CounterPath Reports Fourth Quarter and Fiscal 2017 Financial Results |
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 gross profit and non-GAAP income (loss) from
operations which exclude non-cash stock-based compensation relative to gross
profit and income (loss) from operations calculated in accordance with GAAP. The
non-GAAP financial measures also include non-GAAP net income (loss) which
excludes non-cash stock-based compensation, fair value adjustment on derivative
instruments charges and foreign exchange gain (loss) 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
CounterPaths core operating results and trends.
Reconciliation to GAAP
(Unaudited)
Three Months Ended | Years Ended | |||||||||||
April 30, | April 30, | |||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Non-GAAP gross margin: | ||||||||||||
Revenue | $ | 2,353,124 | $ | 3,040,387 | $ | 10,685,590 | $ | 11,081,358 | ||||
Less: | ||||||||||||
Cost of sales | 395,545 | 225,420 | 1,729,930 | 1,667,087 | ||||||||
GAAP gross profit | $ | 1,957,579 | $ | 2,814,967 | $ | 8,955,660 | $ | 9,414,271 | ||||
Percentage of revenue (gross margin) | 83% | 93% | 84% | 85% | ||||||||
GAAP gross profit | $ | 1,957,579 | $ | 2,814,967 | $ | 8,955,660 | $ | 9,414,271 | ||||
Plus: | ||||||||||||
Stock-based compensation | 19,994 | 18,444 | 97,434 | 68,259 | ||||||||
Non-GAAP gross profit | $ | 1,977,573 | $ | 2,833,411 | $ | 9,053,094 | $ | 9,482,530 | ||||
Percentage of revenue (Non-GAAP gross margin) | 84% | 93% | 85% | 86% |
Three Months Ended | Years Ended | |||||||||||
April 30, | April 30, | |||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Non-GAAP income (loss) from operations: | ||||||||||||
GAAP income (loss) from operations | $ | (1,125,050 | ) | $ | (324,413 | ) | $ | (2,953,617 | ) | $ | (2,841,809 | ) |
Plus: | ||||||||||||
Stock-based compensation | 134,403 | 160,132 | 835,918 | 906,914 | ||||||||
Non-GAAP income (loss) from operations | $ | (990,647 | ) | $ | (164,281 | ) | $ | (2,117,699 | ) | $ | (1,934,895 | ) |
Page 8 |
CounterPath Reports Fourth Quarter and Fiscal 2017 Financial Results |
Three Months Ended | Years Ended | |||||||||||
April 30, | April 30, | |||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Non-GAAP net income (loss): | ||||||||||||
GAAP net income (loss) | $ | (848,444 | ) | $ | (998,913 | ) | $ | (2,458,515 | ) | $ | (2,691,595 | ) |
Plus: | ||||||||||||
Stock-based compensation | 134,403 | 160,132 | 835,918 | 906,914 | ||||||||
Fair value adjustment on derivative instruments | | | | 47,690 | ||||||||
Foreign exchange (loss)/gain | (279,711 | ) | 675,557 | (497,985 | ) | (195,003 | ) | |||||
Non-GAAP net income (loss) | $ | (993,752 | ) | $ | (163,224 | ) | $ | (2,120,582 | ) | $ | (1,931,994 | ) |
GAAP net income (loss) per share: | ||||||||||||
Basic | $ | (0.17 | ) | $ | (0.22 | ) | $ | (0.52 | ) | $ | (0.61 | ) |
Diluted | $ | (0.17 | ) | $ | (0.22 | ) | $ | (0.52 | ) | $ | (0.61 | ) |
Non-GAAP net income (loss) per share: | ||||||||||||
Basic | $ | (0.20 | ) | $ | (0.04 | ) | $ | (0.45 | ) | $ | (0.44 | ) |
Diluted | $ | (0.20 | ) | $ | (0.04 | ) | $ | (0.45 | ) | $ | (0.44 | ) |