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) December 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))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b -2 of this chapter).
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 7.01 Regulation FD Disclosure
A News Release dated December 13, 2017 is furnished herewith.
Item 9.01 |
Financial Statements and Exhibits |
(d) |
Exhibits |
99.1 |
News Release dated December 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: December 13, 2017
3
CounterPath Reports Second Quarter Fiscal 2018 Financial Results
Company Records Double Digit Year-Over-Year and Sequential Revenue Growth and Positive Net Income
VANCOUVER, British Columbia, Dec. 13, 2017 (GLOBE NEWSWIRE) -- (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 the second quarter ended October 31, 2017 of fiscal year 2018.
Second Quarter Financial Highlights (unaudited)
• |
Revenue of $3.4 million, an increase of 24% over the $2.8 million recorded in the second quarter of fiscal 2017 and an increase of 10% over the $3.1 million recorded for the first quarter of fiscal 2018. | |
• |
Gross margin of 89% compared to 83% for the second quarter of fiscal 2017. | |
• |
Non-GAAP income from operations of $0.1 million compared to non-GAAP loss from operations of $0.5 million for the second quarter of fiscal 2017. | |
• |
Non-GAAP net income of $0.1 million, or $0.01 per share, compared to non-GAAP net loss of $0.5 million, or $0.11 per share, for the second quarter of fiscal 2017. | |
• |
Net income of $0.2 million, or $0.03 per share, compared to net loss of $0.6 million, or $0.12 per share, for the second quarter of fiscal 2017. | |
• |
Cash of $1.7 million as of October 31, 2017 compared to cash of $2.1 million as of April 30, 2017. |
Management Commentary
We continue to execute against our strategy and gain operating leverage from our software platform, evidenced by delivering revenue growth over last year and positive earnings this quarter, said Donovan Jones, President and Chief Executive Officer. We had a solid quarter in both EMEA and the Americas. We entered into a contract with an international, tier-one service provider with tens of millions of users and completed customization services to enable the service provider to deploy our software in the coming quarters. We continue to see increased deployment of our SDK/API in the contact center vertical we now have six of the top ten contact center solution providers1 deploying our software. The effort we have made through digital marketing is increasing our funnel, driving business development opportunities and software sales. Our cloud-based subscription platforms are growing with small businesses, and with the launch of our collaboration product in the coming quarters, this customer growth will continue to accelerate, continued Jones.
_________________________
1 Gartner.
Recent Business Highlights
• |
Won a Request For Proposal (RFP) and entered into a contract with one of the worlds largest communication service providers with tens of millions of users. | |
• |
Signed a distribution agreement with India-based TaraSpan, a leading Unified Communication solutions provider, to sell CounterPaths Bria Stretto subscription services throughout India. | |
• |
Announced that Estech Systems, Inc. (ESI) has selected the CounterPath Bria and Stretto solution for their premise based IP 900 PBX deployments. | |
• |
Awarded patent No. US 9,774,695 by the U.S. Patent and Trademark Office. Titled Enhanced Presence Detection For Routing Decisions. This patent optimizes the routing of calls, messages and other communication based upon a users real-time presence information from both broadband and mobile network. | |
• |
Announced that a multi-billion dollar international health care information technology company has entered into a contract to integrate the CounterPath SDK for high quality voice into their mobile application that has been deployed into thousands of hospitals and critical care facilities. |
Financial Overview
(All amounts are in U.S. dollars and in accordance with accounting principles generally accepted in the United States (GAAP) unless otherwise specified - unaudited.)
Revenue was $3.4 million for the quarter ended October 31, 2017 compared to $2.8 million for the same quarter last fiscal year. Software revenue was $1.8 million compared to $1.2 million for the same quarter last fiscal year. Subscription, support and maintenance revenue was $1.0 million compared to $1.0 million for the same quarter last fiscal year. Professional services and other revenue was $0.6 million compared to $0.6 million for the same quarter last fiscal year.
Operating expenses for the quarter ended October 31, 2017 were $3.5 million compared to $3.5 million for the same quarter last fiscal year. Operating expenses for the quarter ended October 31, 2017 included a non-cash stock-based compensation expense of $0.1 million (2016 - $0.2 million). Sales and marketing expenses were $1.0 million for the quarter ended October 31, 2017 compared to $1.0 million for the same quarter last fiscal year. For the quarter ended October 31, 2017, research and development expenses were $1.3 million and general and administrative expenses were $0.7 million compared to $1.2 million and $0.9 million, respectively, for same quarter last fiscal year.
Foreign exchange gain for the quarter ended October 31, 2017 was $0.2 million compared to foreign exchange gain of $0.2 million for the same quarter last fiscal year. The foreign exchange gain (loss) represents the gain (loss) on account of translation of the intercompany accounts of CounterPaths 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 income for the quarter ended October 31, 2017 was $0.2 million, or $0.03 per share, compared to a net loss of $0.6 million, or $0.12 per share, for the same quarter last fiscal year. As of October 31, 2017, the Company had $1.7 million in cash, compared to $2.1 million at April 30, 2017.
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: (1) the plans of the Companys customer, an international tier one service provider, to deploy the Companys software in the coming quarters; and (2) the Companys expectation that it will launch of a collaboration product in the coming quarters and that customer growth will continue to accelerate. 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 the Companys 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
(TABLES TO FOLLOW)
COUNTERPATH CORPORATION
CONDENSED CONSOLIDATED
BALANCE SHEETS
(Stated in U.S. Dollars)
(Unaudited)
October 31, | April 30, | |||||
2017 | 2017 | |||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 1,682,132 | $ | 2,071,019 | ||
Accounts receivable (net of
allowance for doubtful accounts of $179,926 and
$80,232, respectively) |
3,818,622 | 2,133,469 | ||||
Prepaid expenses and deposits | 170,640 | 170,853 | ||||
Total current assets | 5,671,394 | 4,375,341 | ||||
Deposits | 98,481 | 91,400 | ||||
Equipment | 129,200 | 125,813 | ||||
Goodwill | 6,831,467 | 6,440,955 | ||||
Other assets | 208,444 | 199,637 | ||||
Total Assets | $ | 12,938,986 | $ | 11,233,146 | ||
Liabilities and Stockholders Equity | ||||||
Current liabilities: | ||||||
Accounts payable and accrued liabilities | $ | 1,912,904 | $ | 1,825,528 | ||
Accrued warranty | 60,660 | 54,365 | ||||
Customer deposits | 4,680 | 6,211 | ||||
Unearned revenue | 2,372,559 | 2,134,948 | ||||
Total current liabilities | 4,350,803 | 4,021,052 | ||||
Deferred lease inducements | 19,366 | 23,022 | ||||
Unrecognized tax liability | 9,763 | 9,763 | ||||
Total liabilities | 4,379,932 | 4,053,837 | ||||
Stockholders equity: | ||||||
Preferred stock, $0.001 par value | ||||||
Authorized: 100,000,000 | ||||||
Issued and outstanding: October 31, 2017 nil; April 30, 2017 nil | | | ||||
Common stock, $0.001 par value | ||||||
Authorized: 10,000,000 | ||||||
Issued and outstanding: | ||||||
October 31, 2017 5,499,150; April 30, 2017 5,005,245 | 5,499 | 5,005 | ||||
Treasury stock | (2 | ) | (60 | ) | ||
Additional paid-in capital | 73,282,856 | 71,680,575 | ||||
Accumulated deficit | (61,474,714 | ) | (60,481,015 | ) | ||
Accumulated other comprehensive loss currency translation adjustment | (3,254,585 | ) | (4,025,196 | ) | ||
Total stockholders equity | 8,559,054 | 7,179,309 | ||||
Liabilities and Stockholders Equity | $ | 12,938,986 | $ | 11,233,146 |
COUNTERPATH CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Stated in U.S. Dollars)
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||
October 31, | October 31, | |||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Revenue: | ||||||||||||
Software | $ | 1,816,867 | $ | 1,242,860 | $ | 3,515,760 | $ | 2,898,863 | ||||
Subscription, support and maintenance | 981,619 | 957,891 | 1,948,681 | 1,913,187 | ||||||||
Professional services and other | 612,079 | 550,362 | 1,058,930 | 965,057 | ||||||||
Total revenue | 3,410,565 | 2,751,113 | 6,523,371 | 5,777,107 | ||||||||
Operating expenses: | ||||||||||||
Cost of sales (includes depreciation of $3,168 (2016 $5,419)) | 380,822 | 476,547 | 769,065 | 973,663 | ||||||||
Sales and marketing | 1,031,227 | 988,540 | 2,035,511 | 1,950,409 | ||||||||
Research and development | 1,329,437 | 1,150,515 | 2,690,910 | 2,309,176 | ||||||||
General and administrative | 714,598 | 871,608 | 1,607,185 | 1,853,079 | ||||||||
Total operating expenses | 3,456,084 | 3,487,210 | 7,102,671 | 7,086,327 | ||||||||
Loss from operations | (45,519 | ) | (736,097 | ) | (579,300 | ) | (1,309,220 | ) | ||||
Interest and other income (expense), net: | ||||||||||||
Interest and other income | | 173 | | 186 | ||||||||
Interest expense | (162 | ) | | (215 | ) | | ||||||
Foreign exchange gain/(loss) | 204,515 | 171,904 | (414,184 | ) | 381,103 | |||||||
Net income (loss) for the period | $ | 158,834 | $ | (564,020 | ) | $ | (993,699 | ) | $ | (927,931 | ) | |
Net income (loss) per share: | ||||||||||||
Basic | $ | 0.03 | $ | (0.12 | ) | $ | (0.19 | ) | $ | (0.20 | ) | |
Diluted | $ | 0.03 | $ | (0.12 | ) | $ | (0.19 | ) | $ | (0.20 | ) | |
Weighted average common shares outstanding: | ||||||||||||
Basic | 5,487,765 | 4,554,226 | 5,262,359 | 4,552,371 | ||||||||
Diluted | 5,892,580 | 4,554,226 | 5,262,359 | 4,552,371 |
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 income (loss) from operations which excludes 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 and foreign exchange gain (loss) relative to 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 | Six Months Ended | |||||||||||
October 31, | October 31, | |||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Non-GAAP income (loss) from operations: | ||||||||||||
GAAP income (loss) from operations | $ | (45,519 | ) | $ | (736,097 | ) | $ | (579,300 | ) | $ | (1,309,220 | ) |
Plus: | ||||||||||||
Stock-based compensation | 110,627 | 236,967 | 406,959 | 551,190 | ||||||||
Non-GAAP income (loss) from operations | $ | 65,108 | $ | (499,130 | ) | $ | (172,341 | ) | $ | (758,030 | ) |
Three Months Ended | Six Months Ended | |||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Non-GAAP net income (loss): | ||||||||||||
GAAP net income (loss) | $ | 158,834 | $ | (564,020 | ) | $ | (993,699 | ) | $ | (927,931 | ) | |
Plus: | ||||||||||||
Stock-based compensation | 110,627 | 236,967 | 406,959 | 551,190 | ||||||||
Foreign exchange gain (loss) | (204,515 | ) | (171,904 | ) | 414,184 | (381,103 | ) | |||||
Non-GAAP net income (loss) | $ | 64,946 | $ | (498,957 | ) | $ | (172,556 | ) | $ | (757,844 | ) | |
GAAP net income (loss) per share: | ||||||||||||
Basic and diluted | $ | 0.03 | $ | (0.12 | ) | $ | (0.19 | ) | $ | (0.20 | ) | |
Non-GAAP net income (loss) per share: | ||||||||||||
Basic and diluted | $ | 0.01 | $ | (0.11 | ) | $ | (0.03 | ) | $ | (0.17 | ) |