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) March 18,
2019
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 March 18, 2019 is furnished herewith.
Item 9.01 |
Financial Statements and Exhibits |
(d) | Exhibits |
99.1 | News Release dated March 18, 2019 |
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 | ||
Interim Chief Executive Officer and | ||
Chief Financial Officer | ||
Dated: | March 18, 2019 |
CounterPath Reports Third Quarter
Fiscal 2019 Financial
Results
Year-over-Year Recurring Revenue Growth of 22%
VANCOUVER, BC, Canada March 18, 2019 CounterPath Corporation (NASDAQ: CPAH) (TSX: PATH) (the Company or CounterPath), a global provider of award-winning Unified Communications (UC) solutions for enterprises and service providers, today announced the financial and operating results for its quarter ended January 31, 2019, being the third quarter of fiscal year 2019.
Third Quarter Financial Highlights (unaudited)
Revenue of $2.6 million compared to revenue of $3.1 million for the third quarter of fiscal 2018.
Growth in subscription, support and maintenance revenue (revenue of a recurring nature) of 22% for the quarter compared to the third quarter of fiscal 2018.
Non-GAAP loss from operations of $1.0 million compared to non- GAAP loss from operations of $0.3 million for the third quarter of fiscal 2018.
Net loss of $1.1 million, or $0.18 per share, compared to net loss of $0.8 million, or $0.14 per share, for the third quarter of fiscal 2018.
Non-GAAP net loss of $1.0 million, or $0.17 per share, compared to non-GAAP net income of $0.3 million, or $0.06 per share, for the third quarter of fiscal 2018.
Cash of $1.7 million as of January 31, 2019 compared to cash of $2.3 million as of April 30, 2018.
Management Commentary
We continue to make progress on our strategy of growing our recurring revenue business in the quarter, which contributed 53% of total revenue and grew 22% over the same quarter last year said David Karp, interim CEO and CFO. We recorded $1.4 million in recurring revenue, the highest level on record at CounterPath. Contributing to this growth included our channel partner program and e-store Software-as-a-Service (SaaS) offerings. We also sold our first on-premises collaboration solution to a North American service provider that offers cloud communication services to small and medium sized businesses. The CounterPath solution is intended to displace their legacy BroadSoft solution over time. Our solution will extend the customers internally developed PBX to enable a complete unified communications and collaboration offering to their customers powered by Bria softphones and the Stretto Platform. During the quarter, we also received recognition for our innovation as Bria Teams was named a finalist for the Best of Enterprise Connect Award 2019. The winner will be announced on March 19, 2019 at the event. Bria Teams is a subscription-based cloud service that unifies team communications and collaboration across desktop and mobile devices, enabling organizations to enhance team productivity and improve business processes. SMBs and enterprises can easily integrate Bria Teams with existing call server (PBX) or VoIP service, allowing users to take their business number with them as their single identity. Bria Teams overlays an organizations infrastructure to leverage their existing investments, reducing both costs and complexity.
Page 2
CounterPath Reports Third Quarter Fiscal 2019
Financial Results
Financial Overview
(All amounts in U.S. dollars and in accordance with accounting principles generally accepted in the United States (GAAP) unless otherwise specified unaudited).
Revenue was $2.6 million for the quarter ended January 31, 2019 compared to $3.1 million for the same quarter in the last fiscal year. Software revenue was $1.1 million compared to $1.8 million for the same quarter in the last fiscal year, subscription, support and maintenance revenue was $1.4 million compared to $1.1 million for the same quarter in the last fiscal year, and professional services and other revenue was $0.1 million compared to $0.2 million for the same quarter in the last fiscal year.
Operating expenses for the quarter ended January 31, 2019 were $3.6 million compared to $3.5 million for the same quarter in the last fiscal year. Operating expenses for the quarter ended January 31, 2019 included a non-cash stock-based compensation expense of $0.1 million (2018 - $0.1 million). Cost of sales was $0.6 million for the quarter ended January 31, 2019 compared to $0.4 million for the same quarter in the last fiscal year. Sales and marketing expenses were $1.0 million for the quarter ended January 31, 2019 compared to $1.0 million for the same quarter last fiscal year. For the quarter ended January 31, 2019, research and development expenses were $1.4 million and general and administrative expenses were $0.7 million compared to $1.4 million and $0.8 million, respectively, for the same quarter in the last fiscal year.
Foreign exchange loss for the quarter ended January 31, 2019 was $0.0 million compared to $0.3 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 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 quarter ended January 31, 2019 was $1.1 million, or $0.18 per share, compared to a net loss of $0.8 million, or $0.14 per share, for the same quarter in the last fiscal year. As of January 31, 2019, the Company had $1.7 million in cash, compared to $2.3 million at April 30, 2018.
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 the statements that the CounterPath solution is intended to displace their legacy BroadSoft solution overtime and that the Companys solution will extend the customers internally developed PBX to enable a complete unified communications and collaboration offering to their customers powered by Bria softphones and the Stretto Platform. 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 the Companys sales from reporting period to reporting period due to extended sales cycles as a result of selling the Companys products through channel partners or the length of time of deployment of the Companys products by its customers; (2) the Companys ability to manage its operating expenses, which may adversely affect its financial condition and ability to continue to operate as a going concern; (3) the Companys ability to remain competitive as other better financed competitors develop and release competitive products; (4) a decline in the Company’s stock price or insufficient investor interest in the Company’s securities which may impact the Company’s 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 Company’s business; (6) the success by the Company of the sales of its current and new products; (7) the impact of technology changes on the Company’s products and industry; (8) the failure to develop new and innovative products using the Company’s technologies including the refresh of our Software-as-a Service (SaaS) solution; and (9) the potential dilution to shareholders or overhang on the Company’s share price of its outstanding stock options. Readers should also refer to the risk disclosures outlined in the Company’s quarterly reports on Form 10-Q, the Company’s annual reports on Form 10-K, and the Company’s 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.
Page 3
CounterPath Reports Third Quarter Fiscal 2019
Financial Results
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 service providers, OEMs and
enterprises large and small around the globe to offer a seamless and unified
communications experience across any network. 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 deliver
high-quality voice and video calling, messaging, and presence offerings to our
customers such as AT&T, Avaya, Bell Canada, BT, Liberty Global, Ribbon
Communications, Uber and Vonex. Visit counterpath.com and follow
@counterpath.
Contacts: |
David Karp |
Interim Chief Executive Officer and Chief Financial Officer, CounterPath |
dkarp@counterpath.com |
###
(TABLES TO FOLLOW)
Page 4 |
CounterPath Reports Third Quarter Fiscal 2019 Financial Results |
COUNTERPATH CORPORATION |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(Stated in U.S. Dollars) |
January 31, | April 30, | |||||
2019 | 2018 | |||||
(Unaudited) | ||||||
Assets | ||||||
Current assets: | ||||||
Cash | $ | 1,744,859 | $ | 2,348,883 | ||
Accounts receivable (net of allowance for doubtful accounts of $1,124,161 (2018 - $322,638)) | 2,230,742 | 3,509,010 | ||||
Deferred sales commission costs current | 110,561 | | ||||
Derivative assets | 12,007 | | ||||
Prepaid expenses and other current assets | 271,687 | 191,245 | ||||
Total current assets | 4,369,856 | 6,049,138 | ||||
Deposits | 96,701 | 98,633 | ||||
Deferred sales commission costs non-current | 61,812 | | ||||
Equipment | 80,644 | 121,819 | ||||
Goodwill | 6,690,043 | 6,843,575 | ||||
Intangibles and other assets | 225,656 | 221,062 | ||||
Total Assets | $ | 11,524,712 | $ | 13,334,227 | ||
Liabilities and Stockholders Equity | ||||||
Current liabilities: | ||||||
Accounts payable and accrued liabilities | $ | 2,411,854 | $ | 2,437,733 | ||
Derivative liability | 18,052 | | ||||
Unearned revenue | 2,680,073 | 2,565,876 | ||||
Customer deposits | 3,137 | 2,200 | ||||
Accrued warranty | 49,305 | 63,130 | ||||
Total current liabilities | 5,162,421 | 5,068,939 | ||||
Deferred lease inducements | 6,596 | 14,339 | ||||
Loan payable | 2,000,000 | | ||||
Unrecognized tax liability | 9,763 | 9,763 | ||||
Total liabilities | 7,178,780 | 5,093,041 | ||||
Stockholders equity: | ||||||
Preferred stock, $0.001 par value Authorized: 100,000,000 Issued and outstanding: January 31, 2019 nil; April 30, 2018 nil |
|
|
||||
Common stock, $0.001 par value
Authorized: 100,000,000 Issued: January 31, 2019 5,946,832; April 30, 2018 5,930,468 |
5,947 |
5,931 |
||||
Additional paid-in capital | 75,591,318 | 75,170,181 | ||||
Accumulated deficit | (67,701,736 | ) | (63,701,685 | ) | ||
Accumulated other comprehensive loss currency translation adjustment | (3,549,597 | ) | (3,233,241 | ) | ||
Total stockholders equity | 4,345,932 | 8,241,186 | ||||
Liabilities and Stockholders Equity | $ | 11,524,712 | $ | 13,334,227 |
Page 5 |
CounterPath Reports Third Quarter Fiscal 2019 Financial Results |
COUNTERPATH CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
(Stated in U.S. Dollars) |
(Unaudited) |
Three Months Ended | Nine Months Ended | |||||||||||
January 31, | January 31, | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
Revenue: | ||||||||||||
Software | $ | 1,119,311 | $ | 1,791,165 | $ | 3,398,729 | $ | 5,306,925 | ||||
Subscription, support and maintenance | 1,367,387 | 1,120,690 | 3,938,247 | 3,069,371 | ||||||||
Professional services and other | 101,060 | 172,048 | 579,873 | 1,230,978 | ||||||||
Total revenue | 2,587,758 | 3,083,903 | 7,916,849 | 9,607,274 | ||||||||
Operating expenses: | ||||||||||||
Cost of sales (includes depreciation of $528 (2018 $4,753)) | 563,236 | 362,057 | 1,782,603 | 1,131,122 | ||||||||
Sales and marketing | 983,290 | 996,470 | 2,945,939 | 3,031,981 | ||||||||
Research and development | 1,369,196 | 1,361,219 | 4,163,889 | 4,052,129 | ||||||||
General and administrative | 699,428 | 800,049 | 3,241,167 | 2,407,234 | ||||||||
Total operating expenses | 3,615,150 | 3,519,795 | 12,133,598 | 10,622,466 | ||||||||
Loss from operations | (1,027,392 | ) | (435,892 | ) | (4,216,749 | ) | (1,015,192 | ) | ||||
Interest and other income (expense), net: | ||||||||||||
Interest and other income | 2,145 | | 2,145 | | ||||||||
Interest expense | (22,122 | ) | (123 | ) | (26,788 | ) | (338 | ) | ||||
Foreign exchange gain (loss) | (16,266 | ) | (342,328 | ) | 108,205 | (756,512 | ) | |||||
Change in fair value of derivative instruments | 4,255 | | (897 | ) | | |||||||
Total interest and other income (expense), net | (31,988 | ) | (342,451 | ) | 82,665 | (756,850 | ) | |||||
Net loss for the period | $ | (1,059,380 | ) | $ | (778,343 | ) | $ | (4,134,084 | ) | $ | (1,772,042 | ) |
Net loss per share: | ||||||||||||
Basic and diluted | $ | (0.18 | ) | $ | (0.14 | ) | $ | (0.70 | ) | $ | (0.33 | ) |
Weighted average common shares outstanding: | ||||||||||||
Basic and diluted | 5,945,181 | 5,539,352 | 5,939,803 | 5,354,690 |
Page 6 |
CounterPath Reports Third Quarter Fiscal 2019 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 loss from operations which excludes non-cash stock-based compensation relative to loss from operations calculated in accordance with GAAP. The non-GAAP financial measures also include non-GAAP net loss which excludes non-cash stock-based compensation, foreign exchange gain (loss) and gain (loss) on change in fair value of derivative instruments relative to net 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 | Nine Months Ended | |||||||||||
January 31, | January 31, | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
Non-GAAP loss from operations: | ||||||||||||
GAAP loss from operations | $ | (1,027,392 | ) | $ | (435,892 | ) | $ | (4,216,749 | ) | $ | (1,015,192 | ) |
Plus: | ||||||||||||
Stock-based compensation | 64,817 | 87,924 | 404,414 | 494,883 | ||||||||
Non-GAAP loss from operations | $ | (962,575 | ) | $ | (347,968 | ) | $ | (3,812,335 | ) | $ | (520,309 | ) |
Three Months Ended | Nine Months Ended | |||||||||||
January 31, | January 31, | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
Non-GAAP net loss: | ||||||||||||
GAAP net loss | $ | (1,059,380 | ) | $ | (778,343 | ) | $ | (4,134,084 | ) | $ | (1,772,042 | ) |
Plus: | ||||||||||||
Stock-based compensation | 64,817 | 87,924 | 404,414 | 494,883 | ||||||||
Foreign exchange (gain) loss | 16,266 | 342,328 | (108,205 | ) | 756,512 | |||||||
Loss (gain) on change in fair value of derivative instruments | (4,255 | ) | 897 | |||||||||
Non-GAAP net loss | $ | (982,552 | ) | $ | (348,091 | ) | $ | (3,836,978 | ) | $ | (520,647 | ) |
GAAP net loss per share: | ||||||||||||
Basic and diluted | $ | (0.18 | ) | $ | (0.14 | ) | $ | (0.70 | ) | $ | (0.33 | ) |
Non-GAAP net loss per share: | ||||||||||||
Basic and diluted | $ | (0.17 | ) | $ | (0.06 | ) | $ | (0.65 | ) | $ | (0.10 | ) |