Mr. Andrew Cheung reports

01 COMMUNIQUE REPORTS RESULTS FOR FOURTH QUARTER AND FISCAL 2014

01 Communique Laboratory Inc. has released results for its fourth quarter and fiscal year ended Oct. 31, 2014. The loss and comprehensive loss for the fourth quarter and fiscal 2014 were $674,589 (2013 -- $357,631) and $2,073,332 (2013 -- $3,172,080), respectively. The adjusted loss, which excludes non-cash expenses for stock-based compensation and depreciation, for the fourth quarter and fiscal 2014, was $438,087 (2013 -- $271,899) and $1,551,181 (2013 -- $2,449,335), respectively. The company completed the year with $1,370,813 of cash and cash equivalents.

"As we head into 2015, we are continuing with our lawsuit against Citrix and are looking forward to our day in court," said Andrew Cheung, president and chief executive officer for 01 Communique. "Protecting our intellectual property is very important to us. We have cut our operating expenses while this lawsuit carries on and will continue to monitor them very closely."

An update on the company's patent lawsuit against Citrix Systems Inc. follows.

The company is protecting its intellectual property against Citrix's GoToMyPC product offering. The company is seeking damages based upon a reasonable royalty, back to August, 2005, the date the patent was issued, for infringement, as well as pre- and postjudgment interest on awarded damages, treble damages for willful infringement, a permanent injunction, and attorneys' fees. An overview of recent events and timelines to get to trial follow.

The timetable

Expert discovery is scheduled to be completed by Jan. 16, 2015, following which a scheduling conference is expected to take place to set dates regarding filing and/or renewing dispositive motions, trial preparation, and trial.

The inter partes re-examination

On Oct. 16, 2014, the United States Court of Appeal for the Federal Circuit rendered its decision affirming the United States Patent and Trademark Office's (USPTO) patent trial and appeals board decision that the company's patent 6,928,479 is valid, and on Nov. 25, 2014, the Federal Circuit issued its mandate to the USPTO to issue a re-examination certificate.

The recent claim construction hearing

A claim construction tutorial and hearing took place on Nov. 12 and 13, 2014. The company is now waiting for the court's findings.

The California action

In May, 2014, Citrix filed a lawsuit in the United States District Court -- Central District of California alleging infringement of three U.S. patents, No. 7,219,233, No. 8,127,019 and No. 8,325,896, by the company's I'm InTouch Meeting product. On Oct. 23, 2014, the parties reached an agreement whereby each party withdrew its claims against the other with respect to Citrix's GoToMeeting product and 01 Communique's I'm InTouch Meeting product. The company's case against Citrix's GoToMyPC product offering is continuing.

An update on financial results follows:

1. Operating expenses for the fourth quarter 2014 were $746,101 (2013 -- $528,227). Excluding non-cash expenses for stock-based compensation of $234,870 (2013 -- $83,978) and depreciation of $1,632 (2013 -- $1,754), as well as patent litigation and re-examination costs of $153,272 (2013 -- $39,039), the cash operating expenses to finance operations for the fourth quarter of 2014 were $356,327 (2013 -- $403,456), a reduction of $47,129.
2. Executive management and directors agreed to a reduction in the cash component of their compensation effective Aug. 1, 2014. This reduction along with other cost-saving initiatives is expected to save approximately $75,000 per quarter ($300,000 annually). The first quarter 2015 cash operating expenses, excluding patent litigation and re-examination costs, are expected to be approximately $350,000.
3. The loss and comprehensive loss for the three months ended Oct. 31, 2014, was $674,589 (2013 -- $357,631), an increase of $316,958. Excluding non-cash expenses for stock-based compensation and depreciation, the adjusted loss for the three months ended Oct. 31, 2014, was $438,087 (2013 -- $271,899), an increase of $166,188, primarily as a result of a reduction in revenue, and an increase in patent litigation and re-examination expenses, offset by a reduction in expenses for salaries, contractors, commissions and benefits.
4. The reduction in revenue of $104,062 from $161,810 in the fourth quarter 2013 to $57,748 in 2014 was primarily due to a reduction in contract engineering fees.
5. Patent litigation and re-examination expenses increased by $114,233 from $39,039 in the fourth quarter of 2013 to $153,272 in 2014 primarily a result of an increase in expenses pertaining to costs associated with the re-exam appeal and previous lawsuits.
6. There was a reduction in expenses for salaries, contractors, commissions and benefits, primarily as a result of reducing the cash component of compensation to directors and executive management effective Aug. 1, 2014. The salaries, contractors, commissions and benefits expenses for the fourth quarter of 2014 were $223,286 (2013 -- $287,716), a reduction of $64,430.
7. Cash and cash equivalents were 1,370,813 as at Oct. 31, 2014, compared with $1,607,879 as at July 31, 2014, a decrease of $237,067 for the fourth quarter. This decrease is primarily a result of financing the adjusted loss of $438,087, offset by an increase in accounts payable and accrued liabilities of $104,536, and an increase in accounts receivable of $79,556.

On Dec. 10, 2014, stock options were granted to members of the company's executive management and directors. There were 958,750 stock options granted in total, expiring on Dec. 10, 2018, with an exercise price of 20 cents, and vesting 208,750 on June 10, 2015, 375,000 on Dec. 10, 2015, and 375,000 on Dec. 10, 2016.

                       CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
                      FOR THE THREE- AND 12-MONTH PERIODS ENDED OCT. 31, 2014, AND 2013

                                                  For the three months ending       For the 12 months ending
                                                Oct. 31, 2014   Oct. 31, 2013  Oct. 31, 2014   Oct. 31, 2013

Revenue                                              $ 57,748       $ 161,810      $ 266,691     $ 1,258,109
Cost of revenue                                             -           7,502              -           7,502
                                                       57,748         154,308        266,691       1,250,607
Expenses (income)
Selling, general and administrative                   370,266         353,425      1,327,639       1,659,834
Patent enforcement and re-examination expenses        153,272          39,039        267,968       2,004,581
Research and development                              222,563         135,763        763,738         793,627
Interest                                              (13,764)        (16,288)       (19,322)        (35,355)
                                                      732,337         511,939      2,340,023       4,422,687
(Loss) for the period and comprehensive (loss)       (674,589)       (357,631)    (2,073,332)     (3,172,080)
(Loss) per common share
Basic                                                 $ (0.01)        $ (0.01)       $ (0.03)        $ (0.05)
Diluted                                               $ (0.01)        $ (0.01)       $ (0.03)        $ (0.05)

We seek Safe Harbor.