CounterPath Reports Second Quarter Fiscal 2007 Financial Results

Vancouver, BC, Canada — December 18, 2006 – CounterPath Solutions, Inc. (OTCBB: CTPS), a leading provider of VoIP (Voice over IP) and Video over IP SIP softphones, today announced the financial and operating results for its second quarter ended October 31, 2006.

Second quarter highlights:

• Revenues for the quarter ended October 31, 2006 of $1,672,793, an increase of 54% over the $1,086,101 recorded for the quarter ended October 31, 2005.
• Reduction in loss to $234,649 ($0.01 per share) for the quarter ended October 31, 2006 from a loss of $258,725 ($0.01 per share) recorded for the quarter ended October 31, 2005, and a loss of $478,142 ($0.01 per share) recorded for the last quarter ended July 31, 2006.
• Deployment of AT&T CallVantage Softphone using the CounterPath softphone application. AT&T Inc. is one of the world's largest telecommunications holding companies and is the largest in the United States. For more information visit http://www.usa.att.com/callvantage/softphone/index.jsp.
• Announcement of mobilkom austria “Fixed-Mobile” convergence trial launch enabling end users the ability to make voice over internet calls with a softphone application on their PCs or laptops and also choose to receive mobile telephone calls on their softphone.

“Overall, we were pleased with the progress made executing our strategic and operational plan during the quarter though we believe that current quarter’s revenue was impacted by a delay in customer reporting of deployed endpoints,” stated Mark Bruk, chief executive officer of CounterPath. “We put in place a plan slightly less than 18 months ago to focus on five key areas: First, to focus our selling and solutioning efforts to tier one service providers, OEM’s and enterprises; we have since announced commercial agreements and launches with British Telecom, AT&T, Cisco and mobilkom austria. We will continue to see the monetization of our efforts through these relationships, though we expect that our results of operations will vary from quarter to quarter as a result of long sales and deployment cycles and variations in customer ordering and reporting patterns. Second, to focus our R&D efforts on the development and commercialization of innovative technologies; we have launched new versions of our X-Lite™ (X-Lite 3.0) and eyeBeam™ (eyeBeam 1.5) clients, and unveiled a new look and feel to our latest client, code-named Frontier, which will be generally available in the first quarter of calendar 2007. Third, to invest in the CounterPath team; we have more than doubled the headcount over the last year with a deliberate focus on recruiting engineering talent while broadening our geographic sales coverage, and keeping expenses in line evidenced by our reduction is losses quarter over quarter. Fourth, to build out our interoperability program, we achieved certification from leading manufacturers and solution providers such as Nortel, Sylantro and Intrado. Fifth, to provide thought leadership on standards and architecture; we contributed to standards organizations such as the IETF working groups, the implementation of UPDI (universal phone device interface) from Intel and our E911 solution focus.”

Financial Results - Unaudited

(All amounts in U.S. dollars and in accordance with U.S. GAAP unless otherwise specified)

For the quarter ended October 31, 2006, we generated $1,672,793 in revenue compared to $1,086,101 for the quarter ended October 31, 2005, representing an increase of $586,692 or 54% from the same period last year and a 5% decrease from quarter ended July 31, 2006 revenues. Software revenues were $1,276,065 for the quarter ended October 31, 2006 compared to $731,164 for the quarter ended October 31, 2005, representing an increase of $554,901 or 75% over the same period last year. For the quarter ended October 31, 2006, service revenue grew by 12% to $396,728 compared to $354,937 for the quarter ended October 31, 2005. Over the quarter, the total number of customers that have deployed our software increased by 23 to 236, as of October 31, 2006.

For the six months ended October 31, 2006, we generated $3,433,674 in revenue compared to $1,913,397 for the six months ended October 31, 2005. This represents an increase of $1,520,277 or 79% from the same period last year. We generated $2,685,784 in software revenue for the six months ended October 31, 2006 compared to $1,441,842 for the six months ended October 31, 2005, representing an increase of $1,243,942 or 86% over the same period last year. For the six months ended October 31, 2006, service revenue was $747,890 compared to $471,555 for the six months ended October 31, 2005, an increase of $276,335 or 59%.

Operating expenses for the quarter ended October 31, 2006 were $1,511,784 compared to $1,159,044 for the quarter ended October 31, 2005, representing an increase of 30% or $352,740. Operating expenses for the six months ended October 31, 2006 were $3,274,998 compared to $2,186,671 for the six months ended October 31, 2005, representing and increase of 50% or $1,088,327. Increases in operating expenses primarily reflect the addition of personnel and related wages and benefits and include the non-cash fair value of employee stock-based compensation of $442,718, which we began expensing this fiscal year.

The net loss for the quarter ended October 31, 2006 was $234,649 ($0.01 per share) compared to $258,725 ($0.01 per share) recorded for the quarter ended October 31, 2005. For the six months ended October 31, 2006, the net loss was $712,791 ($0.02 per share) compared to a net loss of $568,529 ($0.02 per share) recorded for the six months ended October 31, 2005.

As of October 31, 2006, we had $1,085,368 in cash compared to $1,133,361 as of July 31, 2006 and $2,369,021 at April 30, 2006. Our working capital was $1,744,149 as of October 31, 2006 compared to $1,671,169 at July 31, 2006 and $1,975,881 at April 30, 2006. Subsequent to the quarter, we raised an additional net $2 million in convertible debentures which will be used to (1) expand the development and marketing of our core products, (2) develop additional products, and (3) for general corporate purposes.

Financial tables follow:

The Company's Quarterly Report on Form 10-QSB for the quarter ended October 31, 2006 is available for viewing at www.sec.gov.

About CounterPath Solutions

CounterPath Solutions is a developer of award-winning, high-quality, carrier-grade VoIP (Voice over IP) and Video over IP SIP softphones for service providers, cable operators, Internet telephony service providers, IP PBX manufacturers and OEMs. CounterPath's SIP softphones are available either pre-configured or as a software development kit (SDK), and provide VoIP (Voice over IP), Video over IP, IM (Instant Messaging), and Presence functionality. eyeBeam -- CounterPath's feature-rich SIP Video over IP softphone with IM and Presence -- recently received both Communications Solutions® Magazine's and INTERNET TELEPHONY® Magazine's "Product of the Year" Award for 2004. CounterPath's Pocket PC SIP Softphone was recently named a 2005 Innovation Award winner from INTERNET TELEPHONY® magazine. With over 120 customers in more than 30 countries, CounterPath technology is deployed in more than 5,400,000 IP endpoints worldwide.