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CounterPath Reports Fourth Quarter and Fiscal 2011 Financial Results

Company Reports Record Revenues

Vancouver, BC, Canada — July 26, 2011 — CounterPath Corporation (“CounterPath” or the “Company”) (OTCBB: CPAH) (TSX-V: CCV), an award-winning provider of desktop and mobile VoIP software products and solutions, today announced the financial and operating results for its fourth fiscal quarter and fiscal year 2011. CounterPath’s fiscal year runs May 1 to April 30.

Financial and operating highlights for the fourth quarter ended April 30, 2011, include: Financial highlights for the year ended April 30, 2011 include: “Strong sales through the fourth quarter enabled CounterPath to post record quarterly and annual revenues driven by continued demand for our desktop and mobile VoIP applications with license revenue in the fourth quarter growing 49% over the prior quarter,” stated Donovan Jones, President and Chief Executive Officer. “During fiscal 2011 we made significant inroads in developing channel partners through which we expect to continue to leverage complementary to our direct sales. In addition, the extension of our suite of applications to Apple iOS and Google Android mobile and tablet devices has positioned CounterPath in the rapidly growing market segment. We expect fiscal 2012 to reflect solid business growth overall, notwithstanding typical seasonality on a quarterly basis.

“We have laid the foundation for our social networking strategy in all our mobile and desktop softphones and when coupled with our Networks Convergence Gateway and provisioning server, we are uniquely positioned to take advantage of the multi-billion user addressable market through our channel partners and operator customers. The communications landscape is rapidly changing to socially enabled mobile devices leveraging cloud based infrastructure and CounterPath is in the sweet spot,” continued Jones.

Financial Results for the Fourth Quarter Ended April 30, 2011

(All amounts in U.S. dollars and in accordance with accounting principles generally accepted in the United States (“GAAP”) unless otherwise specified.)

Revenue was $3.2 million for the quarter ended April 30, 2011 compared to $2.7 million for the same quarter last year. Software revenue for the quarter ended April 30, 2011 was $2.1 million compared to $2.4 million for the same quarter last year. Service revenue for the quarter ended April 30, 2011 was $1.1 million compared to $0.4 million for same quarter last year.

Operating expenses for the quarter ended April 30, 2011 were $3.7 million compared to $3.6 million for the same quarter last year. Operating expenses for the quarter ended April 30, 2011 included a non-cash expense of $0.2 million for amortization of intangible assets and a non-cash stock-based compensation expense of $0.1 million.

Sales and marketing expenses were $0.9 million for the quarter ended April 30, 2011 compared to $1.0 million for same quarter last year. For the quarter ended April 30, 2011, research and development expenses were $1.2 million and general and administrative expenses were $1.0 million, compared to $1.0 million and $0.9 million, respectively, for the same quarter last year.

The net loss for the quarter ended April 30, 2011 was $0.8 million, including a non-cash $0.3 million foreign exchange loss, or a loss of $0.02 per share, compared to a net loss of $0.7 million, including a non-cash foreign exchange gain of $0.1 million, or a loss of $0.02 per share, for the quarter ended April 30, 2010.

Financial Results for the Year Ended April 30, 2011

(All amounts in U.S. dollars and in accordance with accounting principles generally accepted in the United States (“GAAP”) unless otherwise specified.)

Revenue was $11.0 million for the year ended April 30, 2011 compared to $8.0 million for last year. Software revenue for the year ended April 30, 2011 was $7.2 million compared to $6.0 million for last year. Service revenue for the year ended April 30, 2011 was $3.8 million compared to $2.0 million last year.

Operating expenses for the year ended April 30, 2011 were $14.8 million compared to $13.2 million for last year. Operating expenses for the year ended April 30, 2011 included a non-cash expense of $0.9 million for amortization of intangible assets and a non-cash stock-based compensation expense of $0.8 million.

Sales and marketing expenses were $3.5 million for the year ended April 30, 2011 compared to $3.1 million for last year. For the year ended April 30, 2011, research and development expenses were $4.5 million and general and administrative expenses were $4.0 million, compared to $3.6 million and $3.7 million, respectively, for last year.

The net loss for the year ended April 30, 2011 was $3.5 million, or a loss of $0.11 per share, compared to a net loss of $5.4 million, or a loss of $0.17 per share, for last year.

Subsequent to the year end, on July 25, 2011, the Company granted a total of 201,351 deferred share units to six non-employee directors, two officers and one employee pursuant to its deferred share unit plan. Each deferred share unit provides the holder thereof the right to exchange the unit, once vested, into one share of common stock of the Company under the terms and conditions of the plan. Seventy-seven thousand twenty-seven of the deferred share units vest immediately and 124,324 of the deferred share units vest as to one-third of the deferred share units on the first, second and third anniversary of the date of the grant, at which time the deferred share units are fully vested.

The Company also announced today that it has retained the services of Renmark Financial Communications Inc. to assist in its investor relations activities. In consideration of the investor relations services to be provided, the Company has agreed to a to pay a retainer of CDN$6,000 per month to Renmark Financial Communications Inc. starting on August 1, 2011 for a minimum of six months. Renmark Financial Communications Inc. does not have any interest, directly or indirectly, in CounterPath Corporation or its securities, or any right or intent to acquire such an interest.

About CounterPath
CounterPath Corporation is an award-winning provider of innovative desktop and mobile VoIP software products and solutions. The Company’s product suite includes SIP-based softphones, server applications and Fixed Mobile Convergence (FMC) solutions that enable service providers, enterprises and Original Equipment Manufacturers (OEM) to cost-effectively integrate voice, video, presence and Instant Messaging (IM) applications into their VoIP offerings and extend functionality across both fixed and mobile networks.

CounterPath’s customers include some of the world's largest telecommunications service providers and network equipment providers including AT&T, Verizon, BT (British Telecommunications PLC), Mobilkom Austria, Avaya, Cisco Systems, Metaswitch and Mitel.

For more information please visit www.counterpath.com.

Non-GAAP Financial Measures

This news release contains “non-GAAP financial measures”. The non-GAAP financial measures in this news release consist of (1) non-GAAP gross profit margin which excludes stock-based compensation and amortization of intangible asset charges relative to gross profit margin calculated in accordance with GAAP; and (2) non-GAAP operating loss which excludes stock-based compensation and amortization of intangible asset charges relative to operating 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 CounterPath’s core operating results and trends.

GAAP Sheet

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, expectations or intentions regarding the future, such as the following: (1) During fiscal 2011 we made significant inroads in developing channel partners through which we expect to continue to leverage complementary to our direct sales; (2) In addition, the extension of our suite of applications to Apple iOS and Google Android mobile and tablet devices has positioned CounterPath in the rapidly growing market segment; (3) We expect fiscal 2012 to reflect solid business growth overall, notwithstanding typical seasonality on a quarterly basis; (4) We have laid the foundation for our social networking strategy in all our mobile and desktop softphones and when coupled with our Networks Convergence Gateway and provisioning server, we are uniquely positioned to take advantage of the multi-billion user addressable market through our channel partners and operator customers; and (5) The communications landscape is rapidly changing to socially enabled mobile devices leveraging cloud based infrastructure and CounterPath is in the sweet spot.

It is important to note that actual outcomes and the Company’s 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 failure to develop new and innovative products using the Company’s technologies, (2) the Company’s ability to remain competitive as other parties develop and release competitive products, (3) the Company’s ability to retain the employees necessary to continue research and development of current and new products, (4) the success by the Company of the sales of its current and new products, (5) the impact of technology changes on the Company’s products and on the VoIP industry, (6) the compatibility of the Company’s products with new computer operating systems, (7) the rate of adoption by service providers and the general public of VoIP as a replacement for regular and cellular phone service, (8) general economic conditions as they affect CounterPath and its current and prospective customers, including a continued downturn in general economic conditions internationally, (9) the ability of the Company to control costs operating, general administrative and other expenses, and (10) insufficient investor interest in the Company’s securities which may impact on the Company’s ability to raise additional financing as required. Readers should also refer to the risk disclosures outlined in the Company’s quarterly reports on Form 10-Q, 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 www.sec.gov and the Company’s interim and annual filings and other disclosure documents filed from time-to-time on SEDAR at www.sedar.com.

Disclaimer: Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact:

David Karp
Chief Financial Officer
CounterPath Corporation
+1.604.320.3344 ext 1114
dkarp@counterpath.com

(TABLES TO FOLLOW)

Balance Sheet

Statement Sheet